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Home My WebLink AboutNB 6 SETTLE RR CASES 02-05-90DATE: TO: FROM: SUBJECT: 1/31/90 MEMBERS OF THE CITY COUNCIL CITY ATTORNEY NEW BUSINESS N0. 6 2-5-90 Inter -- Com PROPOSED SETTLEMENT OR PARTIAL SETTLEMENT OF SOME OF THE 'RAILROAD CASES11 Attached is a copy of a letter dated January 22, 1990 from the orange County Counsel concerning proposed settlement of the "railroad cases". You will recall that since the enactment of Proposition 13 in 1978, various railroads have contended that their properties have been over valued for tax purposes by the State Board of Equalization. The State Board of Equalization, represented by the California Attorney General, has been the lead defendant in all of the cases that have been filed by the various railroads. In Orange County, the Orange County Counsel's Office has been local counsel for the City of Tustin and the other governmental agencies in the County. The potential, liability to the railroads in the cases statewide for tax refunds is in the neighborhood of three hundred million dollars. The proposed settlement would refund fifty-two million of the three hundred million to the railroads. Under the terms of the proposed settlement, the City of Tustin' s share of the fifty-two zillion dollar refund would be approximately $4,222.95. This amount would be deducted from future tax allocations to the City. If the City disapproves of the settlement, its potential liability could be as high as six times that amount. A more serious problem is that if the City disapproves the settlement and the settlement is approved by others, the City will have to proceed on its own without the information that is available to the State Board of Equalization and its experts. We recommend that the City Council approve the settlement. If the City Council chooses to disapprove the settlement, the county Counsel's office must be notified by February 71 1990, or it will assume that the settlement has been approved. If you have any questions concerning this matter, please advise. CLARK F. IDE Deputy City Attorney CFF: cas: D: Q1-31 (1) Attachment cc: WH VW Writer's Direct Dial Number 7141 834-4379 CITY COUNCIL THE COU TY COUNSEL COUNTY OF ORANGE 10 CIVIC CENTER PLAZA MAILING ADDRESS: P.O. BOX 1379 SANTA ANA, CALIFORNIA 92702-1379 ATTENTION: CITY ATTORNEY 7141834.3300 Fax 7141834-2359 January 22, 1990 ADRIAN KUYPER COUNTY COUNSEL WILLIAM J. McCOURT CHIEF ASSISTANT ARTHUR C. WAHLSTEDT, JR. LAURENCE M. WATSON ASSISTANTS VICTOR T. BELLERUE TERRY C. ANDRUS JOHN R. GRISET JAMES L. TURNER EDWARD N. DURAN PETER L. COHON IRYNE C. BLACK NICHOLAS S. CHRISOS RICHARD D. OVIEDO THOMAS F. MORSE BENJAMIN P. DE MAYO WANDA S. FLORENCE HOWARD SERBIN HOPE E. SNYDER DANIEL J. DIDIER THOMAS C. AGIN GENE AXELROD SHERIE A. CHRISTENSEN ROBERT L. AUSTIN SUSAN M. NILSEN DONALD H. RUBIN SARA L. PARKER DAVID R. CHAFFEE ADRIENNE K. SAURO CAROL D. BROWN KARYN J. DRIESSEN BARBARA L. STOCKER KATHY PAUL JAMES F. MEADE KAREN R. PRATHER STEFEN H. WEISS F. LATIMER GOULD SUSAN STROM ROBIN FLORY DAVID BEALES Re: Proposed Settlement or Partial Settlement DEPUTIES of Some of the "Railroad Cases" 1. The Atchison, Topeka & Santa Fe Railway Company, et al. v. State Board of Equalization, et al., Sacramento Superior Court Case No. 281434; 2. Southern Pacific Transportation Company, et al. v. State_ Board of Equalization, et al., San Francisco Superior Court Case No. 810433; 3. Southern Pacific Transportation Company, et al. v. State Board of Equalization, et al., San Francisco Superior Court Case No. 877359; 4. Southern Pacific Transportation Company, et al. v. State Board of Equalization, et al., United States District Court for the Northern District of California, Master Consolidated Case No. C 81 4365 DLJ (related case nos. C 81-4848 DLJ, C 82-6009 DLJ, C 83-4704 DLJ, C 83-5689 DLJ, C 83-5690 DLJ, C 82-6030 DLJ); 5. The Atchison, Topeka & Santa Fe Railway Com any, et al. v. State Board of Equalization, et al., San Francisco Superior Court Case Nos. 761819, 778986, 288219 (consolidated); and 6. The Atchison, Topeka & Santa Fe Railway Company, et al. v. State Board of Equalization, et al., San Francisco Superior Court Case No. 855589. Dear Council Members: As you may be aware, this office, by your Council's request, has appeared as the attorney of record for the County of Orange and for your City in those actions listed above which named your City as a party defendant. Recently we were advised that the lead De- fendant in all of these cases, the State Board of Equalization, has dre3/070 City Council Attn: City Attorney reached a tentative settlement with Plaintiffs The Atchison, Topeka & Santa Fe Railway Company and Southern Pacific Transportation Com- pany. This proposed settlement, represented by the documents which we enclose herewith, is contingent upon theapproval of a majority of the defendant counties. While we intend to seek and recommend approval of this settle- ment by the Orange County Board of Supervisors, as a matter of pro- fessional responsibility, this is to request your separate approval of the proposed settlement. By way of background, since the implementation of Proposition 13 (Art. XIIIA, Calif. Const.) in 1978, the various railroads which operate and own property throughout the State of California have contended that their properties have been over valued, improperly equalized, and assessed at an improper ratio to the assessment of all other industrial and commercial property in the State. The railroads, like.all other statewide utilities, are appraised and assessed exclusively by the State Board of Equalization. Your County Assessor has had nothing to do with the assessment or equal- ization of the assessment of railroad property in Orange County. The State Board of Equalization, represented by the California Attorney General, has literally spent years litigating the numerous valuation and legal issues relating to the assessment and taxation of the railroads' property. To date, the State Board of Equaliza- tion has been uniformly unsuccessful, having completely lost in the San Francisco Superior Court in case numbers 761819, 778986, and 788219; cases which were consolidated for trial, and which are now pending appeal in the First Appellate District of the California Court of Appeal. Statewide, we understand that the total potential liability may be as high as $300 million for the cases listed above. In that light, the Plaintiffs have agreed to settle the above -listed cases for a total of $52 million. Of that amount, the share for all tax- ing entities in Orange County, as calculated by the State Board of Equalization, is $1,665,465.28. The Auditor has allocated the in- dividual cities shares on a pro rata basis, and we enclose a copy of that allocation so that you may see your City's total liability under the terms of this settlement. As you can see, the total lia- bility for the cities in Orange County is $191,775.20; the balance is borne by the schools, the County, and other taxing entities. Assuming settlement is approved, rather than seek direct contribu- tion from each city, we understand that the Auditor is agreeable to withhold the amount owed through settlement from the next distribu- tion of your City's allocated share of property taxes. dre3/070 City Council Attn: City Attorney We understand that the State Board of Equalization will enter the settlement as long as a majority of the counties, or alterna- tively, counties with liability totaling in excess of $26 million approve