Court Opinion

ID: 9382518
Source: CourtListenerOpinion
Date Created: 2023-03-27 21:02:56.651839+00
Date Added: 2024-06-11T17:17:39.922434
License: Public Domain

Filed 3/15/23; Certified for Publication 3/27/23 (order attached)

        IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                              FIRST APPELLATE DISTRICT

                                         DIVISION FIVE

 JOAQUÍN TORRES, as Assessor–
 Recorder, etc.,                                          A162440

         Plaintiff and Appellant,                         (San Francisco County
 v.                                                       Super. Ct. No. CPF-19-516833)
 SAN FRANCISCO ASSESSMENT
 APPEALS BOARD NO. 1,
         Defendant and Respondent;

 CHINA BASIN BALLPARK
 COMPANY LLC,
        Real Party in Interest and
        Respondent.

        The San Francisco Assessment Appeals Board No. 1 (County Board)
was charged with assessing the possessory interest of respondent China
Basin Ballpark Company LLC (Taxpayer) in Oracle Park, the home baseball
stadium of the San Francisco Giants (the Ballpark). Like hitting a major
league curveball, this has proved to be a daunting task. The applicable
regulations set forth three methods for valuing property for tax purposes, all

                                                   1
of which have limitations for purposes of valuing Taxpayer’s property
interest. Taxpayer and appellant San Francisco Assessor-Recorder
(Assessor) presented evidence relating to only one of these valuation
methods, the cost method. The County Board deducted from the assessed
value the cost of funding a reserve to prevent functional obsolescence, a type
of depreciation. Although the County Board has substantial latitude in
conducting this difficult assessment, this deduction was impermissible, and
we will direct the trial court to remand the matter to the County Board for
further proceedings.
                           LEGAL BACKGROUND
      “Property subject to taxation must be assessed at its full value, which is
defined as its full cash value or fair market value. (Rev. & Tax. Code,
§§ 110.5, 401.) ‘ “[F]ull cash value” or “fair market value” means the amount
of cash or its equivalent that property would bring if exposed for sale in the
open market under conditions in which neither buyer nor seller could take
advantage of the exigencies of the other, and both the buyer and the seller
have knowledge of all of the uses and purposes to which the property is
adapted and for which it is capable of being used, and of the enforceable
restrictions upon those uses and purposes.’ (Rev. & Tax. Code, § 110,
subd. (a).)” (Sky River LLC v. County of Kern (2013) 214 Cal.App.4th 720,
726 (Sky River).)
      The determination of fair market value is governed and guided by two
sources issued by the State Board of Equalization (State Board). “The
Legislature has authorized the state’s Board . . . to prescribe rules and
regulations to govern the operation and functioning of local tax assessors and
boards of equalization. (Gov. Code, § 15606.) Those regulations are found in
the California Code of Regulations, title 18.” (Sky River, supra,

                                       2
214 Cal.App.4th at p. 726, fn. 3.) In addition, the State Board “issues a
handbook to ‘serve as a primary reference and basic guide for assessors.’ ”
(Church v. San Mateo County Assessment Appeals Board (2020)
52 Cal.App.5th 310, 316 (Church).) “ ‘Although assessors’ handbooks are not
regulations and do not possess the force of law, they . . .have been relied upon
and accorded great weight in interpreting valuation questions. [Citation.]
“The interpretations and opinions of an agency administrator, while not
controlling upon the courts, constitute a body of experience and informed
judgment to which courts and litigants may properly resort for guidance.
[Citation.] ‘Because the agency will often be interpreting a statute within its
administrative jurisdiction, it may possess special familiarity with satellite
legal and regulatory issues. It is this “expertise,” expressed as an
interpretation (whether in a regulation or less formally . . .), that is the
source of the presumptive value of the agency’s views.’ ” ’ ” (Id. at p. 323;
accord, Sky River, supra, 214 Cal.App.4th at pp. 735–736.)
      “There are three basic methods for calculating fair market value: (1)
the comparative sales or market data method; (2) the reproduction or
replacement cost method; and (3) the income method. (Cal. Code Regs.,
tit. 18, §§ 3, 4, 6, 8; [citation].)” (Sky River, supra, 214 Cal.App.4th at p. 726.)
The regulations provide that, in determining fair market value, “the assessor
shall consider one or more of” these approaches, “as may be appropriate for
the property being appraised . . . .” (Cal. Code Regs., tit. 18, § 3; 1 see also id.,
tit. 18, § 21(e) [valuation of taxable possessory interests is by one or more of

      1 Although the regulation lists five permissible valuation approaches
(Cal. Code Regs., tit. 18, § 3), one is a variation of the comparative sales
approach and two variations of the cost approach are listed separately;
therefore, the “five methods . . . in fact reduce themselves to the same basic
three.” (1 Flavin, Taxing Cal. Property (4th ed. 2022 update) § 17:10, p. 507.)

