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Apple, Genentech holding up counties for billions on property tax

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Tech companies lead in tax assessment disputes

Apple Park in Cupertino.
Photo by Droneandy/Shutterstock

Silicon Valley’s boom times mean that county coffers are booming too, as all of that private success can lead to a fat annual bill when it’s time to pay the taxman.

According to the Santa Clara County Assessor’s Office, 2018 netted an assessment roll of more than $483 billion. County Assessor Larry Stone’s office notes in its annual report:

The growth in the assessment roll this year is due primarily to significant new construction, changes in ownership, and growth in business property, i.e. machinery, equipment, computers, and fixtures. In addition, the two percent increase in the assessed value of all properties mandated by Proposition 13, also contributed to the increase in the assessment roll.

[...] Apple Computer, accounted for an increase of $1.5 billion in assessed value, primarily from construction of the Apple Park (Spaceship) campus.

But the county might not be as happy about letting the good times roll as one would assume, because it turns out trying to serve a tax bill in Silicon Valley is a taxing experience in and of itself.

According to the San Francisco Chronicle, Apple is embroiled in arguments about its property tax value, appealing billions of dollars going back over a decade:

In Santa Clara County, Apple is the leading appealer of tax assessments, with 489 open cases dating back to 2004, disputing $8.5 billion in property value, according to the assessor’s office. Apple is largest taxpayer in the county, paying $56 million in tax year 2017-18.

In fact, the ten most plentiful sources of Santa Clara County appeals are all tech companies.

According to the Assessment Appeals Board’s site, “The effect of [the law] is to impose upon the applicant the burden of proving that the value on the assessment roll is not correct,” and appealing can even sometimes result in a higher bill than the one a property owner contests.

Nevertheless, appeals happen every year, and they’re an expected and reasonable part of the county’s revenue collection process. Companies like Apple are in a unique position, though, since their titanic volume of assets provides both means and incentive to field a tremendous degree of resistance.

Genentech’s South San Francisco offices.
CoolCaesar

The Chronicle also notes that biotech company Genentech is a leading challenger of property values, including in San Mateo County, where it hopes to reclaim some $190 million in taxes.

Earlier this year, the county beat Genentech in court over this very issue; a Superior Court ruled that Genentech’s holdings were evaluated properly.

“Genentech currently has over 650 unresolved appeals pending, going back to 2000,” County Counsel John Beiers noted in a press release after the win.

That suit concerned $9.5 million worth of machinery and equipment in South San Francisco, but it still leaves over $100 million more in dispute, including Genentech’s extensive real estate holdings.

In the suit, county officials alleged that Genentech is simply stuffing up the system with frivolous appeals, but the company contends that, if anything, it’s paying more right now than necessary.

A 2009 stock buyout valued Genentech at more than $100 billion. Apple recently broke records with its $1 trillion valuation.