the agreement. Once the State Board settles, the settle- ment will be "crammed down" on all of the parties to these actions, whether they like it or not. There is simply no reasonable or ef- ficient way that an individual county or'city could separately de- fend the State Board's assessments. All of the facts, information, witnesses, and expertise resides in the State Board. Without its participation in the litigation the assessments cannot be defended. In view of the potential liability, the apparently reasonable settlement numbers, and the recommendations to settle by both the State Board and its attorney, the California Attorney General, we strongly recommend you approve this settlement. Unfortunately, we have a very short time in which to respond to the proposed settle- ment. A response by the counties is due no later than February 8, 1990. We intend to take this matter, with our recommendation to approve, to the Orange County Board of Supervisors on February 6, 1990. In view of this very short time period, we must request that you advise us by February 7, 1990, if you disapprove the proposed settlement. If we do not hear from you by that date we will assume your approval of the settlement. Should you determine that it is in your best interest to disapprove, then we must respectfully ad- vise that a conflict of interest will exist between our various clients which will require our resignation as attorney of record. As we believe it is very likely that our principal client, the Or- ange County Board of Supervisors, will approve the settlement, we expect that we will be unable to represent those parties who disap- prove. In view of this anticipated conflict, we must further re- quest that, upon your disapproval of the settlement, you obtain other counsel to substitute into each case listed above in which your City is a party so that your interests can fully and properly be represented in further proceedings. Thank you for your anticipated courtesy and cooperation in this matter. Very truly yours, ADRIAN RUYPER, COUNTY COUNSEL By n David R. Naf fee; ` puty PP DRC:rer Enclosures dre3/070 ,"RREFUND ALLOCATION C= ESTIMATED CITY SHARE OF REFUND TO SOUTHERN PACIFIC AND SANTA FE RAILROADS AS OF 01-16-90 '' 0F C' Tv REV AMOUNT TOTAL C? TY!D I ST AFTORT I "N"'IE`iT AL .+0 JAT :O"� ^F ABB AMOUNTS FACTOR RR AMT ? ul ►A:. FCA ALL JUURISDICTIONS 1.21255451946.61 1,457,252.12 uANA PI CITY 928,162.25 DANA PO. NT Ll DANA PT. CSA 591170.36 TOTAL DANA POINT ' 148 '^5 39 0 G009,023F5 '!ISSION ViEO CITY 2,28°,064.16 MV CITY p;ECR6 498 4,351,1:6.16 MV LTG 1,475,981.65 TOT !1ISSION VIEJC 73016,758.57 0.005513353 8,035.39 IRVINE CITY 5,041,051.13 :C STLT9.110 9011928.30 IC AUGMENT FUND 195 100.97 TOTAL IRVINE CITY 612441080.44 0.0049061522 7,150.54 YORBA LINDA +CITY 21785,818.00 YL SRENBELT MAINT DIST 41 191018.05 YL LTG 198,349.30 YL LANDSCAPE 47 131110.26 YL LANDSCAPE 48 200.51 YL LANDSCAPE 49 1,535.41 LIBRARY 114901031.44 IGMENT FUND 51,656.23 IuiAL YORBA LINDA 415591779.21 0.0035831942 5,221.12 ANAHEIM CITY 1512749735.52 ANA CITY REORG 482 234,188.65 _ TOTAL ANAHEIM 15,509,524.17 0.0221877911 17,761.05 BREA CITY 2,5981920.09 0.0020422996 23976.21 VENA PARK CITY 41209,981.78 0.0033083142 4,B21.15 COSTA MESA CITY 10,892,571.33 VEH PKS DIS 41 ACO 242.59 VEH PKK DIS 41 IMP 121.29 VEH PKS DIS #2 AC9 161.37 VEH PKB DIS #2 IMP 80.67 COSTA MESA AUGMENT 118.57 TOTAL COSTA MESA 10,893,295.82 0.0085602317 121474.68 CYPRESS CITY 213011314.31 CC LTG 42 353,980.61 CC CCWD SERER FUND 51956.55 CC SPEC DIST AUGMENT FUND 697,216.84 TOTAL CYPRESS CITY 3,3581468.31 0.0026391725 31846.02 PALMA CITY 1,0641367.13 'ALMA MUNI LTG 11 28,035.49 ,A PALMA CITY REORG 1103 81708.38 AI REF ;ND TOTAL LA PALMA 1,!01,111.00 0.0008652919 1,260.96 ''TAIN VALLEY CITY 3,881,309;91 0.00:0547501 41451.63 FULLERTON CITY 1013559658.82 0.0051401059 il,862.43 EARDEN GROVE CITY 61341,056.86 VEH PKS DIST #2 ACO 727.24 VEH PKG DIST 12 IMP 436.36 GARDEN GROVE AUEMENTATION 250.84 TOTAL GARDE GROVE 6,3421471.30 0.0049840804. 7,263.21 HUNTINGTON :LEACH CITY 19,157,199.97 0.0150542305 211938.26 LACUNA BEACH CITY 61054,862.90 LAG BCH LTG #1 177,404.72 LAG BCH AUGMENTATICN 305737.65 TOTAL LACUNA BEACH 61303,005.27 0.0049530669 11218.02 LA HABRA CITY 45075,987.81 0.0032030182 4,667.70 LOS ALAMITOS CITY 920,506.13 0.0007233579 11054.14 NEWPORT BCH CITY 18,630,888.40 ASSESS DIST #50 BALBOA IS 12,617.19 NEWPORT AUGMENTATION 1,862.68 t -'L NEWPORT BCH CITY 1836453368.27 0.0146520197 21,352.13 UhANGE CITY 91607,839.72 ORANGE CITY SEWER 105848.42 TOTAL ORANGE CITY 920,506.13 0.0007233579 1,054.14 PLACENTIA CITY 21890,321.58 0.0022712905 31309.91 SAN CLEMENTE CITY 53003,818.13 SC CITY LTG 41 277,242.16 SAN CLEM AUGMENTATION 34,362.28 TOTAL SAN CLEMENTE 513153422.57 0.0041769985 61081.01 SAN JUAN CAPISTRANO CITY 21032,733.08 SJC WESTSIDE ANX 41540.28 SJC AUGMENTATION 39,817.46 TOTAL SN JUAN CAPISTRANO 21077,090.82 0,0016322325 21378.62 SANTA ANA CITY 18,412,605.67 SANTA ANA SANITARY 109,654.41 TOTAL SANTA ANA 18,522,260.08 0.014555278 21,211.15 SEAL BEACH CITY 2,675,157.91 0.0021022093 31063.51 STANTON CITY 11162,165.37 S_TANTON MUNI LTG 171,873.35 NTON REORG #88 54,311.82 ,TON AUGMENTAIION 38,591.31 TOTAL STANTON CITY 11426,941.85 0.0011213284 11634.09 RRREFUND TUSTIN CITY 31304,259.63 'TN CITY LISHTING 383,355.86 TUSTIN CITY 3,681,615.49 7.;02297825 4,222.95 VILLA PARK CITY 623,635.49 0.0004900699 714,17 WESTMINSTER CITY 2;3 5,926.66 WESTMINSTER MUNI LTG 500,043.50 WEST AUGMENTATION FUND 1081636.26 TOTAL WEST4IN.TER CITY 2,994,606.42 0.0023532403 3,429..34 TOTAL ALL ':1TTES 1611464,312.55 0.17159785'.~ 191,175.20 TOTAL ALL OTHER JUSRiSOICTIONS 1510550815634.26 0.8684021485 1,265,506.92 152693551,340.39 PROOF 154511282.12 COMPUTE ESTIMATED 'HARE OF RR REFUND ALLOCABLE TO DEBT SERVICE AND BASIC LEVY TOTAL REFUND 1,665,465.8 X OF TOTAL TAX LEVY ATTRIBUTABLE 7O DEBT SERVICE 12.501 -------------- ESTIMATED AMT OF ;R REFUND ALLOCABLE TO DEBT SERVICE 209,183.16 ESTIMATED AMT OF RR REFUND ALLOCABLE TO BASIC LEVY 11457,292.12 q i z 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 1),e C --# c2 � -?,� Paul J. Mooney - 006708 Jim L. Wright - 010531 D `J FENNEMORE CRAIG Suite 2200, One Renaissance Square11 Two North Central Avenue JAN 0 3 �9� Phoenix, Arizona 85004-2390 (602) 257-5492/257-5441 COUNTY COUNSEL'S OFFICE Attorneys for Plaintiffs The Atchison, Topeka and Santa Fe Railway Company and Southern Pacific Transportation Company IN THE UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SOUTHERN PACIFIC TRANSPORTATION j COMPANY, Ll Plaintiffs, ) VS. ) STATE OF CALIFORNIA, gj al., ) l Defendants. ) ) THE ATCHISON, TOPEKA & SANTA FE ) RAILWAY COMPANY9 gj al, ) Plaintiffs, ) VS. ) STATE BOARD OF EQUALIZATION, gj Defendants. 