290 Division (EAT), LLC v. City and County of San Francisco
Annotate this Case
Division purchased two office buildings from the city that included a short-term leaseback at below-market rent. Division alleged that the assessor failed to take the leaseback into account when valuing the buildings for property tax purposes and claims this violated Revenue and Taxation Code section 402.1. After failing to persuade the City’s Assessment Appeals Board, Division filed suit. The trial court dismissed, holding that the lease did not constitute an “enforceable restriction” under section 402.1.
The court of appeal affirmed, noting that Division paid $53 million, a price discounted to reflect the leaseback. While a purchase price may play a significant role in the reassessment of property upon its sale, that price is only the beginning of the inquiry; one factor that may skew the purchase price and make it an unreliable indicator of fair market value is an agreement containing restrictions on the buyer’s use of the property. Such restrictions do not bind the assessor. Government-imposed land use restrictions must be taken into account when a property is valued for assessment purposes but under section 402.1 “enforceable restrictions” are land use restrictions imposed by the government under its police power, not restrictions agreed to by a public entity selling property to a private buyer in an ordinary arm’s-length transaction.
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.