County of San Mateo Wins Property Tax Lawsuit Against Genentech

South San Francisco, CA June 19, 2018 Submitted by San Mateo County

The County of San Mateo has preserved approximately $9.5 million in property tax revenues for residents in a successful lawsuit against Genentech, Inc.

The Superior Court ruled that the County Assessor’s Office  had appropriately considered certain costs when it calculated the value of Genentech’s machinery and equipment in its South San Francisco facilities. The ruling overturned an earlier decision directing the County to refund property taxes paid by Genentech between 2000 and 2005. The result is approximately $9.5 million, including interest, of property tax revenue that may be returned to the County.

County leaders say the ruling should make Genentech rethink a business model of extreme litigiousness that is not based on merit and ultimately siphons resources from  residents in the county where it operates.

“Genentech’s longstanding modus operandi is to contest each and every County tax assessment of their properties dating back approximately 30 years,” said County Counsel John Beiers. “Genentech currently has over 650 unresolved appeals pending, going back to 2000. Maybe this decision will be a wake-up call to change its ‘litigate first’ corporate tax culture.”

Board of Supervisors President Dave Pine called the ruling a well-reasoned decision which correctly holds Genentech accountable for its local property taxes.

“County residents should be pleased, too, because they are the ones who ultimately benefit by retaining nearly $10 million for public programs and services,” Pine said.”

Assessor Mark Church, who brought the legal challenge, agreed.

“Property taxes are a key component to the County’s budget and its ability to provide for its residents. County property owners rightfully pay their share every year and we believe corporations like Genentech should be held to the same standard,” Church said.

However,  Genentech argued that in calculating the value of its machinery and equipment for property tax purposes, it was not required to include certain cost components that it did include for the property in its audited financial statements and financial statement documents included in Genentech’s federal Securities and Exchange Commission filings. The Court rejected Genentech’s position, stating that ”there is nothing unfair or inappropriate about including costs that were capitalized for financial purposes into the valuation of an asset for tax purposes.”

In San Mateo County, disputes over local property tax assessments are considered by the independent three-member Assessment Appeals Board. The Assessor challenged a ruling by that Board decided partially in favor of Genentech.   Genentech has since filed another lawsuit to overturn the portion of the Board’s decision that was in favor of the County.

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