20 - ) 21 22 23 24 25 26 MASTER CONSOLIDATED NUMBER C 81 4365 DLJ C 81-4848 DLJ C 82-6009 DLJ C 83-4704 DLJ C 83-5689 DLJ C 83-5690 DLJ NO. C 82 6030 DLJ y STIPULATION FOR ENTRY OF i/,(/ JUDGMENT Ale - Plaintiffs The 'Atchison, Topeka and Santa Fe Railway Company ("Santa Fe") and Southern Pacific Transportation Company ("Southern Pacific") (collectively "the Railroads"), have been involved in intensive settlement Inegotiations with representatives of the California State Board of Equalization ("SBE") and some of the defendant counties ("Counties"), for 11 approximately one year. As a result of these settlement negotiations, on !STIPULATION FOR ENTRY OF JUDGMENT Be I 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 1 25 26 September 1, 1989, representatives of the Railroads, the SBE, the Attornew General's Office and the County Counsel Steering Committee agreed in concep,. to a settlement, with the understanding that the specific details of the settlement were to be negotiated. During the next two months, those negotiations resulted in the submission of a proposed settlement agreement to the SBE. On December 7, 1989, the SBE met in executive session and approved the proposed settlement, subject to approval by the Counties. On December 14, 1989, representatives of the Railroads, the SBE, the Attorney General's Office and the County Counsel Steering Committee negotiated the specific details of the proposed settlement and agreed to recommend that their respective clients and constituents accept the proposed settlement in its present form. Under the terms of the proposed settlement, the Counties would be obligated to refund to Santa Fe and Southern Pacific $52,500,000.00, in addition to all amounts previously enjoined by this Court. Under the terms the proposed settlement, of the $52,500,000.00 cash refund, $21,400,000.00 would be payable to Santa Fe and $31,100,000.00 would be payable to Southern Pacific. The refund of the enjoined amounts, together with the cash refunds, represent the principal refunds and all interest accrued on said amounts for all tax years through 1988-89. The proposed settlement represents a substantial compromise of the Railroads' total claims for the relevant tax years, which, with all accrued interest, might exceed $300,000,000.009 exclusive of costs and legal fees. A copy of the proposed Settlement Agreement is attached hereto as Exhibit 1 and is incorporated by reference, as if fully set forth herein. In the event of any inconsistency between the terms, conditions, covenants and/or obligations set forth in the Settlement Agreement and this Stipulation, the Settlement Agreement shall control. (STIPULATION FOR ENTRY OF JUDGMENT -2- 1 2 3 4 5 6 7 item 11 12 13 14 15 16 17 18 19 20 21 22 - 23 24 Generally, the proposed settlement contemplates the dismissal of all other pending litigation in federal or state courts brought by either Railroad for tax years .1977-78 through 1988-89, and is intended to compromise all outstanding valuation, equalization and audit issues for all tax years, including the operating unitary and operating non -unitary property taxes assessed against Santa Fe and Southern Pacific -1 Under the proposed settlement, all parties will bear their own legal fees, expert witness fees and court costs incurred in the litigation. The parties believe that the proposed settlement is in the best interests of all concerned, particularly since it is estimated that this litigation has already consumed in excess of $15,000,000.00 in legal fees, expert witness fees and other related costs. Unfortunately, because there are 51 different county defendants, only some of whom have participated directly in the settlement negotiations, it has been impossible to obtain input from all of the affected Counties regarding the proposed settlement. The Counties have previously stipulated that the Attorney General (which is representing the SBE in this matter) could defend their interests in this litigation. Notwithstanding these prior stipulations, the Attorney General and the SBE are reluctant to force the Counties to accept the terms of the proposed settlement without giving all Counties an opportunity to review the proposed settlement and express their support or opposition thereto. This Stipulation has been prepared based upon the best judgment of the parties who have been controlling the litigation throughout. - In order to give the Counties an opportunity to be heard with 25 lIn addition, Santa Fe and the SBE are continuing their negotiations toward 26 resolution of. their underlying differences concerning the valuation and equalization methodologies used in assessing rail transportation property. STIPULATION FOR ENTRY OF JUDGMENT -3- i 21 3 � 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 .respect to any opposition they may have, Santa Fe, Southern Pacific and th^ SBE are desirous of having this Court schedule a hearing at which time ars, County may appear and lodge whatever objections they may have to the merits of the proposed settlement or to the form of Judgment which has been submitted herewith to effectuate it. After considering any such objections, the Court can either approve the Judgment in its present form, modify the Judgment to address those concerns voiced by the Counties in a manner which is consistent with the proposed settlement, or reject the proposed settlement outright. Moreover, it is expressly agreed by the Railroads and the SBE that unless the proposed settlement enjoys the support of at least 26 Counties Qr any number of Counties which comprise at least 51% of the cash refunds due under the proposed settlement, prior to February 8, 1990 at 5:00 P.M., this Stipulation shall be withdrawn and the hearing vacated.2 It is anticipated that some of the Counties may have difficulty satisfying the Judgment. It is not the desire of the Railroads to impose an undue hardship on any county, and the proposed form of Judgment allows the flexibility to make alternative arrangements in satisfaction of the Judgment. Finally, it is respectfully requested that the Court schedule a hearing as soon as possible after February 8, 1990, which is the last date for the Counties to approve the proposed settlement. Time is of the essence because if the Judgment is not entered before February 15, .1990, the iconsiderations which motivated the Railroads to compromise their claims as loutlined herein will result in the need to renegotiate the settlement on �------------------------ 2The Exhibit 1 Settlement Agreement has been circulated to each of the .Counties in order to allow the individual County Boards of Supervisors an opportunity to review the terms of the proposed settlement and report their approval or rejection to the Attorney General prior to the hearing on.this Stipulation for Entry of Judgment. ISTIPULATION FOR ENTRY OF JUDGMENT -4- 1 different terms. 1 ., DATED this 2 day of 0ecember,*1989. FENNEMORE CRAIG 3 4 ` 5 6' 7 8 9 10 11 12 13 14 1, 15 !j 1 E ; 17 18 1 29 .0 i V ` 1 1 23 24 ''. ' 1 26 STIPULATION FOR ENTRY OF MIGMEN r By 0. 2ff�eM—kOe-e-- - - - - P6f a J. y0it Jim L. W Suite 22CO, One Renaissance Square Two North Central Avenue Phoenix, Arizona 85004-2390 Attorneys for Plaintiffs The Atchison, Topeka and Santa Fe Railway Company and Southern Pacific Transportation Company CALIFORNIA ATTORNEY GENERAL • Yrr FRo rt,7- . Tyler �- R e 5e C. Murphy ' eputy .Attorney General `. 