It pays to have friends in high places, especially when it comes time to appeal property tax assessments in San Diego County, according to documents released via the California Public Records Act and provided to the San Diego Free Press. These documents, along with a careful analysis of campaign finance records and personal financial disclosures, suggest favoritism has been a factor in reducing the tax burdens of those with connections to County Assessor Ernest Dronenburg.
A major local corporation, along with a longtime campaign contributor’s family, were among the beneficiaries, thanks to a seeming lack of interest in challenging appeals by the agency responsible for such matters. Because there was no push-back by the County, the assessment appeals process was effectively manipulated, paving the way for significant reductions in property values for Qualcomm, the largest property taxpayer in San Diego County.
Another beneficiary was the estate of Larry G. Mabee (deceased 2012). He and wife Betty owned the Golden Eagle Farm. They were leading breeders for many years, garnering three Eclipse Awards in the 90’s. Notable graded stakes winners such as Best Pal, Excellent Meeting, General Challenge, Event of the Year, Souvenir Copy, and Favorite Funtime built a solid reputation for the family business.
The Qualcomm Story.
The mobile technology company was a client of Dronenburg’s Multistate Tax Consulting company prior to his election as County Assessor/Clerk/Recorder. In 2010 he reported earning over $100,000 from his company, listing Qualcomm as a source of more than $10,000 in income.
In 2012, Qualcomm filed assessment appeals for seven properties. Amazingly, the appeals board ended up giving reductions in value $4 million less than the company requested.
The parcels in question were individually assessed at $13.6M, $10.38M, $17M, $12M, $10.6M, $14M, and $51.26M. The company asked for valuations of $10.5M, $7M, $14M, $8M, $7M, $9.5M, and $33M, respectively.
Qualcomm didn’t bother to submit third-party appraisals of its properties, choosing to send one of its lawyers to the hearing to simply argue their case. This must have been one heckofa lawyer.
This gave Qualcomm a complete victory and an even lower property tax bill than it sought. The company saves roughly $500,000 annually on its property taxes as a result of this decision.
|Qualcomm Parcel Number||Initial Assessment||Requested Assessment||Final Assessment|
Golden Eagle Farm
The regular campaign contributions of the Mabee family are significant because Ernest Dronenberg’s campaigns are largely self funded.
The late Larry G. Mabee donated the maximum allowable amount to Dronenburg’s campaign for County Assessor in 2010 ($500 for the primary and $500 for the general). His widow and daughter (Laura Boswell), who are also co-trustees of Mabee’s estate, donated the maximum allowable amount to Dronenburg’s reelection campaign in 2014 ($700 each). The Mabee clan thus donated at least $2,400 to Dronenburg’s campaigns in 2010 and 2014.
In 2013, assessment appeals were filed for four properties owned by Mabee’s estate. The final reduction in taxable value came to more than $11 million.
The parcels in question were individually assessed at $1.66M, $2.1M, $10.45M, and $6.35M. The Mabee estate requested valuations of $860k, $860k, $4.4M, and $2.7M, respectively, submitting alternative valuations for each parcel provided by a third-party appraiser to the appeals board.
The County Assessor’s office offered no evidence in response (such as even a basic justification for the initial assessments it had made that prompted the appeal, for instance), nor did it contest the validity of the third-party appraisal.
Recommending a slightly reduced assessment is not out of the ordinary at an appeals board hearing—what’s unique in this case is that the County Assessor recommended a reduction so close to the Mabee estate’s own appraisal rather than a valuation much closer to their initial assessment.
The appeals board accepted the recommendation and reduced the assessment of the four parcels accordingly, resulting in a total reduction of $11,657,958 in taxable value and giving the Mabee estate a major victory and a much, much lower property tax bill.
The Mabee estate saves more than $110,000 annually on its property taxes as a result of this decision.
|Parcel Number||Initial Assessment||Requested Assessment||Final Assessment|
It’s worth pointing out the contributions (made at the maximum allowable level) by Christine Mabee and Laura Boswell to Dronenburg’s 2014 reelection campaign were made after the appeals were filed but before the appeal hearings took place.
Some Background on the Process
The annual assessment process is a massive undertaking—there is roughly $512 billion worth of real property in San Diego County, generating approximately $4.9 billion in property tax annually.
When the County Assessor’s office assigns the taxable value to a property (this is called the assessment), the property owner has the right to challenge that valuation by filing an appeal with the county’s Assessment Appeals Board, an independent review board whose members are appointed by the County Board of Supervisors.
The appeals board solicits the requested valuation the property owner is seeking, and then hears evidence from the property owner and from the County Assessor’s office, ultimately rendering a final decision about the valuation of the property in question.
Normally most of the appeals board’s decisions follow the County Assessor’s recommendation, resulting in either upholding the initial assessment or assigning a lower value hewing closer to what the county wanted rather than to the property owner’s request.
The US Grant Hotel: a Counterexample
The experience of another large property taxpayer serves to reinforce the sense that the experiences of Qualcomm and the Mabee family were extraordinary.
In 2015, the US Grant Hotel filed an assessment appeal seeking a reduction of around $4 million in the taxable value of its property,
Unlike in the cases of the Mabee estate or Qualcomm, Dronenburg sprang into action in response to the appeal by sending the hotel’s agent a legal demand, under the threat of the County Assessor’s audit power, for income and expense sheets, operating budgets, and other documents relating to the hotel’s financial books.
No such demand was ever made of the Mabee estate or Qualcomm despite the fact that both of those appeals sought significantly larger assessment reductions than did the US Grant Hotel.
Faced with such staunch opposition from the County Assessor’s office, the US Grant Hotel chose to withdraw its appeal, dropping the matter entirely.
Neither the US Grant Hotel nor its owner, the Sycuan Band of the Kumeyaay Nation, has a history of financial dealings or any other sort of relationship with Dronenburg or his tax consulting firm.
County Assessor Ernest Dronenburg is facing re-election on June 5. The San Diego Free Press has endorsed his challenger, Matt Strabone.