County has big issues with tax story implicating Caruso

That story yesterday out of the Los Cerritos Community News tying developer Rick Caruso's properties to the emerging probe around tax reductions by Assessor John Noguez drew a strong objection today from the fill-in assessor appointed by the Board of Supervisors. "Several erroneous conclusions based on nonexistent evidence," says a letter to the paper's publisher from Santos Kreimann, who is in charge of the assessor's office while Noguez is on leave and under investigation by the DA for suspicious property tax finaglings.

Another potential objection to the story that Kreimann doesn't mention: the reporter, Randy Economy, has been promoting Kevin James, a candidate for mayor and thus a potential rival of Caruso's.

Here's the letter from Kreimann:

A review of County records indicates that the information presented in your article is not accurate due to several erroneous conclusions based on nonexistent evidence. None of the records provided by the Office of the Assessor over the last week substantiate a connection between Rick Caruso and “massive property reductions.”

Here are some of our specific concerns with errors in your reporting:

“On Thursday, LCCN published several key emails and documents that show how entrenched property tax agents Dale Beckwith and Michael J. Schaaf (who also donated to Noguez’ campaign) were able to flex their political influence on behalf of Caruso that directly resulted in having several Grove parcels, with a 2012 value of $165 million, devalued.”

- Publically-available County records indicate that Mr Beckwith and Mr. Schaff were not operating on behalf of Mr. Caruso. These records show that Beckwith and Schaff were advocating on behalf of Nordstrom Incorporated, not Caruso or his company.

“The first case asked for a “Base Value Reduction” on all Grove properties. According to sources in the Assessor’s office, a BVR does not have to go through the appeals process, the properties can be revalued using what is called an “Assessor’s Correction”. One parcel, valued at $13,770,000, was reduced using this correction to $9,050,000, a 34.27% reduction.”

- The parcel you are talking about, which received a reduction, is the Nordstrom building in the Grove. Publically-available County records indicate that Caruso was not connected to this request for a reduction. Caruso holds the master lease for the ground on which the buildings in the Grove sit. There is a sublease in place for the building sitting on that ground, the Nordstrom building. Both the master lease and sublease were recorded with the County on August 8, 2000. Nordstrom’s sublease is for a total of 100 years, and the County considers anyone holding a sublease longer than 35 years to be the “owner” in terms of who pays the property tax bill for a parcel. So after August 8, 2000, Nordstrom would have been the recipient of any value reductions for this parcel, not Caruso.

“Applying that percentage to all other properties would generate a $49 million refund. At a 1.25% tax rate the refund would amount to $612,000 per year. A Base Value Reduction appeal allows the owner to go back in years and assume the new value. If Caruso owned the property for eight years he would realize a $4,896,000 refund. The rule also allows the carry forward of the reduced amount.”

- You are applying a non-existent formula to parcels that never received a reduction. The $49 million refund statement is pure fiction. No such refund ever occurred. The $4,896,000 refund is also speculation. A review of County records indicates that no refund was ever requested by Caruso, and no refund was ever issued by the County. Again, the County records indicate that Caruso does not have any economic interest in tax refunds related to the parcel you are writing about.

“Emails obtained between Beckwith and Schaaf and members of the Assessor’s office, including Noguez, show a carefully thought out plan for the tax reductions at the Grove going back to 2009. Caruso gave authorization to both Beckwith and Schaaf to represent him on official business regarding his properties before the Assessor’s office, LCCN sources confirmed.”

- This is inaccurate. The emails you are mentioning do not connect Caruso to Noguez. County records indicate that Nordstom gave authorization, not Caruso. The Application for Changed Assessment, filed with the County on November 29, 2007, show Beckwith was representing Nordstrom, and not Caruso or his company.

“During a three-day period in September of 2009, Beckwith, Mc Neill, Stephens, Schaaf and Noguez communicated back in forth in a series of emails to set the plan for Caruso’s devaluations.”

- Again, this is not related to Caruso. After August 8,2000, Caruso was not the owner who would have been connected to any devaluation of this parcel.

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