7th Floor, State Building San Francisca, California 94111 Attorneys for Defendant State Board of Equalization 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 PROOF OF SERVICE BY MAIL (Code Civ. Proc. Secs. 1013a, 2015.5) I, Paul J. Mooney, do hereby declare that I am a citizen of the United States, employed in the County of Maricopa, State of Arizona, over 18 years old, and that my business address is Suite 2200, One Renaissance Square, Two North Central Avenue, Phoenix, Arizona 85004-2390. I am not a party to the within action; on the ZJ,day of December, 1989, I deposited in the United States Mail a true copy of: STIPULATION FOR ENTRY OF JUDGMENT in said action, in a sealed envelope, with the postage thereon fully prepaid, addressed as follows: ISEE ATTACHED LIST icorrect. I declare under penalty of perjury that the foregoing is true and EXECUTED at Phoenix, Arizona this ay of December, 1989. Paul J. Moo y STIPULATION FOR ENTRY OF JUDGMENT S11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 James Williams, Esq. . BOARD OF EQUALIZATION OF THE STATE OF CALIFORNIA 1020 "N" Street Sacramento, California 95814 DeWitt W. Clinton, Esq. Deputy Los Angeles County Counsel LOS ANGELES COUNTY 648 Hall of Administration 500 West Temple Los Angeles, California 90012 Ms. Kitt Berman COUNTY SUPERVISORS ASSOCIATION OF CALIFORNIA 1100 "K" Street Sacramento, California 95814 Alan S. Marks, Esq. County Counsel COUNTY OF SAN BERNARDINO 4th Floor, 385 North Arrowhead San Bernardino; California 92415 James F. May, Esq. Senior Deputy County Counsel COUNTY OF ALAMEDA Room 463 1221 Oak Street Oakland, California 94612 Everett B. Gibson, Esq. LAUGHLIN, HALLE, GIBSON & McBRIDE Suite 650, Morgan Keegan Tower 50 North Front Street Memphis, Tennessee 38103-1106 Robert F. Tyler, Esq. James W. McBride, Esq. Supervising Deputy Attorney General LAUGHLIN, HALLE, GIBSON & McBRIDE 1515 "K" Street Suite 1000 Sacramento, California 95814 1612 K Street, N.W. Washington, D.C. 20006-2802 Robert E. Murphy, Esq. Deputy Attorney General 350 McAllister Street 7th Floor, State Building San Francisco, California 94111 William E.'Saul, Esq. SOUTHERN PACIFIC TRANSPORTATION COMPANY Southern Pacific Building One Market Plaza San Francisco, California 94105 Jay R. Martin, Esq. CROSBY, HEAFY, ROACH & MAY 1999 Harrison Street Oakland, California 94612-3573 Weyman I. Lundquist, Esq. Joan K. Irion, Esq. HELLER, EHRMAN, WHITE & McAULIFFE Suite 310, 333 Bush Street San Francisco, California 94105 G. Christopher Ritter, Esq. Steven Woodside, Esq. GORDON & REES County Counsel 20th Floor, Embarcadero Center West SANTA CLARA COUNTY COUNSEL 275 Battery Street 9th Floor San.Francisco, California 94111 70 West Hedding San Jose, California 95110 Sherwood M. Sullivan HOPKINS & CARLEY 150 Almaden Boulevard San Jose, California 95113 ISTIPULATION FOR ENTRY OF JUDGMENT Paul J. Mooney, Esq. FENNEMORE CRAIG Suite 2200, One Renaissance Square Two North Central Avenue Phoenix, Arizona 85004 -7- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 John F. Hahn, Esq. County Counsel Paty Keene, Esq., Deputy COUNTY OF AMADOR 108 Court Street Jackson, California 95642 Jeffrey Tuttle, Esq. County Counsel COUNTY OF CALAVERAS Calaveras City Government Center Post Office Box 667 San Andreas, California 95249 Dennis C. Graves, Esq. Deputy County Counsel COUNTY OF CONTRA COSTA County Administration Building Post Office Box 69 Martinez, California 94553 Devon L. Workman, Esq. County Counsel COUNTY OF GLENN 515 West Sycamore Street Willows, California 95988 Gregory L. James, Esq. County Counsel COUNTY OF INYO Post Office Box 428 Independence, California 93526 Bernard C. Barmann, Esq. County Counsel COUNTY OF KERN 5th Floor 1415 Truxtun Avenue Bakersfield, California 93301 Denis A. Eymil, Esq. County Counsel COUNTY OF KINGS Kings County Government Center 1400 West Lacey Boulevard Hanford, California 93230 STIPULATION FOR ENTRY OF JUDGMENT Susan Roff Minasian County Counsel COUNTY OF BUTTE 25 County Center Drive Oroville, California 95965-3380 Williams James Murphy, Esq. County Counsel COUNTY OF COLUSA 1213 Market Street Colusa, California 95932 David W. Whittington, Esq. County Counsel COUNTY OF EL DORADO 330 Fair Lane Placerville, California 95667 Max E. Robinson, Esq. County Counsel COUNTY OF FRESNO Fifth Floor, 2220 Tulare Street Post Office Box 1549 Fresno, California 93716 Thomas M. Fries, Esq. County Counsel COUNTY OF IMPERIAL 940 West Main Street City Administration Center El Centro, California 92243-2869 James P. Lough, Esq. County Counsel Richard K. Kula, Esq. Deputy County Counsel COUNTY OF HUMBOLDT Humboldt County Courthouse Room 110, 825 Fifth Street Eureka, California 95501 Dawson Arnold, Esq. County Counsel COUNTY OF LASSEN 707 Nevada Street Post Office Box 150 Susanville, California 96230 20 1 2 3 4 5 6 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Jeffrey L. Kuhn, Esq. County Counsel COUNTY OF MADERA 209 West Yosemite Avenue Madera, California 93637 H. Peter Klein, Esq. County Counsel COUNTY OF MENDOCINO Room 202, Courthouse Ukiah, Cal i forni'a 95842 Ruth Sorensen, Esq. District Attorney COUNTY OF MODOC Post Office Box 1171 Alturas, California 96101 James A. Curtis, Esq. County Counsel COUNTY OF NEVADA Post Office Box 6100 Nevada City, California 95959-6100 Richard K. Denhalter, Esq. County Counsel COUNTY OF PLACER 175 Fulweiler Avenue Auburn, California 95603 L.B. Elam, Esq. County Counsel Robert Ryan, Deputy COUNTY OF SACRAMENTO Suite 2650 700 "H" Street Sacramento, California 95814 Lloyd M. Harmon, Jr., Esq. County Counsel COUNTY OF SAN DIEGO Room 355, 1600 Pacific Highway San Diego, California 92101 John F. Cheadle, Esq. County Counsel COUNTY OF SAN JOAQUIN Room 711 222 East Weber Avenue Stockton, California 95202 STIPULATION FOR ENTRY OF JUDGMENT Douglas J. Maloney, Esq. County Counsel COUNTY OF MARIN Suite 342, Civic Center San Rafael, California 94903 Dennis L. Myers, Esq. County Counsel COUNTY OF MERCED 2222 "M" Street Merced, California 95340 Robert Westmeyer, Esq. County Counsel COUNTY OF NAPA Room 3,01, 1195 Third Street Napa, California 94559 David R. Chaffee, Esq. Deputy County Counsel COUNTY OF ORANGE Room 407, 10 Civic Center Plaza Post Office Box 1379 Santa Ana, California 92702-1379 Gerald J. Geerlings, Esq. Riverside Deputy County Counsel COUNTY OF RIVERSIDE Suite 300 3535 Tenth Street Riverside, California 92501-3674 Steven A. Sanders, Esq. County Counsel COUNTY OF SAN BENITO 498 Fifth Street Hollister, California 95023 John Doherty, Esq. Deputy City Attorney COUNTY OF SAN FRANCISCO 6th Floor, 1390 Market Street San Francisco, California 94102 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Thomas Casey, Esq. County Counsel (COUNTY OF SAN MATEO Hall of Justice 401 Marshall Street Redwood City, California 94063 Dwight L. Herr, Esq. County Counsel COUNTY OF SANTA CRUZ Room 505 701 Ocean Street Santa Cruz, California 95060 William W. Pangman, Esq. County Counsel COUNTY OF SIERRA Courthouse, Box 495 Downieville, California 95936 Thomas H. Gordinier, Esq. County Counsel COUNTY OF SOLANO Courthouse 580 Texas Street Fairfield, California 94533 Michael H. Krausnick, Esq. County Counsel COUNTY OF STANISLAUS 2nd Floor, 1100 "H" Street Post Office Box 74 Modesto, California 95353 Nelson D. Buck, Esq. County Counsel COUNTY OF TEHAMA Post Office Box 8189 Red Bluff, California 96080 Lita Blatner,.Esq. County Counsel COUNTY OF TULARE County Civic Center 2900 West Burrel Visalia, California 93291 STIPULATION FOR ENTRY OF JUDGMENT James P. Lindholm, Jr., Esq. County Counsel COUNTY OF SAN LUIS OBISPO County Government Center Room 386 San Luis Obispo, California 93408 Enrique R. Sanchez,. Esq. Deputy County Counsel COUNTY OF SANTA BARBARA 105 East Anapamu Street Santa Barbara, California 93101 David R. Frank, Esq. Shasta County Counsel COUNTY OF SHASTA 1640 West Street Redding, California 96001 Frank J. DeMarco, Esq. County Counsel COUNTY OF SISKIYOU 304 Lane Street Post Office Box 659 Yreka, California 96097 James Bots, Esq. County Counsel COUNTY OF SONOMA Room 116-A 575 Administration Drive Santa Rosa, California 95403-2881 Darrell W. Larsen, Esq. County Counsel COUNTY OF SUTTER 463 Second Street Yuba City, California 95991 David L. Cross, Esq. District Attorney Trinity County Courthouse Post Office Box 310 Weaverville, California 96093 James McBride, Esq. County Counsel COUNTY OF VENTURA 800 South Victoria Avenue Ventura, California 93009 -10- I 