                                          3
the three basic methods].) “Each approach, from a different perspective,
simulates the thought processes of the typical buyer in a competitive
market.” (State Bd. of Equalization, Assessors’ Handbook (Jan. 2002) Basic
Appraisal, p. 61 (hereafter Assessors’ Handbook (Basic Appraisal)).) 2
      “In the comparative sales approach, the appraiser estimates market
value by comparing the subject property to comparable properties of similar
utility that have recently sold under competitive market conditions.”
(Assessors’ Handbook (Basic Appraisal), p. 61.) The sale prices of comparable
properties are adjusted for any differences between them and the property
being assessed, for example, different market conditions, such as a shift in
supply or demand, or different physical characteristics. (Id. at pp. 88–89, 91–
92.) “[T]he validity of this method rests upon the assumption that
comparable properties have comparable full cash values.” (Bret Harte Inn,
Inc. v. City and County of San Francisco (1976) 16 Cal.3d 14, 24 (Bret Harte).)
      “Using the income approach, an appraiser ‘estimates the future income
stream a prospective purchaser could expect to receive from the enterprise
and then discounts that amount to a present value by use of a capitalization
rate.’ ” (Elk Hills Power, LLC v. Board of Equalization (2013) 57 Cal.4th 593,
604 (Elk Hills).) The income to be capitalized is the anticipated “net return,”

      2 Where, as here, the property interest being valued is a possessory
interest in publicly owned land, the valuation approaches take into
consideration the taxpayer’s reasonably anticipated term of possession. (Cal.
Code Regs., tit. 18, § 21(d)–(e).) Thus, “the conventional approaches [to
valuation] must be modified to accommodate the finite duration of a taxable
possessory interest and the corresponding fact that a portion of the fee simple
interest in those rights, the reversionary interest, is retained by the public
owner and is nontaxable.” (State Bd. of Equalization, Assessors’ Handbook
(Dec. 2002) Assessment of Taxable Possessory Interests, p. 23 (hereafter,
Assessors’ Handbook (Possessory Interests)).)

                                       4
in other words, the gross income reduced by current and future expenses.
(Cal. Code of Regs., tit. 18, § 8(c); see also Assessors’ Handbook (Basic
Appraisal), p. 96.) “The income method rests upon the assumption that in an
open market a willing buyer of the property would pay a willing seller an
amount approximately equal to the present value of the future income to be
derived from the property.” (Bret Harte, supra, 16 Cal.3d at p. 24; see also
Assessors’ Handbook (Basic Appraisal), p. 6 [“The premise [of the income
method] is that present value is a function of future benefits or income.”].)
      “Under the replacement cost approach, the tax assessor values the
property ‘by applying current prices to the labor and material components of
a substitute property capable of yielding the same services and amenities’
and then applying a depreciation factor to arrive at a taxable base value.
(Cal. Code Regs., tit. 18, § 6.)” (Elk Hills, supra, 57 Cal.4th at p. 604.)
“Reproduction or replacement cost shall be reduced by the amount that such
cost is estimated to exceed the current value of the reproducible property by
reason of physical deterioration, misplacement, over- or underimprovement,
and other forms of depreciation or obsolescence.” (Cal. Code Regs., tit. 18,
§ 6(e).) “The cost approach to property valuation ‘is based upon the economic
principle of substitution,’ which ‘holds that a rational person will pay no more
for a property than the cost of acquiring a satisfactory substitute.’ ” (Dreyer’s
Grand Ice Cream, Inc. v. County of Kern (2013) 218 Cal.App.4th 828, 839
(Dreyer’s).)
      “The most difficult aspect of the cost approach is estimating
depreciation. In general, depreciation may be thought of as the difference
between the present value of the worn or outmoded subject property and the
present value of a hypothetical, newly built, modern property of equivalent
utility.” (State Bd. of Equalization, Assessors’ Handbook (Dec. 1998)

