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HomeMy WebLinkAboutRDA PROP PENALTY TAX 05-06-91DATE: March 29, 19 91 RDA N0. 7 5-6-91' Inter - Com TO: HONORABLE MAYOR AND MEMBERS OF THE REDEVELOPMENT AGENCY FROM: CITY ATTORNEY SUBJECT: PROPERTY PENALTY TAX LITIGATION WITH THE COUNTY OF ORANGE The Tustin Redevelopment Agency 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 50% 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of Los Angeles v. County of Los Angeles, the court held that in implementing Proposition 13, the Legislature impliedly repealed these provisions of the Revenue and Taxation Code.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 Inter -Com to Honorable Mayor and Members of the Redevelopment Agency Page Two March 29, 1991 between July 1, 1985 and June 30, 1989. On February 14, 1991, a settlement meeting was held at the County Counsel's Office between 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 Redevelopment Agency's lawsuit. It is our legal opinion that the Redevelopment Agency's action would not be successful. Therefore, we recommend that the Redevelopment Agency approve the tentative agreement to settle for 22% of tax penalties impounded between July 11 1985 and June 30, 1989. AAM G. ROURKE City Attorney DAD:cj♦:R:3/29/91(S\1069) cc: W. Huston * A 22% settlement amounts to $11,974.00.