The County of Los Angeles Adopted a Redevelopment Plan for the Central

The County of Los Angeles adopted a redevelopment plan for the Central Business District Redevelopment Project. The plan limited Mitsui Fudosan (U.S.A.), Inc. (Mitsui), to a maximum floor area ratio of six square feet of building area to one square foot of parcel area. However, Mitsui could exceed that level through transfer of other unused floor area ratios from other parcels within the project area. Making use of these so-called transfer development rights (TDRs), Mitsui, in 1983, purchased from several adjacent land owners at a cost of $8,209,000 sufficient TDRs to permit it to construct an additional 490,338 square feet of building area, more than doubling the density originally permitted.
Beginning in the 1984-1985 tax year, the county assessor increased Mitsui's base assessment by $8,209,000 to reflect the value of the TDR transactions. This resulted in increased taxes of $266,821.10 for the 1984-1986 tax years. Mitsui paid the taxes under protest and appealed to the county appeals board. The appeals board labeled the issue a legal question and summarily denied the application. Discuss for the appeals board how the property should be valued.