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 1 25 26 James Mack, Esq. County Counsel COUNTY OF YOLO Room 201, 625 Court Street Post Office Box 127 Woodland, California 95695 Ralph R. Kuchler, Esq. Monterey County Counsel COUNTY OF MONTEREY Post Office Box 1587 Salinas, California 93902 ISTIPULATION FOR ENTRY OF JUDGMENT Timothy P. Hayes, Esq. County Counsel COUNTY OF YUBA Courthouse 3rd Floor., 215 Fifth Street Marysville, California 95901 -11- SETTLEMENT AGREEMENT This Settlement Agreement is made and entered into by and between THE ATCHISON, TOPEKA & SANTA FE RAILWAY COMPANY, a corporation (hereinafter "Santa Fe"), SOUTHERN PACIFIC TRANSPORTATION COMPANY, a corporation (herein- after "Southern Pacific"), and THE STATE BOARD OF EQUALIZATION OF THE STATE OF CALIFORNIA (hereinafter "SBE"), and the COUNTIES OF: ALAMEDA, AMADOR, BUTTE, CALAVERAS, COLUSA, CONTRA COSTA, EL DORADO, FRESNO, GLENN, HUMBOLDT, IMPERIAL, INYO, KERN, KINGS, LASSEN, LOS ANGELES, MADERA, MARIN, MENDOCINO, MERCED, MODOC, MONTEREY, NAPA, NEVADA, ORANGE, PLACER, RIVERSIDE, SACRAMENTO, SAN BENITO, SAN BERNARDINO, SAN DIEGO, SAN JOAQUIN, SAN LUIS OBISP09 SAN MATED, SANTA BARBARA, SANTA CLARA, SANTA CRUZ, SHASTA, SIERRA, SISKIYOU, SOLAN09 SONOMA, STANISLAUS, SUTTER, TEHAMA, TRINITY, TULARE, VENTURA, YOLO, YUBA, AND THE CITY AND COUNTY OF SAN FRANCISCO (hereinafter "the Counties"), (collectively "the Parties"). WHEREAS, certain disputes have arisen between the Parties, and WHEREAS, Santa Fe and Southern Pacific (collectively referred to as "the Railroads"), are 'involved in a number of different lawsuits against SBE and the Counties, seeking the refund of property taxes levied against the Railroads' California property for tax years 1977-78 through 1988-89 (Southern Pacific) and 1978-79 through 1988-89 (Santa Fe), including: The Atchison. Topeka & Santa Fe Railway Company. et al. v. State Board of Equalization of the. State of California. et' al., Nos. 761819, 778986 and 788219 (consolidated), presently on appeal to the First Appellate District of the California Court of Appeal (No. AO 42894); The Atchison. Topeka & Santa Fe Railway Company, et al. v. State Board of Equalization of the State of California, et al., No. 855589, presently stayed pending the outcome of the appeal in No. AO 42894; Southern Pacific Transport tion Company, et al, V. Stgte Board of Eau&lization of the State of California. et al., No. 28134, pending remand to the SBE from the Sacramento County Superior Court; Southern Pacific Transportation Company._ et al, v, State -Board of Equalization of the State of California. -et al, No. 810433 and Southern Pacific Transportation Company, Rt al, v, State Board of Foualization of the State of California, et al,, No.'877359, both of which are. pending in the San Francisco Superior Court and are stayed pending the outcome of the appeal in No. AO 42894; and Southern Pacific Transportation Company, et a1, v, State of California. et al., Master Consolidated Number C 81 4365 DLJ, (related numbers: C 81-4848 DLJ, C 82-6009 DLJ, C 83-4704 DLJ, C 83-5689 DLJ, C 83-5690 DLJ, C 82 6030 DLJ), now pending in the United States District Court for the Northern District of California, (hereinafter collectively referred to as the "Litigation"), and WHEREAS, the Railroads seek refunds of portions of those assessments which have been enjoined, and WHEREAS, the Railroads seek refunds in addition to the amounts which have been enjoined, and WHEREAS, the Parties wish to resolve their differences, terminate the Litigation and avoid further liability; NOW, THEREFORE, in consideration of the foregoing recitals and the provisions, obligations, agreements, releases, covenants, rights and duties contained herein, the sufficiency and adequacy of such consideration being hereby acknowledged, the Parties agree as follows: 1. That all tax monies, collection of which have been previously enjoined in favor of either Santa Fe or Southern Pacific pertaining to tax years through 1988-89, inclusive, shall be refunded by abatement of that portion of such assessments levied against the Railroads' property in the State -2- of California which has been enjoined, with no interest due on such amounts. 2. That all payments made to the court, bonds, letters of credit or other security which has been posted or deposited to secure the preliminary injunctions referred to in Paragraph 1 above, shall be refunded, dissolved and exonerated upon final approval of this Settlement Agreement as outlined herein. 3. That in addition to those enjoined amounts referred to in Paragraph 19 above, monies totalling Fifty -Two Million, Five Hundred Thousand and 00/100 Dollars (552,5009000.00) shall be refunded as follows: $21,400,000.00 to Santa Fe and $31,100,000.00 to Southern Pacific. This amount represents all principal and interest on said refunds, calculated (for convenience only) through June 30, 1989. 4. That the monies refunded under Paragraph 3 above shall be paid by the Counties as set forth in Exhibit A, which is attached hereto and incorporated herein by reference. Exhibit A is an allocation of the total refund, including interest, to each County, prepared by the SBE based on all available information. The allocated share shall be entered as the Judgment against each County and, except as provided in Paragraph 5, infrsl, no County shall be liable for any amount in excess of the allocated amount set forth for that County in Exhibit A. 5. After entry of final Judgments terminating the Litigation, interest on any amounts which remain unpaid as of March 1, 1990, shall accrue from that date forward at the rate of ten percent (10%) per annum. 6. That the refund of the enjoined amounts set forth in Paragraph 1 above, together with the refund monies set forth in Paragraph 3 above, represent complete satisfaction and liquidation of the Railroads' claims for refund of property taxes and interest for all tax years through 1988-89, inclusive. -3- 7. That this Settlement Agreement does not contemplate or endorse any particular valuation methodology. 8. That although part of the amounts being refunded pursuant to this Settlement Agreement are intended to reflect equalization relief required under 49 U.S.C. § 11503, nothing herein shall be admissible in any present or future proceeding as an admission, indication or concession by any Party as to the appropriate equalization ratio for the State of California for these Parties in any future tax year, nor for any other parties in these or any future tax years. 9. That this Settlement Agreement does not resolve any issues relating to tax year 1989-90. 10. That they will authorize their respective counsel to execute whatever form of documentation is necessary or required to terminate the Litigation, including: (a) the SBE, Counties and Santa Fe, by and through counsel will stipulate that the First District Court of Appeal enter an Order, in Case No. AO 42894, remanding that portion of the appeal pendi.ng between the SBE, Counties and Santa Fe to the trial court with directions to vacate the prior judgment in favor of Santa Fe and enter a dismissal of said action as to Santa Fe, with the notation that the case has been settled between defendants and Santa Fe without any acknowledgment or concession as to the relative merit of any party's legal or factual contentions; (b) Southern Pacific's 1977 refund suit will be dismissed with prejudice by stipulation, since no refund is being allocated to that case under this Settlement Agreement; (c) Santa Fe and Southern Pacific will stipulate with the Counties and the SBE to dismiss with prejudice each of the Superior Court cases now pending, with the notation that the Parties have settled their dispute; (d) the Parties will stipulate to the entry of a final judgment in the consolidated federal court cases which grants ■ME refunds to Santa Fe and Southern Pacific in accordance with Paragraphs 1 through 4 above; and (e) the Railroads will waive or withdraw any claims for refund in all tax years through 1988-89, inclusive, based on the refund relief granted herein. 