                                         5
Advanced Appraisal, p. 20 (hereafter, Assessors’ Handbook (Advanced
Appraisal)).)
      The type of depreciation at issue here, functional obsolescence, “is the
loss of value in a property caused by the design of the property itself. When
the capacity of a property to perform the function for which it was intended
declines, functional obsolescence begins.... Functional obsolescence may be
attributable to changes of taste in the marketplace, changes in building
construction techniques, or to poor initial design.” (Assessors’ Handbook
(Basic Appraisal), p. 81.)
      More than one of the three valuation approaches can be used to
determine the value of a given property. “Each appraisal approach utilized
should be carried out independently from the others.... If each approach to
value is performed independently, the resulting value indicators[3] will define
a value range and allow a rational and defensible final estimate of value.”
(Assessors’ Handbook (Basic Appraisal), p. 73.)
      Selecting the final estimate of value from that range is done by a
process called reconciliation. “The final analytical step in the appraisal
process is to reconcile value indicators from the separate approaches utilized
into a final estimate of value. Resolving the differences among the value
indicators is called reconciliation. The result of reconciliation is the final
value estimate.” 4 (Assessors’ Handbook (Basic Appraisal), p. 110.) “In the

      3The Assessors’ Handbook does not define the term “value indicator,”
but appears to use it to mean a preliminary determination of a property’s fair
market value resulting from one of the valuation approaches.
      4A form of reconciliation may also occur while conducting one of the
valuation methods. “Since more than one value indicator may be developed
within a single approach to value, reconciliation occurs both within and
among the value approaches. In the comparative sales approach, for
example, each comparable sale produces an adjusted sale price, which is,

                                         6
reconciliation process, consideration should be given to factors influencing
value that are either not reflected or only partially reflected in the
indicators. . . . The greatest weight should be given to that approach or
combination of approaches that best measures the type of benefits the subject
property yields.” (Ibid.)
              FACTUAL AND PROCEDURAL BACKGROUND
      The Ballpark sits on public land that Taxpayer leases. The Ballpark
was completed in 2000 and, since 2001, Taxpayer and Assessor have hotly
disputed the property tax valuation of Taxpayer’s possessory interest.
Taxpayer appealed Assessor’s valuations for 2001–2003 to the County
Board. 5 Following litigation, in 2006, the parties reached a settlement for tax
years 2001–2010, approved by the County Board. The settlement agreement
applied the cost method to determine value.
      After the expiration of the settlement agreement, Taxpayer appealed
Assessor’s valuation for tax years 2011–2014 to the County Board. The
County Board held a 12-day hearing at which the parties presented evidence
and argument under both the cost and income approaches; both sides agreed
there were not enough comparative sales to support that approach. In its
written decision, the County Board applied both the income and cost
approaches to arrive at two conclusions of value.

technically, a separate indicator of value.” (Assessors’ Handbook (Advanced
Appraisal), p. 108.)
      5“The county board of supervisors, or one or more assessment appeals
boards created by the county board of supervisors, shall constitute the county
board of equalization for a county,” and “shall equalize the values of all
property on the local assessment roll by adjusting individual assessments.”
(Cal. Const., art. XIII, § 16.)

                                        7
      As part of its analysis under the cost approach, the County Board
“agreed with the parties that the [Ballpark] had experienced no functional
obsolescence as of the lien dates.” Nonetheless, the County Board “found that
fan and advertiser expectations require ongoing capital improvements and
renovations beyond ordinary maintenance, and that a reasonable and
prudent buyer would anticipate that these costs during the term of possession
could equal $300 million.” The County Board assumed Taxpayer “would
begin funding a contingency reserve starting in 2018” to fund these future
costs, and discounted the net present value of equal annual installments from
2018 until 2042, the anticipated end of possession, “as a necessary expense to
prevent functional obsolescence.” 6 In reconciling the values determined by
the cost and income approaches, the County Board found neither approach
“was completely persuasive” and reached a final conclusion of value in
between the two values. Neither party sought judicial review of the County
Board’s decision.
      Taxpayer next returned to the County Board in an appeal of Assessor’s
determination of value for the 2015–2017 tax years, the proceedings at issue
here. Before the County Board hearing, the parties stipulated that “the cost
approach alone would provide the [County] Board with a sufficiently reliable
indicator of value for it to reach a conclusion regarding the total assessed
value” and, therefore, “the parties will rely exclusively on the cost approach

