The Unconstitutional Truth about the Presidio

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By John Farrell

 

OPINION When Congress established the Presidio Trust in 1996, it wanted to ensure its financial stability. Congress believed taxing private tenants impeded the Trust's financial stability, so it enacted provisions within the Presidio Trust Act to ensure that tenants were tax-exempt. The only problem is that Congress doesn't have the power to exempt tenants under the US Constitution.

In 1897, the State of California ceded to the United States exclusive jurisdiction on all lands held for military purposes, including the Presidio. Military installations are federal enclaves exempt from state authority. Per legal counsel of the State Board of Equalization, a "federal enclave" is a property over which the federal government holds exclusive jurisdiction.

In 1989, the federal government closed the Presidio as a military base. Since the Presidio is no longer for military use, the federal government transferred jurisdiction to the Golden Gate National Recreation Area (GGNRA) in 1994 for natural, historic, cultural, and recreational purposes.

Did this transfer to GGNRA end its tax-exempt status? Did this transfer negate the concept of "federal enclave" and "exclusive jurisdiction," since the Presidio is no longer used for military purposes? Could the city now tax private beneficiaries? This issue has never been addressed.

The Presidio Trust was created by Congress in 1996 for a dual purpose: to rehabilitate and repurpose historic buildings and environmental resources, and operate as a vibrant public park independent of annual taxpayer funds.

In establishing the Trust, Congress's concern was with the city's potential assessment of property tax. In California, any private party that rents or uses space on government-owned property is subject to property tax.

In order to curtail the possible assessment of property tax, Congress enacted legislation signed into law by President Clinton on November 29, 1999. Public Law 106-113 (HR 3194) includes specific language providing that, "The Trust and all properties administered by the Trust and all interest created under leases, concessions, permits and other agreements associated with the properties shall be exempt from all taxes and special assessments of every kind in the State of California, and its political subdivisions, including the City and County San Francisco."

Our City Attorney and Congressional representative have the opinion that all third party interests for private benefit under the Presidio Trust's jurisdiction are exempted from taxes by the Presidio Trust Act.

This language confirms Congress's intent to exempt private tenants from all forms of state and local property taxes. The only problem is that if Congress enacted the Presidio Trust Act to exempt third party beneficiaries, it did not have the authority per Article 1 Section 8 of the Constitution, which provides the Powers of US Congress. In other words, this part of the legislation was unconstitutional.

Because of this unconstitutional loophole, the city is losing at least $10 million annually in property tax and over $100 million since inception. This amount doesn't include revenue loss from other taxes such as real estate transfer tax. Further, if the George Lucas plan for a Presidio museum is approved, the city will lose at least $8.1 million annually in property tax.

The city is losing an additional $12.5 million from the recent sale of Lucasfilm's to Disney in 2012 (based on a 2.5 percent transfer tax on a conservative $500 million assessment). An ownership transfer includes a lease of 35 years or more. Lucasfilm had a 66-year lease at the Presidio transferred to Disney. Per the state Revenue and Taxation Code, this is a legal transfer and there is no rational why there is no transfer tax imposed.

Comments

nor the National Park system.

If the city ran it, it would be a disaster and it would cost us far more than some taxes that we really aren't entitled to anyway.

Posted by Guest on Dec. 17, 2013 @ 3:55 pm

I've looked at all the proposals from the all-important viewpoint of common sense.

Presidio Exchange: this proposal reads like what it is, a collection of politically correct buzzwords strung together. For instance it "curates" " cross-disciplinary" "co-created" "residences"? WT_ does that mean? And it will be free and accessible to all, yes until the grant disappears in year two. And it will study the current trend in museums. Ahh I see, it'll be a museum about museums, how self-indulgent of them, how convenient. We'll study ourselves! Who better to grant us public money than ourselves?

Bridge Sustainability Blah Blah Blah: Who are you kidding? This is just more of the same fuzzy thinking pie in the sky PC nonsense. Get a grip because here we go again.
"A new global ethic" "acceptance of this ethic has not yet reached its tipping point". Said Orwell in 1984. "Invent and dream" and don't forget it's for "the children" "We need more places for our poets to talk to our scientists, our activists to our CEOs, our friends and neighbors to each other". Activist to CEO's? You mean the takers to the makers don't you. What a joke, a very sad joke.

I've also seen the plans for the delightful hideous glass cracker box they want to plop down within site of the Palace of Fine Arts and the Golden Gate Bridge. And dare we forget where the money is coming from for these two oh so precious projects. Nowhere that’s where. No one who ever earned a paycheck would fund this nonsense. You'll get people who wear scarves tied in the Parisian style with earnest suffering faces in yoga clothes holding lattes.

Lucas Center:
Everyone in the world will want to go (except those in the final sentence of the previous paragraph) The building is beautiful (beauty being the operative element as in Palace of Fine Arts and Golden Gate Bridge are beautiful) GET IT?
It's paid for. Period.

So as you see, common sense prevails. Stop jerking our chain and approve Lucas or he'll go elsewhere. He's giving us a gift, be grateful.

Thank you

Posted by Guest:Googan on Dec. 18, 2013 @ 8:46 am

Well we certainly can't have fewer entities from which to steal money. No, the city must steal if from everyone equally. Let's confiscate all the wealth from the rich everywhere, and give it to the homeless, who have done so very well with their money so far, haven't they.

Posted by Guest on Dec. 18, 2013 @ 10:23 am

in SF who think the homeless are an asset we should reward and invest in, while those who generate prosperity must be punished.

Posted by Guest on Dec. 19, 2013 @ 7:22 am

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