11. That the Judgment so entered may be recorded in each County where either Santa Fe or Southern Pacific has taxable property, pending.. satisfaction of the Judgment against each such County. Except as provided herein, all amounts due to Santa Fe or Southern Pacific under the Judgment shall be due and payable on or before March 1, 1990, without further interest. Any County may elect to pay 75% of the total amount due on or before March 1, 1990, with the balance, including any accrued interest, due by no later than December 31, 1990. Any County which is unable to meet this alternative payment schedule may enter into a separate agreement with Santa Fe and/or Southern Pacific setting forth a mutually acceptable payment plan. Any such agreement shall be separately executed by and between the affected Parties and shall supersede the payment terms outlined herein. Santa Fe and/or Southern Pacific shall offer to all Counties the same payment terms offered to any one of the five counties paying the largest total refunds, as per Exhibit A. Any County in which Santa Fe continues to do business in tax year 1989-90 or 1990-91, may also credit as an offset against 1989-90 (second installment) or 1990-91 taxes owed, any portion of Santa Fe's operating or non-operating property taxes in complete or partial satisfaction of the outstanding Judgment. It is expressly agreed, however, that any deferred payment or future -tax credit shall bear interest at ten percent (10%) per annum from March 1, 1990 until paid. To the extent that any portion of the deferred payment is paid as an offset against future tax liabilities for the years 1989-90 or 1990-91, the payment date for purposes of computing interest on those deferred payments shall be the due -5- date(s) of each such tax installment. Notwithstanding any of the foregoing, and subject to the Railroads' right to object to a County's claim of financial hardship, any County which can satisfy the criteria set forth in California Government Code Section 910.6 may apply to the federal court for payment relief under the terms of that section. 12. Any and all payments, other than offsets provided in. Paragraph 11, Supra, made by any of the Counties in which both Santa Fe and Southern Pacific have asserted claims for relief shall be by warrant made payable to: "The Atchison, Topeka and Santa Fe Railway Company" " "Daniel J. Westerbeck as Attorney -in -Fact for Southern Pacific Transportation Company," pursuant to that certain Power of Attorney dated October 11, 1988, executed by Richard L. Gunn, General Tax Commissioner of Southern Pacific Transportation Company. A copy of that Power of Attorney is attached hereto as Exhibit B and incorporated herein by this reference. All such payments shall be mailed or delivered to: "Stephen J. Morrow, Esq., Assistant Vice -President and General Tax Counsel, The Atchison, Topeka and Santa Fe Railway Company, 224 South Michigan Avenue, Chicago, Illinois 60604." Any and all payments made by any of the Counties in which only Southern Pacific has asserted a claim for relief shall be payable by warrant made payable to: "Daniel J. Westerbeck as Attorney -in -Fact for Southern Pacific Transportation Company," pursuant to the Exhibit B Power of Attorney. All such payments shall be mailed via overnight mail or 'delivered to: "Daniel J. Westerbeck, Esq., Vice -President and Tax Counsel, Santa Fe Pacific Corporation, 224 South Michigan Avenue, Chicago, ` Illinois 60604." Any' such payments shall be deemed paid when mailed as se forth herein. Upon receipt of final payment by each County, Santa Fe and/or Southern Pacific shall file a Satisfaction of Judgment against each such County with the court. I Me 13. That this Settlement Agreement is intended to resolve All_ outstanding valuation, equalization and audit issues for ,L11 years, including the operating unitary and operating non -unitary property taxes assessed against Santa Fe and Southern Pacific for all tax years through 1988-89, inclusive. 14. That they shall bear their own legal fees, court costs and other expenses incurred in the Litigation, including any legal fees incurred in finalizing this Settlement Agreement. 15. That this Settlement Agreement is intended by both sides as the compromise and settlement of disputed and unliquidated claims. Nothing in this Settlement Agreement or in any Judgment ultimately entered as a result thereof, is or shall be considered either directly or by presumption or inference, as evidence of any admission of liability or of any issue of law or fact, nor is nor shall either be admissible against Santa Fe/Southern Pacific, their attorneys, the SBE, its attorneys, the Counties, their attorneys, or any of them, in this or any current or future administrative or court proceeding. By payment of any sums specified herein, neither the Counties, nor any of them, nor the SBE make any admission or statement regarding the various equalization or valuation claims asserted by Santa_ Fe and/or Southern Pacific in the Litigation. 16. That this Settlement Agreement may be executed in counterparts, each of which shall be deemed an original, but all of, which together shall constitute one and the same agreement.. . This .Settlement Agreement shall be binding only upon execution by all. Parties hereto on or before February 8, 1990 at 5:00 PM. If all of the Counties do not approve this Settlement Agreement on or before February 8, 1990 at 5:00 PM, then upon execution or approval of this Settlement Agreement by any number of Counties which aggregate at least 51p of the total cash refunds specified i n Paragraph -7- 3, as allocated in Exhibit A (526,7750000.00)9 = upon execution or approval of this Settlement Agreement by at least 26 Counties, prior to February 8, 1990 at 5:00 PM, the proposed settlement set forth herein shall be submitted to the United States District Court for the Northern District of California for approval of a Stipulated Judgment setting forth the terms outlined herein. Pending the Counties' opportunity to review the proposed settlement, a Stipulation for Entry of Judgment may be submitted to the Court, provided that any Hearing on such Stipulation shall not be set prior to February 9, 1990. Any County which approves this Settlement Agreement shall notify the Attorney General's Office (Mr. Robert F. Tyler at (916) 324-5155) by no later than 5:00 PM on Thursday, February 8, 1990, and shall simultaneously forward to Mr. Tyler an executed copy of this Settlement Agreement via Facsimile transmission at (916) 324-5205, hand -delivery or overnight mail to 1515 "K" Street, Sacramento, California 95814. If fewer than 26 Counties or Counties paying less than 519 ($26,775,000.00) of the refunds specified in Exhibit A, have given notice of their approval of this Settlement Agreement in the manner provided prior to 5:00 PM on Thursday, February 8, 1990, then the Stipulation for Entry of Judgment shall be deemed withdrawn and any Hearing on such Stipulation shall be vacated. DATED this