The club and others like it have been shielded under Prop. 13, which essentially prevents rising property values from increasing tax rates unless a property changes hands. But, as the report indicates, it's not really clear if country clubs are covered under Prop. 13, and, in response to questions from the downtown paper, Los Angeles County Assessor Rick Auerbach has asked the state Board of Equalization to review the clubs' tax rates.
The Los Angeles Country Club pays taxes based on blast-from-the-past property value of 17.6 million for a few hundred acres in what real estate agents call the "Golden Triangle" -- represented by some of the world's richest communities: Beverly Hills, Bel-Air and Holmby Hills. And, let's be clear here: This isn't a public institution, it's a private environment for mostly rich, mostly white, mostly male folks to hit little white balls around on very green grass.
As Golf.com describes it: "The North Course at the Los Angeles Country Club is one of the most private and exclusive in the world. (Legend has it that Hugh Hefner, who lives off one of the fairways, was turned down for membership)." Green fees start at $245. The cost of a membership, if you can get one, is said to be in the six figures.
The Garment & Citizen notes that a single house recently sold near the club for more than $18 million a year ago. The owner of that residence, then, pays higher property taxes than the country club.
Prop. 13 was passed in 1978 to prevent homeowners from being taxed out of their homes as rising values brought with them rising taxes. So now residential properties -- and subsequently commercial ones as well -- are reassessed for tax purposes only when they change hands or are rebuilt. In some SoCal, single-family neighborhoods, new neighbors could pay 10, even 15 times the tax rate that a retired couple down the block does if the pair purchased the home decades ago.
Billionaire investor Warren Buffet famously pointed out that that he paid more taxes for his $500,000 house in Omaha, Nebraska than he did for his $4 million house in Laguna Beach. (And, he noted, that because he purchased a second Laguna Beach home decades later than the first, its tax rate -- "same neighborhood, same owner, same ability to pay," he writes -- was ten times that of the original residence).
While the proposition has brought relief to many homeowners, particularly in times when home values have shot up, critics have pointed to the proposition's unequal tax rates as a sore spot in California's revenue stream, especially in recent years as the state has faced multi-billion-dollar deficits.
The Garment & Citizen reports that if the country club were assessed based on the kind of property values attached to homes for sale in the area, its taxes would shoot up to $25 million a year. So the club is getting a $24,800,000 tax break as, for example, the Los Angeles Unified School District faces thousands of possible layoffs.
One question for the club and others like it (the report found that the Hillcrest and Bel Air clubs pay similarly low rates) is whether their values should be reassessed because membership turnover would equate to a change in ownership. It's a question that remains up the air.
[Spotted at LAObserved].