WILSHIRE BLVD ‚Äî A group of about 20 college students, teachers union members, and community organizers on Monday protested billionaire Michael Dell‚Äôs use of a tax loophole when he purchased the Fairmont Miramar Hotel.
Protesters rode the elevator at 100 Wilshire Blvd. up 17 floors to the office of MSD Capital, which manages Dell‚Äôs personal capital, and yelled through the locked door, asking Dell to sign a pledge to pay $1.2 million in taxes they claim he owes.
Dell, a computer mogul, purchased the Miramar in 2006 for a reported $200 million with his wife and two investment advisors, keeping any of them from becoming majority owners, according to a report by the Los Angeles Times. Under Proposition 13, this allowed the owners to claim that no change in ownership had taken place and therefore the property should not have been reassessed. That allowed Dell to pay a lower property tax rate.
The Los Angeles County assessor reappraised the property, saying that a change in ownership had taken place, but a Superior Court judge agreed with Dell. The county appealed the decision and the litigation is ongoing.
County officials could not comment on the specifics of the case, but spokesperson Anthony Crump said that cases like the one described are not uncommon in California.
“But each corporate entity is structured differently so there‚Äôs unique circumstances surrounding each one,” he said.
Voters overwhelmingly approved Proposition 13 out of a concern that homeowners, particularly the elderly, would be forced from their houses by rising tax bills during a real estate boom. The law ensured that property taxes were pegged at 1 percent of purchase price, assessed value could rise no more than 2 percent per year, and property was reassessed to full market value only when sold.
But large corporate property owners have been among the law’s biggest beneficiaries, thanks in part to loopholes such as the one Dell used. Essentially, the law allows businesses to sidestep reassessment if no one acquires a majority stake in a company that owns the property.
The Dell case has sparked efforts to reform Prop. 13. Some want commercial properties treated differently than private residences, others want to eliminate loopholes while there are those who would like to lower the majority required in local elections to raise parcel taxes to fund schools from two-thirds to 55 percent.
At 100 Wilshire Blvd., protesters‚Äô cries were met with silence.
“We‚Äôre community college students and we‚Äôre not receiving the education we should receive because there is not enough funds in our taxes,” yelled David Gonzalez, a West Los Angeles College student. “You‚Äôre taking our tax money and you‚Äôre taking away from our vital services and we‚Äôre here to ask you to pay your fair share of taxes.”
Several other community members yelled speeches through the door. A security guard asked the group to leave, but they refused to do so until a few minutes after police were called.
Protesters then crossed the street to the Fairmont Miramar Hotel and entered the lobby, where they handed the hotel manager a copy of their pledge and asked for him to pass it along to Dell. The manager said that he would, but protesters refused to leave until they received confirmation.
The group, which dwindled in size as that protest went on, waited in the lobby for about 20 minutes until police were called. Police took some information from a few protesters. Ultimately the group dispersed, chanting “We‚Äôll be back!”
Alan Epstein, an executive with MSD Capital, disagreed with the protesters‚Äô assertions.
“Sadly, the group protesting at the Miramar Hotel this afternoon was ill-informed,” he said. “The Miramar has paid all property taxes required by California law. This has been affirmed by a Superior Court ruling.”
Protest organizer Peter Kuhns said the group had no affiliation with the Huntley Hotel, which has been locked in a public battle with the Miramar over its proposed remodel that would include a taller structure and ritzier rooms.
The pledge also asked Dell to back the group in supporting the closure of corporate tax loopholes.
ReFund California, which organized the event, plans to rally for education funding at a different location every day this week.
School board member Oscar de la Torre was present for the first part of Monday‚Äôs protest.
“Santa Monica-Malibu schools have felt the impact of years of budget cuts,” he said. “That‚Äôs why we recently passed a resolution calling for state legislation to close the loopholes and make large commercial property owners pay their fair share.”