      6 The County Board selected 2018 because that was the date by which
Taxpayer was “expected to finish repaying [its] construction loan.” We note
that “property tax appraisal is based on a hypothetical market transaction
with a hypothetical buyer, not the taxpayer’s peculiar benefits or
predicaments unrelated to the market.” (Mola Development Corp. v. Orange
County Assessment Appeals Bd. (2000) 80 Cal.App.4th 309, 326.) As noted
post, in the current proceedings the County Board assumed the reserve would
be funded starting in 2015.

                                       8
to determine the parties’ respective opinions of value.” The County Board
accepted the stipulation but “retained the right to seek additional
information—relating to any valuation approach—regarding the valuation of
subject property . . . .”
      In its written decision following the four-day hearing, the County Board
agreed that “the cost approach is the most appropriate for this case.” Using
the cost approach, the County Board made findings as to the land value,
replacement cost, and physical deterioration, none of which are challenged by
the Assessor. The County Board then turned to functional obsolescence: “The
[County] Board agreed with the parties that the [Ballpark] had experienced
no functional obsolescence as of the lien dates. However, as with the prior
findings [regarding the 2011–2014 tax years], the [County] Board did deduct
the cost of the substantial capital expenditures that it believed would be
necessary to prevent functional obsolescence in the future. [Taxpayer]
showed that fan and advertiser expectations will require ongoing capital
improvements and renovations beyond ordinary maintenance, and that a
reasonable and prudent buyer would anticipate these costs during the term of
possession. Thus, the [County] Board assumed a buyer would account for
this future cost by funding a contingency reserve through the anticipated
term of possession.” The County Board found the anticipated term of
possession to be until 2042, assumed a buyer would fund a reserve in equal
annual amounts from 2015 until 2042, and deducted the present value of the
amount it found necessary to fund the reserve to prevent functional
obsolescence—more than $180 million for each tax year.
       Assessor filed a petition for writ of administrative mandamus (Code
Civ. Proc., § 1094.5) challenging the County Board’s decision. The superior
court denied the petition.

                                       9
                                 DISCUSSION
      Assessor argues the County Board’s deduction for the present value of
the cost of funding a reserve to prevent future functional obsolescence is
impermissible under the cost approach. 7 We agree.
I.    Standard of Review
      A county assessment appeals board’s “ ‘ “factual determinations are
entitled on appeal to the same deference due a judicial decision, i.e., review
under the substantial evidence standard.” ’ [Citation.] However, when the
appeals board purports to decide a question of law, the decision is reviewed
de novo. [Citation.] ‘Where the [petitioner] claims a valid valuation method
was improperly applied, the trial court is limited to reviewing the
administrative record. [Citation.] The court may overturn the assessment
appeals board’s decision only if there is no substantial evidence in the
administrative record to support it. [Citation.] However, where the
[petitioner] challenges the validity of the valuation method itself, the court is
faced with a question of law. In such a case, the court does not evaluate
whether substantial evidence supports the board’s decision, but rather must
inquire into whether the challenged valuation method is arbitrary, in excess
of discretion, or in violation of the standards prescribed by law.’ ” (Church,
supra, 52 Cal.App.5th at p. 321.) “ ‘Whether a taxpayer is challenging
“method” or “application” is not always easy to ascertain. [Citation.] If none

      7 The California Assessors’ Association and California State Association
of Counties filed an amici curiae brief in support of the Assessor, as did the
Santa Clara Unified School District and Santa Clara County Office of
Education. We deny as irrelevant the Santa Clara Unified School District
and Santa Clara County Office of Education’s September 28, 2022 request for
judicial notice of a rating action commentary for South San Francisco Unified
School District.

