GILROY
– Bonfante Gardens and the county tax assessor’s office are in a
disagreement over complex property tax laws that if unresolved
could cripple the already financially strapped horticultural theme
park’s turnaround plan and bring both parties to court.
Bonfante Gardens board President Bob Kraemer and Gilroy Mayor Al
Pinheiro, who serves on the park’s board of directors, met late
Wednesday with county tax officials and a county lawyer.
GILROY – Bonfante Gardens and the county tax assessor’s office are in a disagreement over complex property tax laws that if unresolved could cripple the already financially strapped horticultural theme park’s turnaround plan and bring both parties to court.
Bonfante Gardens board President Bob Kraemer and Gilroy Mayor Al Pinheiro, who serves on the park’s board of directors, met late Wednesday with county tax officials and a county lawyer. They are trying to convince the county that Bonfante Gardens qualifies for exemptions from a $2 million property tax bill since the park serves charitable and educational purposes.
So far, the effort – which got City Council and Gilroy Unified School District backing – has been to little avail. County Assessor Lawrence Stone has concluded that Bonfante Gardens is primarily an amusement theme park – not an educational facility – and will only grant tax exemptions on a small portion of the property. The difference could spell hundreds of thousands of dollars of annual tax relief for the Hecker Pass park, a critical component of Bonfante Gardens’ comeback plan that has until this incident showed signs of consistent progress.
“We don’t intend to let the park falter by not pursuing (the tax break),” Kraemer said Wednesday after the meeting with Stone. “We cannot give up. We’re moving forward with park operations for next year. Everything we’re doing has been going well and we hope this will, too. We have to be optimistic the county will see things the way we do.”
At issue is how much of an annual million-dollar property tax roll Bonfante Gardens must pay each year it operates. Bonfante has not paid its bill from fiscal year 2002-03 and does not plan to pay the first half million of its 2003-04 bill which is due in two more business days. By April 10, Bonfante Gardens will owe another half a million dollars.
Stone sent a four-page letter to Kraemer in November detailing which parts of the park should be taxable and tax-exempt. Stone said he based the decision after thorough research on each area of the park and its uses.
In the letter, Stone states that Bonfante Gardens’ “original request for 100 percent exemption from property taxes presented an unusual challenge … To ascertain which components of the facility were educational and which portions are commercial was a complex undertaking. The components are often, but not always, inextricably intertwined.”
Ultimately, Stone concluded that more than 20 amusement rides, the video game arcade, seven gift shops and 11 restaurants cannot be exempt from property taxes without breaking California tax law.
Stone granted exemption, however, to four botanical gardens, four learning sheds, and the park’s famous circus trees.
If Bonfante Gardens directors, and lawyers, fail to convince the county to give them their desired level of tax relief, the park could appeal the county’s decision in Superior Court. It is an option Kraemer said he does not want to pursue but did not rule out.
“We’re not precluding anything at this point in time,” Kraemer said. “But the county’s reception to us was good (Wednesday). We provided them information. They looked at it. They said they’d get back to us. That’s all we could have expected.”
It is still unknown how much Bonfante Gardens will owe in property taxes using these county guidelines or, for that matter, guidelines permitting skimpier or heftier exemptions. Stone’s office must assess the value of each section of the roughly60 acres that make up the core of the active amusement park – a dollar figure on which the county and the park may also disagree.
“How do you assess the value of a circus tree?” Stone quipped earlier this week. “We’ll do it though. We’ll determine some formula that can be justified.”
For Bonfante Gardens officials, a 100 percent exemption on the core 60 acres of the amusement park violates no state law. Rather, it follows California’s welfare exemption laws and its tax revenue code.
Already, the State Board of Equalization – California’s tax assessing arm – granted 100 percent property tax exemption to Bonfante Gardens. According to park architect Leo Tirado, the state ruled that Bonfante Gardens is property tax exempt because as a nonprofit company, it will give proceeds to charitable organizations and programs in Gilroy when the park begins operating in the black.
Even if the county is correct in determining parts of the park to be amusement- and not education-oriented,Tirado says, Bonfante Gardens doesn’t have to pay property taxes on any portion of the park that gives back to the community.
As a nonprofit agency, Bonfante Gardens is already exempt from income taxes.
Stone could not be reached for comment after Wednesday’s late afternoon meeting. However, before the meeting with Bonfante Gardens officials, Stone called the park’s request “unprecedented” and noted that parks like Sea World in San Diego, the technology museum in San Jose and the Monterey Bay Aquarium are not 100 percent exempt from property taxes.
Others in the assessor’s office took sharp stands against the state’s ruling.
“The State Board of Equalization has a history of giving away the tax roll,” said David Ginsberg, director of special programs. “The State Board is political (it is an elected body). They can grant favors. It’s different for us. Exemptions cannot be handed out like candy, otherwise it would jeopardize our whole taxing system. We can’t say because we like somebody, ‘Here’s a tax break.’ ”
Ginsberg said it would be grossly unfair if the county was made to look like the bully just for doing its job.
“It’s not that we’re not sympathetic,” Ginsberg said. “Some of the staff said we should give the park no exemptions, but we still cut them a break.”
If Bonfante Gardens must pay everything the county wants it to, Kraemer said the park has enough cash to do so. However, coming up with that much cash would slash profits from the 2003 season – the park’s first “in-the-black” finish since it opened March 2001. It would also make it harder to pay back creditors in a timely fashion without selling off excess inventory and unused acreage.
“If we lose out to the county, this will drain us not only now, but it will be a constant drain in future years, and we’ll constantly have to find new ways to generate cash.”
