HomeMy WebLinkAboutCC 15 PROP PENALTY TX 05-06-91DATE:
TO:
FROM:
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UA -
March 28, 1991
CONSENT CALENDAR NO. 15
5-6-91
Inter - Com
HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
CITY ATTORNEY
PROPERTY PENALTY TAX LITIGATION WITH THE COUNTY OF ORANGE
Tustin is one of six public agencies represented by the law
firm of Rourke & Woodruff in a lawsuit against the County of Orange
which challenges the County's retention of tax penalties and
interest on a local government agency's share of property taxes.
This action was instituted after the City of Anaheim successfully
sued the County over this issue and as a result of a settlement
received 500 of the property tax penalties which were withheld by
the County.
Subsequent to Anaheim's successful court action, Assembly Bill
2372 (Revenue and Taxation Code Section 93) was enacted in 1989.
This new legislation undermined the basis upon which Anaheim's
lawsuit was successful. Long time provisions of the Revenue and
Taxation Code state that the County is entitled to all penalties.
However, in a case entitled City of Los Angeles v. County of Los
Angeles, the court held that in implementing Proposition 13, the
Legislature impliedly repealed these provisions of the Revenue and
Taxation Code. AB 2372 was specifically enacted to rectify the
court holding and returned the law regarding tax penalties to its
previous status, i.e., the County is entitled to all penalties.
This has significantly reduced the likelihood of success in the
pending litigation.
In addition to the lawsuit brought by Rourke & Woodruff, three
other actions have also been filed on behalf of most of the public
agencies within Orange County which are entitled to property tax
revenues. Attorneys from these agencies have been negotiating with
the County and a tentative agreement has been reached.
The County initially offered to settle with all public
agencies for 15% of the impounded amounts of property tax penalties
between July 1, 1985 and June 30, 1989. On February 14, 1991, a
settlement meeting was held at the County Counsel's office between
Inter -Com to the Honorable Mayor
and Members of the City Council
Page Two
March 28, 1991
County Counsel and attorneys representing the various public
agencies, including David DeBerry of this office. At that meeting,
the public agency attorneys countered with a 25% settlement.
Subsequent to that meeting, the County made a 20% offer, which was
countered by the public agencies with a 22% offer. The County has
agreed to the 22% figure. *
Assembly Bill 2372 has significantly undermined the City of
Tustin's lawsuit. It is our legal opinion that the City of
Tustin's action would not be successful. Therefore, we recommend
that the City Council approve the tentative agreement to settle for
22% of tax penalties impounded between July 1, 1985 and June 30,
1989.
J ROURRE
City Attorney
DAD:cj♦:R:3/25/91(S\1069)
cc: W. Huston
* A 22% settlement amounts to $16,334.00.
Deputy City