When Local Government Pays Property Taxes

We usually think of property taxes being paid by private owners to local government.  There are times, however, when local governments have to pay property taxes to other local governments, sometimes within the same county, sometimes to a distant county.  The taxation of lands owned by local governments outside their own boundaries began with an amendment to the California Constitution in 1914.  The amendment was prompted by the purchase of large tracts of land in the area around Mono Lake by Los Angeles water agencies in order to obtain the rights to water for shipment to the growing population of the Los Angeles area.  

Mono and Inyo Counties objected to the removal of these lands from their already small tax base.  The 1914 amendment required that local governments which purchase taxable lands outside of their own boundaries (city limits, district boundary or county line) pay property taxes to the county in which the purchased lands were located.  In 1968 an additional section was added to the constitution to govern how the amount of taxes on these lands was calculated because of allegations by the tax-paying agencies of unfair assessments.  The formula contained in that 1968 amendment, Article XIII, Section 11 of the California Constitution, is still in place.  That section provides that such lands are taxed at the lower of their current market value or a value based on factoring the 1967 assessed value of the property. A recent California Supreme Court decision added a third comparison to determine which is the lowest, the Proposition 13 factored base year of the property.

Napa County Parcels

In Napa County there are currently 72 parcels of land owned by agencies outside of their boundaries.  The total taxable value of these lands in Napa County is $6,993,599.   The taxes paid on these lands are distributed to all taxing agencies within the county on the same basis as taxes paid by private property owners..

Example of Lands

One example of lands owned by agencies outside their boundaries is 3,263 acres of watershed lands owned by the City of Vallejo near Lakes Madigan, Frey and Curry. The Cities of American Canyon, Calistoga, Napa, and St. Helena also own lands outside their boundaries as does the Napa Sanitation District.  

Reducing Assessments

Agencies with taxable lands can use the same methods as private landowners to reduce their assessment including signing California Land Conservation (Williamson) Act contracts and/or entering into conservation or scenic easements.  The City of American Canyon received 600 acres of land for a natural preserve and has entered into a Williamson Act contract with the County.

More Information

Should you have any questions please contact Napa County Assessor-Recorder-County Clerk John Tuteur at 707.253.4459 or by e-mail [email protected]    More articles can be found at https://www.countyofnapa.org/149/Assessor.