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Acting County Assessor Says It Ain’t So: Nordstrom’s — Not Caruso — Got the Tax Breaks on Grove Property

UPDATE: On Saturday, the Los Cerritos Community Newspaper accused the acting County Assessor Santos Kreiman and David Sommers, Press Secretary for LA County CEO Bill Fujioka, of a “blatant misuse of taxpayer dollars” in coming to the defense of developer Rick Caruso and of ignoring at least some evidence. The paper demanded “total transparency” and promised to file a new public records request on Monday.

EDITOR’S NOTE: Here is the email Chief Deputy County Assessor Santos Kreiman sent to the Los Cerritos Community Newspaper over its story saying Rick Caruso hired tax agents connected to the County Assessor scandal to get tax breaks on property at his Grove shopping center on the Westside. Kreiman says Caruso effectively sold the building in question to Nordstrom’s in 2000 on a 100-year lease and it was the department store that sought the tax reductions. 

From: Kreimann, Santos [mailto:SKreimann@assessor.lacounty.gov]
Sent: Friday, September 28, 2012 2:50 PM
To: Brian Hews-Publisher-Cerritos/La Mirada Lamplighter News (brianhews@cerritosnews.net)
Subject: Caruso Story Corrections

Hi Brian –

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.

EMAIL TRAIL LINKS CARUSO REPS TO NOGUEZ
“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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11 Responses to Acting County Assessor Says It Ain’t So: Nordstrom’s — Not Caruso — Got the Tax Breaks on Grove Property

  1. Magnym PI says:

    Ask the question-why is Santos Kriemann defending Caruso? Why did David Sommers-Press Secretary for CEO LA County Bill Fujioka-go on KNX and defend Caruso? Public employees defending a private citizen?

    Think they are wrong? Go here: http://www.independent.com/news/2012/apr/26/caruso-gets-reduction-miramar-property-value/

    • LA Moderator says:

      Keep reading…

      “Typically, the procedure under deliberation would have been a slam dunk, but Caruso — a controversial figure given his role with Montecito’s much beleaguered Miramar Hotel — was seeking to achieve a $24 million reduction in the assessed value of the six parcels comprising the Miramar, and an item that would otherwise have been rubber-stamped got put on hold this Thursday for another month.”

      http://www.independent.com/news/2012/apr/28/miramar-and-caruso-hit-road-block/

    • Journalistic Integrity at Stake says:

      Let me gets this straight.

      LCCN puts out a story accusing Ron Caruso of getting a lower value on a Grove parcel because of a donation to Assessor Noguez. The Chief Deputy of the Assessor’s Office corrects the record with facts to show the story is completely mistaken. Then LCCN goes on an offensive by stating, “blatant misuse of taxpayer dollars” for correcting their story rather then addressing the facts presented to them?

      Sounds like this small paper is upset for getting caught fabricating stories.

      Also, seems like the report Randy Economy is not real reporter but a political consultant supporting Kevin James on his blog: http://economy4abc.blogspot.com/2012/08/bring-on-kevin-james-zev-is-out-of-la.html

      Now there is the motivation.

  2. ConcernedCitizen says:

    Mr. Sommers,
    I have a few questions..
    1. Why are you, a Los Angeles County official, responding on behalf of Rick Caruso?
    2. If the one property wasn’t directly owned by Caruso, what about the other 11 parcels mentioned in the emails?
    3. Why do the emails specifically say, “the Grove”
    Your response would be greatly appreciated

  3. LA Moderator says:

    Yup…the County’s damage control team…on behalf of themselves as much as Caruso perhaps, have answered the Hew and cry of the crack Cerrito’s staff.

    And so, the publisher doubles down: “Mr. Sommers, Los Cerritos Community Newspaper stands by our coverage, at this time.”

    That coverage includes having “been told by the Santa Barbara Independent Newspaper that Caruso also flexed his political muscle in Santa Barbara to get a tax reduction.” Hopefully, that means some follow-up calls to the 3+ stories the Indy did after the sentence cut and pasted from the 4/26 snippet…like reading the pdf with staff’s responses, indicating that bumping the Proposition 13 factored base year value down a bit was not inappropriate, given the ownership change for the year prior.

    Don’t get me wrong, there’s an interesting story there, but they should get the facts straight. We griped in East Hollywood when CIM would buy distressed properties, let them fade further, and then seek CRA money so as to pencil in profit. Caruso’s huge purchase price (in 2007) of the Miramar notwithstanding, it’s interesting to see the panel mention that the latter ownership change (2010) should trigger its own Market Analysis reassessment.

    But that take us back to the problems which resulting in Prop 13′s enactment in the first place. What can you do when a governmental agency finds occasion to capitalize on economic growth, without transparency, and conveniently drag its feet when the boom busts. (Prop R/J anyone)

    For that matter, the TOT’s that get slipped in by the locals so the out-of-owners can pay their fair share of….

    Sorry, I’m just not convinced that the ability to cut through bureaucratic red tape is disqualifying attribute for a potential mayoral candidate, for a city that desperately needs reform.

  4. Teddy says:

    Sir Walter Scott: “Oh what a tangled web we weave, When first
    we practice to deceive.”

  5. Sierra says:

    Caruso benefits whether his tenant or he receives reduced property taxes. And yes, as we know in Los Angeles, public officials have turned over the keys of government to the wealthy developers who really run the place.

    It looks like “little ricky” (Garcetti) may not have to compete with Big Rick.

  6. MissAnthrope says:

    Just what we need! Another mega rich power broker developer as mayor.

    The first time Caruso — if he decides to run — declares himself to be an “outsider” we can tattoo a big scarlet and black “L” on his forehead. “L” for liar, because he is the ultimate insider!

    Imagine A Mayor Caruso and how many more cushy deals he’ll negotiate for his croneys while continuing to crush the tax payers.

  7. Wayne from the Most Corrupt City in America says:

    KABC’s Tilden had Dennis Dummy Zine on two nights in a row. Last night, Tilden asked about Caruso’s chances of running for mayor. Zine (whose been promised the Controller’s Seat by his campaign donors) claimed “I’d take that bet.” Zine was all gushy about Caruso being mayor. YEP, WE NOW SEE WHY. There’s an even WORSE SCUMBAG who can run for Mayor than Garslutti, Hamburger Perry, or Cruella-Gruella! Of course Caruso owns the Ventura/Hayvenhurst shopping center in CD5 and just gave a big donation to Field Marshall Koretz’ 2013 campaign.
    Might as well have Caruso run. That way he can pay himself off as Mayor rather than pay the other bumbs off to do his bidding. It’s kinda like cutting out the middleman in the Wholesale trade business.

  8. Ron…. Don’t be so fast to “cast judgement” against Los Cerritos Community Newspaper. Trust me on this one! Your the BEST! Appreciate all you do for the community and as one of the BEST REPORTERS in AMERICA! Lots more “follow the money and memos” trail….

    Randy Economy

  9. El Quixotian says:

    (Wondering why a ‘Journalist’ would put “cast judgement” in quotes…)

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