                                       10
of the facts are in dispute, what might otherwise appear to be a factual
challenge, and therefore subject to substantial evidence review, is actually a
legal challenge. [Citation.] “ ‘The issue is not whether the assessor
misunderstood or distorted the available data, but whether [the assessor]
chose an appraisal method which by its nature was incapable of correctly
estimating market value.’ ” ’ ” (Sky River, supra, 214 Cal.App.4th at p. 729.)
      Assessor argues his challenge is to the validity of the valuation method;
Taxpayer argues the issue is whether the cost method was improperly
applied. In Bret Harte, supra, 16 Cal.3d 14, an assessor, using the cost
approach, deducted “50 percent for depreciation, regardless of the property’s
age or condition.” (Id. at pp. 18–19.) The Supreme Court determined the
taxpayer’s challenge to this uniform deduction was a challenge to the validity
of the valuation method, not to its application. (Id. at p. 23.) In contrast, in
Dreyer’s, supra, 218 Cal.App.4th 828, the assessment appeals board, using
the cost approach, made no deduction for economic obsolescence after finding
the taxpayer “did not present sufficient evidence to prove external factors
created economic obsolescence.” (Id. at p. 834.) The Court of Appeal
reasoned, “The board found that the assessor carefully considered making the
adjustment, but determined it was not warranted. Thus, the issue before the
trial court was not one of law: Whether the cost method of valuation
mandated making an underutilization adjustment [for economic
obsolescence] in an appropriate case. Rather, the issue was one of fact:
Whether on the evidence presented the board could conclude that [the
taxpayer] failed to satisfy its burden of proving an underutilization
adjustment was appropriate in this case.” (Id. at p. 838.)
      We agree with Assessor that this case, like Bret Harte, involves a
challenge to the validity of the valuation method. Assessor does not contend

                                       11
the County Board’s deduction for the cost of funding a reserve to prevent
future functional obsolescence was too high in light of the evidence; instead,
he argues any such deduction, regardless of the evidence presented, is
inconsistent with the cost approach. We therefore review whether the
County Board’s use of this deduction was arbitrary, in excess of discretion, or
in violation of the standards prescribed by law.
II.   Funding a Reserve to Prevent Future Functional Obsolescence
      Assessor argues the cost approach considers the replacement cost of a
property at the time of valuation, and the County Board’s consideration of
future depreciation is therefore inconsistent with the cost approach.
Taxpayer argues the ultimate question is what a prudent buyer would pay for
the possessory interest, and substantial evidence supports the County
Board’s finding that a prudent buyer would consider the significant future
expense of preventing the Ballpark’s functional obsolescence when
determining the amount to pay for the property. 8
      As Assessor argues, “the cost approach is not valid unless it is made as
of a specific date.” (Assessors’ Handbook (Basic Appraisal), p. 84.) While the
income approach is also made as of a specific date, it is inherently forward
looking, and may therefore be generally better suited to consider a factor like
future expenses. (See Assessors’ Handbook (Basic Appraisal), p. 62 [“The
income approach is primarily based on the principle of anticipation.”];
Assessors’ Handbook (Advanced Appraisal), p. 55 [“The principle of
anticipation [fundamental to the income approach] states that value is

      8 The parties dispute whether the testimony of one of Assessor’s
witnesses supported the County Board’s approach or not. As the issue is one
of law, governed by the applicable authorities, the testimony of this witness is
not material.

                                      12
created by the anticipation of future benefits, which leads in fact to one
definition of value as the present worth of future benefits.”].)
      Accordingly, one way to value Taxpayer’s possessory interest would be
to conduct the cost approach without considering future expenses. Those
expenses could be taken into account by also conducting the income approach,
and determining a final value through reconciliation. 9 Perhaps this would be
the best way to determine the fair market value of Taxpayer’s property
interest. (See Cal. Code Regs., tit. 18, § 6(a) [cost approach “is used in
conjunction with other value approaches” and “is particularly appropriate” for
property that “is not affected by . . . depreciation or obsolescence”]; Assessors’
Handbook (Advanced Appraisal), p. 13 [“where the subject property suffers
from depreciation, the reliability of a value indicator determined by the cost
approach may be severely limited”] & p. 108 [“Typically, more than one
approach to value is used in an appraisal . . . .”].)
      But this approach is not the only way; as the County Board has
recognized, the property interest at issue is highly unusual and difficult to
value. We do not read the governing statutes, regulations, and State Board
guidance to prohibit all other methods of considering future expenses.
Although the cost approach normally considers depreciation present at the
time of valuation, we are not persuaded that it prohibits consideration of

      9 The Assessors’ Handbook acknowledges that a given valuation
approach may not consider all factors relevant to value and that this would
be relevant to the reconciliation process. (Assessors’ Handbook (Basic
Appraisal), p. 110 [“In the reconciliation process, consideration should be
given to factors influencing value that are either not reflected or only
partially reflected in the indicators [resulting from each valuation approach
conducted.”].)

