LA Councilman Wants To Tax LA’s Private Country Clubs, Protected Under Prop 13

Six of Los Angeles’s highest-end private golf and country clubs are facing a property tax battle with local LA City Councilman and former Democrat Assemblyman Adrin Nazarian, who wants to drastically raise their taxes after learning that they “have a sweetheart deal dating back to the ’70s,” the New York Post reported.

Bel-Air Country Club, Brentwood Country Club, Hillcrest Country Club, Lakeside Golf Club, Los Angeles Country Club, and Wilshire Country Club’s “sweetheart deals date back to the state’s seminal 1978 Proposition 13 ballot measure, which capped property taxes at 1% of assessed value. The amount being paid was reportedly set at a 1975 rate, with annual increases limited to just 2%.”

That’s not just their sweetheart deal, but the same deal all California property owners – commercial and residential – enjoy thanks to California’s Proposition 13.

While in November, Florida voters will decide on a ballot amendment that would remove roughly 60% of Florida residents from the property tax rolls, California’s politicians are still trying to find ways to illegally steal more of your net worth.

Prior to passage of Prop. 13, many seniors and those living on fixed incomes were forced from their homes because of skyrocketing property tax increases. Commercial property owners risked losing their businesses. According to the Howard Jarvis Taxpayers Association, author of Prop. 13, some properties were reassessed 50 – 100% in just one year.

Proposition 13, the 1978 ballot initiative capped property tax increases for residential and business properties and provide certainty, so property owners would not be taxed out of their homes and businesses.  Passed by 65% of California voters in 1978, Prop. 13 put a Constitutional cap on annual property tax increases.

Opponents have long claimed that because of Proposition 13, public schools have been robbed of necessary revenue and businesses have not been paying their fair share of property taxes. They have commensurately gone after businesses, corporations and industrial property owners in an attempt to “split the roll” – allowing residential property to remain under Prop 13, but taxing commercial properties at full market value.

The NY Post warns that the new tax rates would be so high for the golf clubs, it could force them to close their doors. The proposed tax is a new $4 per square foot annual parcel tax specifically on large nonprofit private country/golf clubs, the LA Times reports. However, this would require voter approval. But Democrats are no doubt fixated in the $250 million per year the tax would generate. The city claims this would go to city services, infrastructure, street repairs, homelessness programs, capital improvements, and first-time homebuyer assistance… they’ve failed thus far on these promises. Why give them more money to blow through?

And since Prop. 13 put a Constitutional cap on annual property tax increases, Councilman Nazarian may have a nasty legal fight on his hands.

However, these clubs are also structured as nonprofits, according to the LA Times. Their combined annual property taxes total around $811,000, on nearly 1,000 acres valued at over $15 billion.

“Some of these properties, resorts and country clubs are sitting on some of the most expensive real estate,” Nazarian said in an interview with the LA Times. “You can’t continue doing things the way you did 40 years ago. You need to figure out what you need to do today to meet the needs of today and tomorrow.”

The worth of the country club properties is a nebulous argument as so many of the Los Angeles golf and country clubs were founded many years ago – many over 100 years ago. The Los Angeles Country Club was founded in 1897. Bel-Air Country Club was founded in 1925. Hill Crest Country Club was founded in 1923. Brentwood Country Club was founded in 1916. Lakeside Golf Club was founded in 1924. Wilshire Country Club was founded in 1919.

Notably, the specific canyon land for the Bel-Air Country Club golf course was quite low-value at the time due to its steep, undeveloped nature. The land had negligible or very low market “worth” as raw, difficult terrain when Alphonzo E. Bell Sr., an oil magnate and real estate developer, acquired large tracts of rugged canyon land in the Santa Monica Mountains in the early 1920s as part of his broader Bel-Air Estates development. The value came from his vision and investment in developing it into an exclusive golf club.

None of these properties were worth much at that time – certainly not $15 billion.

The state of California owns about 4 million acres of sovereign lands. Perhaps if they auctioned off state-owned property to private owners, and get the properties back on the tax rolls, California politicians wouldn’t be so desperate to go after golf clubs.