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Alvin v. United States Postal Service

Decided: April 14, 1987.

ALVIN, LTD., ET AL., APPELLANTS,
v.
UNITED STATES POSTAL SERVICE, APPELLEE



Appealed from: Postal Service Board of Contract Appeals.

Before Davis, Circuit Judge, Baldwin, Senior Circuit Judge,*fn* and Newman, Circuit Judge.

Newman

NEWMAN, Circuit Judge.

The Postal Service Board of Contract Appeals ("Board" or "PSBCA") held that, subsequent to amendment to the California Constitution, Cal. Const. art. XIIIA (1978) (hereinafter "Proposition 13" or "Article XIIIA"), the United States Postal Service was not obligated to pay, under existing lease agreements, certain levies imposed by California taxing authorities. Alvin, Ltd., et al., 85-3 B.C.A. (CCH) para. 18,216 (1985). We reverse.

Background

The appellants are thirty limited partnerships*fn1 (collectively "Alvin") that own real property comprising postal facilities leased to the Postal Service in the state of California. The Postal Service entered into long-term leases for the properties starting in the 1950s, the most recent lease at issue having first been executed in 1974. Each lease agreement was in substantially the same form, provided by the Postal Service, and contained a Tax Clause Rider substantially as follows:

The lessor shall present to the Government the general real estate tax bills of each taxing authority for taxes due and payable on the land and buildings hereby demised . . . . The Government shall pay to the lessor, as additional rent due hereunder, the net amount of said taxes by check made payable to the lessor and the taxing authority issuing said tax bill. . . .

In 1975 a definition of "general real estate taxes" was added to the Rider by the Postal Service, as

taxes which are assessed on an ad valorem basis, without regard to benefit to the property, for the purpose of funding general governmental. services.

No change in the lease terms accompanied this addition.

The Postal Service regulations include a definition of "special assessment" as follows:

A levy on property to pay for one or more specified public improvements to the property or to the immediate area, as for road construction, sidewalks, street lights, etc. Usually calculated pro rata to street frontage occupied by the property or by some other physical measure.

85-3 B.C.A. (CCH) at 91,434.

Proposition 13, added to the California Constitution as Article XIIIA on June 6, 1978, provided that ad valorem taxes on real property shall not exceed 1% of the assessed value of the property. Neither party disputes that the result was the immediate ...


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