                                         13
future depreciation when, as the County Board impliedly found, such future
depreciation is knowable and known on the date of valuation.
      Instead, the fatal flaw with the County Board’s method is that it is not
reasonably likely to approximate fair market value. (See Bret Harte, supra,
16 Cal.3d at p. 25 [the cost approach, “if it is to yield results consistent with
the constitutional command that all property subject to taxation be assessed
at full cash value, must be designed so that cost factors . . . are modulated by
depreciation factors in a manner reasonably calculated to achieve an
approximation of such value with respect to the individual taxpayer” (italics
added)].) Under the cost approach, “In general, depreciation may be thought
of as the difference between the present value of the worn or outmoded
subject property and the present value of a hypothetical, newly built, modern
property of equivalent utility . . . . Thus, in an appraisal sense, the term
‘depreciation’ refers not to a decline in the original value of the subject
property, but rather to a measurement of the extent to which the subject
property is, at a particular point in time, worth less than a hypothetical new
property.” (Assessors’ Handbook (Advanced Appraisal), pp. 20–21, italics
added.)
      Ways of measuring depreciation set forth in the Assessors’ Handbook
illustrate this principle. For example, functional obsolescence requiring an
item be added to the subject property is not measured simply by the cost to
add that item; instead, it “is measured by how much the cost of the addition
exceeds the cost of the item if it had been installed during the construction of
the improvement—this is sometimes called the ‘excess cost to cure.’ ”
(Assessors’ Handbook (Advanced Appraisal), p. 28.) This measure of
depreciation maintains its focus on the difference in value between the
current property and a hypothetical new property. Another example borrows

                                        14
principles from the income approach to measure this difference: one way to
measure depreciation is to “estimate the loss of rental income due to this
cause of depreciation,” based on the “premise that any loss in value of the
property would also be reflected by a loss in either the amount or duration of
rental income (actual or imputed) to the property.” (Assessors’ Handbook
(Basic Appraisal), p. 84.) Again, this measure of depreciation is focused on
the difference between the anticipated future income for the depreciated
subject property and the anticipated future income for a hypothetical new
property with no such depreciation.
      The County Board’s approach simply deducts the present value of
funding a reserve to prevent future functional obsolescence, a specie of
depreciation. But because the County Board found there was no current
functional obsolescence, a hypothetical new stadium would have the same
features as the Ballpark for purposes of functional obsolescence. Moreover,
because the need to fund such a reserve would be known at the time the
stadium was constructed, a hypothetical new stadium would also need to
fund a reserve to prevent future functional obsolescence. Therefore, simply
deducting the present value of funding that reserve to determine the fair
market value of the Ballpark does not approximate the difference in value
between the Ballpark and a hypothetical new stadium. 10

      10 The parties dispute whether stadiums are worth the cost to build
them; more specifically, should the fair market value of a new stadium reflect
a need to fund a reserve to prevent future functional obsolescence. We need
not weigh in on this issue. For present purposes it is sufficient that the
County Board found, and Assessor does not dispute, that a reasonable buyer
of the Ballpark would anticipate costs to prevent future functional
obsolescence and would fund a reserve for this purpose. To the extent
Taxpayer argues that replacement cost is not a good measure of fair market
value, that simply counsels against sole reliance on the cost approach.

                                      15
      There may be a way to compare the current value of funding the
reserve for the Ballpark with the current value of funding a reserve for a
hypothetical new stadium. There may also be other means of measuring this
future functional obsolescence that are reasonably calculated to approximate
fair market value. For example, using principles from the income method,
the metric could potentially be the net loss of income that would be caused by
the future functional obsolescence if not remedied. There may be additional
means of measurement; we do not direct any particular means be used here.
We also acknowledge the imprecision inherent in the appraisal process: “The
final value estimate is an appraiser’s opinion of value. There is no
mathematical formula or statistical technique to which the appraiser can
ultimately refer in order to reach the final value estimate.” (Assessors’
Handbook (Advanced Appraisal), p. 111; see also Assessors’ Handbook (Basic
Appraisal), p. 110 [“a value indicator is usually far from perfect” and the
analysis of value indicators “contain[s] an element of judgment”].)
      We will remand to the trial court to vacate the County Board’s decision
and direct further proceedings. (Sky River, supra, 214 Cal.App.4th at p. 739
[“ ‘[W]hen reviewing an equalization determination properly before it in a
refund action, a court may correct an assessment and grant a tax refund if
value is calculable as a matter of law without remanding to the county board
of equalization. [Citations.] [¶] However, where a judgment must still be
exercised as to value, a remand to the local board of equalization is
required.’ ”].) Again, we do not hold any particular method of valuation is
required. 11 The parties may raise arguments regarding proposed methods

