California Legal Brief

The Rule of The Retail Property Trust is that Revenue and Taxation Code section 170(a)(1) requires physical damage to property (whether direct or indirect) to qualify for reassessment relief, under circumstances where a property owner seeks disaster relief based on diminished property value from access restrictions alone without any physical harm to property.

Appeal from judgment after court trial in Superior Court, Orange County.

Plaintiff Appellant was The Retail Property Trust — the owner of the Brea Mall seeking property tax reassessment relief based on COVID-19 related restrictions.

Defendant Respondent was Orange County Assessment Appeals Board No. 1 — the administrative board that upheld the tax assessor's denial of disaster relief applications. Real Party in Interest was County of Orange.

The suit sounded in administrative mandamus and property tax refund claims.

The key substantive facts leading to the suit were that during the COVID-19 pandemic, plaintiff's shopping mall property was subject to governmental closure orders for over 100 days beginning March 19, 2020, and continued restrictions on access and operations. Plaintiff filed applications for tax disaster relief under Revenue and Taxation Code section 170(a)(1) claiming the pandemic damaged the property by diminishing its value through restricted access. The assessor denied relief because there was no physical damage to property.

The procedural result leading to the Appeal: The trial court entered judgment against plaintiff after a court trial, ruling that plaintiff was not entitled to relief under section 170(a)(1) as a matter of law because the California Constitution requires physical damage to property, and restricted access due to COVID-19 without physical damage does not qualify for reassessment.

The key question(s) on Appeal: Whether a property owner is eligible for reassessment under Revenue and Taxation Code section 170(a)(1) based on mandated closures and restricted access arising from COVID-19 governmental orders or the virus itself, without any physical damage to property.

The Appellate Court held that section 170(a)(1) requires physical damage to property (direct or indirect) as mandated by the California Constitution, and neither governmental access restrictions due to COVID-19 nor the virus itself constitute physical harm to property sufficient for disaster relief reassessment.

The case is inapplicable when there is actual physical damage to the subject property or to other property that indirectly causes restricted access (such as physical damage to bridges or roads serving the property), or when dealing with non-disaster-related property tax relief provisions.

The case leaves open whether other forms of indirect physical damage might qualify for relief under section 170(a)(1), and does not address jurisdictional issues or the specific requirements for gubernatorial disaster proclamations versus emergency declarations.