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11/15/23
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A Los Angeles County hospital, committed to serving the city's homeless and disadvantaged communities, has won a significant multi-million dollar tax dispute with the LA County Assessor's office.
In 2019, LA Downtown Medical Center acquired the property at 1711 W. Temple St in a court ordered bankruptcy sale for $36 mil. However, the hospital's vision to expand its vital services for underserved communities faced a considerable setback when the Assessor's office appraised the property at an astonishing $114 mil, potentially subjecting them to an annual tax increase of nearly $850k.
Wes Nichols, the Founder and CEO of Paramount Property Tax Appeal, who represented the hospital in its appeal against the assessment, expressed the significance of this victory. "LA Downtown Medical Center plays a crucial role in providing healthcare solutions to the city's underserved, including mental health patients and the homeless population in downtown Los Angeles. An adverse judgment, imposing hundreds of thousands in added annual capital expenditures, affects their capacity to deliver essential services."
The sale of the property was conducted on the open market as part of bankruptcy proceedings against its previous owner. Bankruptcy sales often result in discounted sale prices as the trustee’s primary aim is to recover money for debtors through an auction of property. In this case, the property was marketed to the healthcare industry and generated several offers among which LA Downtown Medical Center was the winning bid.
According to Nichols, the property tax assessment should have reflected the purchase price paid on the open market. However, the Assessor valued the property under foreclosure guidelines, where the trustee is selling to regain the debt owned on the property to the bank.
“By enrolling the property under foreclosure guidelines at more than three times what was paid for it, the Assessor made the investment unfeasible,” said Nichols. “We were able to show that the open market transaction and a verified depreciation of the property reflected the true value.”
The outcome was highly favorable for LA Downtown Medical Center, as their property received a new assessment value of $44.5 mil, marking a significant reduction of $70 mil. This achievement promises substantial tax savings, providing the hospital with valuable financial relief for as long as they own the property.
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