      11Although Taxpayer agreed to limit its evidence to the cost approach,
the County Board reserved the right to solicit additional evidence under a
different approach and may do so on remand.

                                       16
with the County Board. The County Board has significant latitude in
determining how to appraise Taxpayer’s property interest. (Church, supra,
52 Cal.App.5th at p. 321 [reviewing court considers “ ‘whether the challenged
valuation method is arbitrary, in excess of discretion, or in violation of the
standards prescribed by law’ ”].) However, to the extent the County Board
continues to consider the cost of funding a reserve to prevent future
functional obsolescence, it must do so by a means reasonably calculated to
approximate the fair market value of Taxpayer’s property interest. The
method used below failed to do that. We leave it to the County Board to
determine the appropriate steps on remand, not inconsistent with this
opinion.
                                 DISPOSITION
      The judgment is reversed and remanded to the superior court with
instructions to grant the writ petition and issue a writ directing the County
Board to vacate its decision and conduct further proceedings not inconsistent
with this opinion. Assessor shall recover its costs on appeal.

                                       17
                                                     SIMONS, J.

We concur.

JACKSON, P. J.

WISEMAN, J. *

(A162440)

      * Retired Associate Justice of the Court of Appeal, Fifth Appellate
District, assigned by the Chief Justice pursuant to article VI, section 6 of the
California Constitution.

                                       18
Filed 3/27/23

                      CERTIFIED FOR PUBLICATION

       IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                         FIRST APPELLATE DISTRICT

                                DIVISION FIVE

 JOAQUÍN TORRES, as Assessor–                A162440
 Recorder, etc.,
         Plaintiff and Appellant,            (San Francisco County
                                             Super. Ct. No. CPF-19-516833)
 v.
 SAN FRANCISCO ASSESSMENT
 APPEALS BOARD NO. 1,
                                            ORDER CERTIFYING
         Defendant and Respondent;
                                            OPINION FOR PUBLICATION

 CHINA BASIN BALLPARK
 COMPANY LLC,
        Real Party in Interest and
        Respondent.

BY THE COURT:
      The opinion in the above-entitled matter, filed on March 15, 2023, was
not certified for publication in the Official Reports. For good cause, the
request for publication, filed on March 21, 2023, is granted.
      Pursuant to California Rules of Court, rules 8.1105 and 8.1120, the
opinion in the above-entitled matter is ordered certified for publication in the
Official Reports.

Date: ___________________                       ________________________,P.
                                                       Jackson, P.J.        J.
         03/27/2023

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Torres v. San Francisco Assessment Appeals Board No.1 (A162440)

Trial Judge:     Hon. Ethan P. Schulman

Trial Court:     San Francisco County Superior Court

Attorneys:
            David Chiu, City Attorney, Yvonne R. Meré, Chief Deputy City
      Attorney, Scott M. Reiber, Chief Tax Attorney, James M. Emery and
      Carole F. Ruwart, Deputy City Attorneys, for Plaintiff and Appellant.

           Vallejo, Antolin, Agarwal & Kanter LLP, Peter B. Kanter and
      Matthew J. Rilla for Real Party in Interest and Respondent.

           Parker & Covert LLP, P. Addison Covert for Santa Clara Unified
      School District and Santa Clara County Office of Education as Amici
      Curiae on behalf of Plaintiff and Appellant.

            James R. Williams, County Counsel, Douglas M. Press, Tony
      LoPresti, and Rachel A. Neil, Office of the County Counsel, County of
      Santa Clara for California Assessors’ Association and California State
      Association of Counties as Amici Curiae on behalf of Plaintiff and
      Appellant.

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