day of , 19_- THE ATCHISON, TOPEKA & SANTA FE RAILWAY COMPANY By Stephen J. Morrow Assistant Vice President and General Tax Counsel INDIVIDUAL SIGNATURE PAGES OMIT= FROM EXHIBIT. Al ameda Amador Butte Calaveras Colusa Contra Costa El Dorado Fresno Glenn Humboldt Imperial Inyo Kern Kings Lassen Los Angeles Madera Marin Mendocino Merced Modoc Monterey Napa Nevada Oranae Placer Riverside Sacramento San Benito San Bernardino San Diego San Francisco San Joaquin San Luis Obispo San Mateo Santa Barbara Santa Clara Santa Cruz Shasta Sierra Siskiyou Sol ano Sonoma Stanislaus Sutter Tehama Trinity Tulare Ventura Yolo Yuba TOTAL S 390709693.33 $ 79965.90 S 2289023.30 S 149398.27 S 939205.04 S 2,0799647.49 S 339946.28 S 191179876.28 S 909649.02 $ 859139.86 S 6779876.43 $ 309169.64 S 2,1219317.14 S 1699331.47 S 2949064.94 $139952,484.76 S 2509366.23 S 61,932.68 S 879436.38 S 4549939.80 $ 2659942.08 $ 539,377.69 S 609960.09 S 2649374.92 $ 19665,465.28 19658,863.87 S 190539881.13 5.290099247.09 S 309000.62 S 795439398.30 S 192959622.00 $ 2,0019797.48 S 1,084,728.02 S 376,970.92 S 197379011.00 S 6059279.82 S 195609251.31 S 1689967.36 S 3959852.66 $ 9,194.51 $ 5829483.96 S 343,277.26 S 1229137.86 S 3839037.49 $ 569305.92 $ 2399304.65 $ 6,387.09 S 601,107.02 S 5569055.52 S 270,156.46 $5295009000.00 Southern Pacific �:ransportation Company, a Delaware Corporation, with principal Office in San Francisco, Califo^:ia, pursuant to Article XIV of the Share Purchase Agreement dated as of December 24, 1987, among Santa Fe Southern Pacific Corporation and Southern Pacific Company, and Rio G.ande Industries, Inc. and SPTC Holding, Inc. for the sale of the shares of Southern Paci:ic Transpomation Company, hereby appoints : Daniel j. Westerbeck, Vice President and ':ax Counsel, Santa Fe Southern PaciL_c Corporation, d.24 South Michigan Avenue, Chicago, Illinois 60604, (and, in the event he ceases to hold that position, the successcr Vice President and Tax Counsel or other cried tax o f f icer) as a or attorney-in-tact to represent the taxpayer State of before any off f�f ice iforor division of the State Board of Equalization, California and/or any and/or any or all counties of the State of or all other municipalities or political subdivisions or taxing districts of the State of California in connect-ios�a any d or valorem property tax for the years that the lien date atter January 1, 1977, and fall on or before December 31, 19881 (this will include the tax fiscal years beginning July 1, 1977► may be any and ending June 30, 19891) for which there if Issue or inquiry concerning the liability, it anY of Southern ` f the of orenent_cned Pacific Transportation Company for any o� taxes. The attorney-in-fact is authorized, subject 6. written revocation, to receive confidential information and to perform can perf orza wi`•..h respect to any and all acts that ,he taxpayer ,`o the above specified tax matters, including but not limited the right to receive, endorse, and collec%. checks, drafts or �utes other remittances for refunds, to execuLe extensions of s..a,. of limitation, and to sian powers of attorney. The attorney-= fact is authorized to delegate authority or to substitute atateBoo�h�= representative. The taxpayer also revues�s what the S cf Ecualization and/or any other taxing body sendacopotheof notices and other written communications add_ ax taxpayer in proceedings involving the above tax natters to : Daniel J. Westerbeck, 224 South Kichigan Ave, Chicago, Illinois 60604. Telephone: (312) 786-6901. r This Power of Attorney. evokes all earlier powers of on le w attorney, if any, and tax in authorizations fi+`h the State Board of Equalization for the same tax matte=s and years or periods covered by this Power Of At♦,.orneY. SOU TERN PACIFIC SPORTATION COM_" -%N' Dated: t By Richard L. Gunn Its General Tax Corr,iss Toner z 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Paul J. Mooney - 006708 Jim L. Wright - 010531 FENNEMORE CRAIG Suite 22009 One Renaissance Square Two North Central Avenue ,Phoenix, Arizona 85004-2390 1(602) 257-5492/257-5441 DEC _,10 CZ sem/ JAN 0 3 1590 COUNTY COUNSEL'S OFFICE Attorneys for Plaintiffs The Atchison-, Topeka and Santa Fe Railway Company and Southern Pacific Transportation Company IN THE UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SOUTHERN PACIFIC TRANSPORTATION ) MASTER CONSOLIDATED COMPANY, g al., ) NUMBER C 81 4365 DLJ Plaintiffs, ) C 81-4848 DLJ ) C 82-6009 DLJ VS. ) C 83-4704 DLJ C 83-5689 DLJ STATE OF CALIFORNIA, gl1., ) C 83-5690 DLJ Defendants. ) NO. C 82 6030 DLJ . ) JUDGMENT THE ATCHISON, TOPEKA & SANTA FE ) RAILWAY COMPANY, -al a1_, ) Plaintiffs, ) vs. ) STATE BOARD OF EQUALIZATION, get al., ) Defendants. ) IThe -Court, having considered the Stipulation for Entry of Judgment jfiled by the attorneys representing plaintiffs The'Atchison, Topeka and Santa Fe Railway Company ("Santa Fe") and Southern Pacific Transportation Company ("Southern Pacific"), and the State Board of Equalization of the State of California"SBE" and having held a hearing to consider any objections to ( ), 9 the terms set forth in that Stipulation, and the Court being fully apprised of JUDGMENT -1- 1 2 3 4 5 6 7 9 10 11 12 13 14 15 16 17 18 the issues; NOW THEREFORE, IT IS HEREBY ORDERED, ADJUDGED AND DECREED entering judgment in favor of the plaintiffs Santa Fe and Southern Pacific on their claims of discriminatory assessment and overvaluation of their rail transportation property located within the State of California in violation of 49 U.S.C. § 11503, as follows: 1. All tax monies, collection of which have been previously enjoined in favor of either Santa Fe or Southern Pacific pertaining to tax years 1988-89, inclusive, shall be refunded by abatement of that portion of such assessments levied against the plaintiffs' rail transportation property in the State of California which has been enjoined, with no interest due on such amounts; 2. In addition to those enjoined amounts referred to in Paragraph 1, above, monies totalling Fifty -Two Million, Five Hundred Thousand and no/" Dollars ($52,500,000.00) shall be refunded as follows: $21,400,000.00 to Santa Fe and $31,100,000.00 to Southern Pacific. These amounts represent all principal and interest on said refunds, calculated (for convenience only) through June 30, 1989; 19 3. The monies refunded under Paragraph 2, above, shall be paid by 20 the defendant Counties as set forth in Exhibit A, which is attached hereto and 21 incorporated herein by reference. Exhibit A is an allocation of the total 22 refund, including 'interest, to each County defendant, prepared by the SBE 23 based on all available information. The allocated share shall be entered as 24 the Judgment against each County defendant and, except as provided in 25 Paragraph 5, infra, no County shall be liable for any amount in excess of the 26 allocated amount set forth for that County in Exhibit A; -2- 4. The refund of the enjoined amounts set forth in Paragraph 1 1 above, together with the refund monies set forth in Paragraph 2 above, 2 3 represent complete satisfaction and liquidation of the Railroads' claims for 4 refunds of property taxes and interest for all tax years through 1988-89, 5 inclusive; 6 5. Interest shall accrue on any amounts which remain unpaid after 7 March 1, 1990 at the rate of ten percent (10%) per annum; 8 6. All payments made to the Court, bonds, letters of credit or 9 other security which has been posted or deposited to secure the preliminary 10 injunctions previously entered by this Court, are