GILROY
– The State Board of Equalization – California’s tax assessing
arm – is firmly denying claims by county officials that a decision
to grant hundreds of thousands of dollars of tax relief to Bonfante
Gardens was a political move.
GILROY – The State Board of Equalization – California’s tax assessing arm – is firmly denying claims by county officials that a decision to grant hundreds of thousands of dollars of tax relief to Bonfante Gardens was a political move.
State Board of Equalization Division Chief Jerri Dale characterized comments made by the county tax assessor’s office last week as “inaccurate.” The county tax assessor’s office claimed the state has a “history of giving away the tax roll” for political reasons after it became clear the two levels of government differed vastly on the amount of property tax exemption Bonfante Gardens could receive.
Dale said the Board of Equalization – which is an elected body – based its decision on staff recommendations which were made after visiting the park and after receiving information from park officials.
“The board voted on the merits of the information presented. They weren’t handing out political favors,” Dale said.
County officials, however, stuck to their claims.
“I don’t care what they say, the fact is they are a political body, and they operate in the realm of political motivation,” County Tax Assessor Larry Stone said.
Stone said the state’s original report on Bonfante Gardens property tax exemptions – which the park appealed – was “almost identical” to the county’s. However, after political maneuvering, a second report changed dramatically.
“I had the board’s political staff calling me and asking me why we weren’t trying to negotiate a solution,” Stone said. “(Negotiating a solution) is not the role of the assessor. I don’t think it should be the role of the State Board (of Equalization) either.”
The Hecker Pass horticultural amusement park is facing a nearly $1 million annual property tax bill for 2003-04, plus a nearly $50,000 late fee for the payment that was due Wednesday. The park owes at least another $1 million in property taxes for the previous year.
Bonfante Gardens was hoping to get exemption on hundreds of thousands of dollars of property taxes. The park is eligible for tax relief because it is a nonprofit corporation serving educational purposes. When nonprofits want to exercise their property tax exemption rights, the State Board of Equalization and the county tax assessor’s office determine how much property can exist tax-free.
The county cannot exceed the property tax exemptions set by the state. However, the county does have the right to exempt less than what the state recommends. In Bonfante Gardens’ case, the county exempted much less. Across 18 general areas of the amusement park – such as gardens, rides, and gift shops – the county and state disagree on nine.
It is unknown right now how large the dollar difference would be since the county only has assessed the overall value of the park and not the components exempt from property taxes. The current assessed value of the overall park is $84 million. Properties are taxed at roughly 1.15 percent of their assessed value.
Bonfante Gardens officials say that if a larger property tax exemption is not granted, the park’s turnaround will be seriously hampered.
The amusement park, which turned a profit for the first time this season since its March 2001 inception, is struggling to pay back its creditors in a timely fashion. Bonfante Gardens President Bob Kraemer says the board of directors has not ruled out selling off excess property and inventory to make good on its mammoth pile of debt, which just months ago exceeded $40 million.
Meanwhile, new details on the disparity between state and county tax exemptions emerged this week. State documents reveal that areas of the park the county says serve no educational purposes – restrooms and restaurants – should be exempt.
“The restaurants are accessible only to park visitors, and they are operated solely for the benefit of park visitors who spend an average of six hours at the park,” state documents say. “Accordingly, the restaurants may be considered as reasonably necessary for the accomplishment of (the park’s) exempt purpose (education) as park visitors require beverages and food in order to spend several hours in the park.”
According to the county, that sort of reasoning would allow any property owner to get property tax exemptions for an entire property even if the owner is using just a tiny portion of the property for some tax-exempt purpose.
Stone said the county cannot give property tax exemptions in that manner. Rather, the county must determine if a particular area has a tax-exempt use and then dole out exemptions accordingly.
“Believe it or not, we’re trying to extract as much tax exemption out of the park as we see possible,” Stone said.
Stone said county lawyers are reviewing precedent-setting property tax cases given to them by park officials last week.
“Legal counsel is looking at them to see if there is substance there. We have not closed the door on the issue,” Stone said.
Another ray of hope for Bonfante Gardens rests with the current $84 million assessed value that Kraemer called a “gross overestimate.” Assessed value is supposed to equal the amount of money a willing buyer will spend on a property under fair market conditions.
Bonfante Gardens officials can appeal the assessed value with the county, meaning a tremendous savings for the park if the county comes back with a lower value.
Bonfante Gardens tax free areas
Area – State – County
Gardens Yes Yes
Circus trees Yes Yes
Other fauna collections Yes Yes*
Learning sheds Yes Yes
Animatronics show Yes Yes
Fire station building Yes Yes
Monorail Yes No
Coyote Lake Yes No
Dinosaur walk Yes No
Train rides Yes No
Boat rides Yes No
Parking, entrance, Yes No
pathways and restrooms
Restaurants Yes No
Support facilities Yes No
Gift shops Yes* No
Pinnacles Rock Maze No No
Lakeside Amphitheater No No
* Some of these property types got exemptions
