Glovis Am., Inc. v. Cnty. of Ventura, 28 Cal. App. 5th 62

Background

Glovis leased Port of Hueneme land from the U.S. Navy under a 2013 five-year lease (2013–2018) that referenced two additional five-year terms and contained provisions for appraisal-based rent renegotiation on extension.
The Ventura County Assessor valued Glovis's possessory interest assuming a 15‑year possession (i.e., including both five‑year extensions) and issued tax bills for 2013–2014 and 2014–2015 based on that valuation.
Glovis appealed to the County Assessment Appeals Board arguing (a) the lease did not create an enforceable option to extend, (b) any extension was discretionary/subject to competitive bidding, and (c) it was uncertain whether extensions would be exercised.
The Board found Glovis failed to prove the assessor erred; it relied on lease terms, Glovis’s history of renewed Navy leases, and the parties’ mutual intent toward long‑term occupation to support a 15‑year anticipated term.
Glovis amended its complaint after the Board proceedings to attach a 2017 lease amendment clarifying extension requests could be approved or rejected by the Navy; the trial court refused to consider that amendment and sustained the County’s demurrer without leave to amend.

Issues

Issue	Glovis's Argument	County's Argument	Held
Whether the 2013 lease includes an option to extend possession beyond five years	Lease language does not create an enforceable option because Navy approval, competitive bidding, and prior practice preclude a unilateral option	Paragraph 2 and related provisions give Glovis an exclusive, irrevocable right to request extensions and evidence mutual intent to permit extensions	The lease contains an option: the terms grant a legal right to extend (not mere expectation) and other provisions (rent renegotiation, exemption from term limits) support that reading
Whether it was reasonable for the assessor to assume the option would be exercised	It was not reasonable because Navy approval, possible termination, and potential competitive bidding make exercise speculative	Prior renewals, parties’ intent for long‑term stability, and exemption from five‑year limits support a reasonable anticipation of extension	It was reasonable to assume the option would likely be exercised; Glovis failed to meet burden to show otherwise
Whether the court may consider the 2017 post‑assessment lease amendment to defeat valuation	The amendment shows the parties intended no enforceable option and that Navy discretion defeats assessment basis	Post‑assessment evidence is not part of the administrative record and cannot undermine an assessor’s valuation based on facts known at valuation time	The amendment is not considered: (1) it was not in the administrative record, and (2) assessments are based on facts known when made; even if considered, it would not change the option analysis

Key Cases Cited

Connolly v. County of Orange, 1 Cal.4th 1105 (explaining taxation of possessory interests in federal property)
Palo Alto Town & Country Village, Inc. v. BBTC Co., 11 Cal.3d 494 (defining contractual nature of options)
San Diego Metropolitan Transit Dev. Bd. v. Handlery Hotel, Inc., 73 Cal.App.4th 517 (options require more than mere expectation)
American Airlines, Inc. v. County of Los Angeles, 65 Cal.App.3d 325 (assessor may value on reasonably anticipated term of possession)
Silveira v. County of Alameda, 139 Cal.App.4th 989 (posture and facts supporting long‑term anticipated possession valuation)
De Luz Homes, Inc. v. County of San Diego, 45 Cal.2d 546 (termination rights affect value but not existence of option)
Fujitsu Microelectronics, Inc. v. Assessment Appeals Bd., 55 Cal.App.4th 1120 (assessments must be based on facts known at time of valuation)