hereby refunded, dissolved 11 and exonerated; 12 7. Nothing in this Judgment contemplates or endorses any 13 particular valuation methodology or any particular level of equalization 14 relief, nor shall anything herein be admissible in any present or future 15 proceeding as an admission, indication or concession by any party as to the 16 validity of any valuation methodology or particular level of equalization 1 Irelief; and 18 .8. Upon entry of this Judgment, Santa Fe, Southern Pacific, the 19 Counties, and the SBE will authorize their respective counsel to execute 20 whatever form of documentation is necessary or required to terminate the 21 litigation, including: (1) the SBE, Counties, and Santa Fe, by and through 22 counsel will stipulate that the First District Court of Appeal enter an Order 23 in Case No. AO 42894, remanding that portion of the appeal pending between the 24 ,SBE, Counties, and Santa Fe to the trial court, with directions to vacate the 25 prior judgment in favor of Santa Fe and enter a dismissal of said action as to 26 Tanta Fe, with.the notation that the case has been settled between defendants UDGMENT -3- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 and Santa Fe without any acknowledgment or concession as to .the relative meri` of any party's legal or factual contentions; (2) Southern Pacific's 19/, refund suit will be dismissed with prejudice by stipulation, since no refund is being allocated to that case under this settlement; (3) Santa Fe and Southern Pacific will stipulate with the Counties and the SBE to dismiss with prejudice each of the Superior Court cases now pending, with the notation that the parties have settled their dispute; and (4) the Railroads will waive or withdraw any claims for refund in all tax years through 1988-89, inclusive, based on the refund relief granted herein. IT IS FURTHER ORDERED ADJUDGED AND DECREED that this Judgment is intended to resolve all outstanding valuation, equalization and audit issues for all tax years through 1988-89, including the operating unitary and operating non -unitary property taxes assessed against Santa Fe and Southern Pacific for all tax years through 1988-89, inclusive. IT IS FURTHER ORDERED that all parties shall bear their own legal fees, court costs and other expenses incurred. IT IS FURTHER ORDERED that this Judgment may be recorded in each county where either Santa Fe or Southern Pacific has taxable property, pending satisfaction of the Judgment against each such county as allocated in the attached Exhibit A. Except as provided herein, all amounts due to Santa Fe or Southern Pacific under this Judgment shall be due'and payable on or before March 1, 1990, without further interest. Any county may elect to pay 75 percent of the total amount due on or before March 1, 1990, with the balance due by no later than December 31, 1990. Any county which is unable to meet this alternative payment schedule may enter into a separate agreement with Santa Fe and/or Southern Pacific setting forth a mutually acceptable payment JUDGMENT -4- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 plan. Any such agreement shall be separately executed by and between the affected parties and shall supersede the payment terms outlined herein. Santa Fe and/or Southern Pacific shall offer to all counties the same payment terms offered to any one of the five counties paying the largest total refunds under Exhibit A. Any county in which Santa Fe continues to do business in tax year 1989-90 or 1990-91 may also credit as an offset against second installment 1989-90 or 1990-91 taxes owed, any portion of Santa Fe's operating or non- operating property taxes in complete or partial satisfaction of the outstanding judgment, with interest as set forth herein, calculated through the date(s) each tax installment would otherwise be payable. Notwithstanding any of the foregoing and subject to Santa Fe's and/or Southern Pacific's right to object to a County's claim of financial hardship, any county which can satisfy the criteria set forth in California Government Code Section 970.6 may apply to this Court for payment relief under the terms of that section. IT IS FURTHER ORDERED, ADJUDGED AND DECREED that there is no just reason for delay and judgment is entered at this time. DONE IN OPEN COURT this of 1990. JUDGMENT The Honorable D. Lowell Jensen, Judge of the United States District Court, Northern District of California -5- 1 II APPROVED AS TO FORM: 2I 3I�21P ,I u l J . M ey 4 I Attorney or Plaintiffs i WIle overy Ty 1 er { tore for Defendant. �� y� Sia e and of Equalization 8 ' 9; II.I 10 I �I 11 I 12 I� 13 14. ; 15 i ,I 16 P 18 i 191- 20 9 -20 21 �i 22 I� 23 I. 24 25 I� . I 26 ,I i' (JUDGMENT Alameda S 390709693.33 Amador S 79965.90 S 2289023.30 Butte S 149398.27 Calaveras S 93,205.04 Colusa Contra Costa S 29079,647.49 El Dorado S 339946.28 S 191179876.28 Fresno $ 909649.02 Glenn Humboldt $ 85,139.86 Imperial 5 6779876.43 S 30,169.64 Inyo S 291219377.14 Kern S 169,331.47 Kings S 2949064.94 Lassen Los Angeles 51399529484.76 Madera 5 2509366.23 Marin S 61,932.68 Mendocino S 879436.38 5 4549939.80 Merced S 265,942.08 Modoc � S 539,377.69 Monterey $ 60,960.09 Napa 5 2649374.92 Nevada 5 1,6659465.28 Orange 5 19658,863.87 Placer Riverside 5 19053,881.13 Sacramento 5 290099247.09 San Benito $. 301000.62 S 795439398.30 San Bernardino 5 192959622.00 San Diego San Francisco S 290019797.48 San Joaquin $ 190849728.02 S 376,970.92 San Luis Obispo S 197379011.00 San Mateo S 605,279.82 Santa Barbara S 115609251.31 Santa Clara 5 1689967.36 Santa Cruz 5 3959852.66 Shasta S 9,194.51 Sierra S 5829483.96 Siskiyou S 3439277.26 Solano $ 1229137.86 -- Sonoma Stanislaus S 383,037.49 Sutter S 569305.92 Tehama S 239,304.65 Trinity $ 69387.09 5 6019107.02 Tulare S 5569055.52 Ventura $ 270,156.46 Yolo 91.036.33$. Yuba S $52,500,000.00 TOTAL 1 2 3 4 51 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 � 22 23 24 25 26 Paul J. Mooney - 006708 Jim L. Wright - 010531 FENNEMORE CRAIG Suite 2200, One Renaissance Square Two North Central Avenue Phoenix, Arizona 85004-2390 (602) 257-5492/257-5441 Dkc JAN 0 3 1990 COUNTY COUNSEL'S OFFiCE Attorneys for Plaintiffs The Atchison, Topeka and Santa Fe Railway Company and Southern Pacific Transportation Company IN THE UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA (SOUTHERN PACIFIC TRANSPORTATION ) COMPANY, jat 11. , ) } Plaintiffs, ) VS. ) ) STATE OF CALIFORNIA, kJ al., ) Defendants. ) THE ATCHISON, TOPEKA & SANTA FE ) RAILWAY COMPANY, at &.19 ) Plaintiffs, ) VS. ) STATE BOARD OF EQUALIZATION, gt al., ) Defendants. ) TO ALL PARTIES AND THEIR RESPECTIVE COUNSEL: MASTER CONSOLIDATED NUMBER C 81 4365 DLJ C 81-4848 DLJ C 82-6009 DLJ C 83-4704 DLJ C 83-5689 DLJ C 83-5690 DLJ NO. C 82 6030 DLJ NOTICE OF HEARING h (t 11 _A� Please take notice that the Court will hear any and all objections Ito the Stipulation for Entry of Judgment filed by plaintiffs The Atchison, Topeka & Santa Fe Railway Company, outhern Pacific Transportation Company and State Board of Equalization o he State of California in the above -captioned cases on' Friday the 9th day of February 1990, at NOTICE OF HEARING 91E 1 2:00 o'clock P.M. in Department 3. i 2 DATED this 29th day of December, 1989. 3 FENNEMORE CRAIG 4 5 By--f44 Paul J. Mooy 6 Jim L. Wrig t Suite 2200, One Renaissance Square 7 Two North Central Avenue Phoenix, Arizona 85004-2390 8 Attorneys for Plaintiffs The Atchison, Topeka and Santa Fe 9 Railway Company and Southern Pacific Transportation Company 10 11 12 13 14 15 16 17 18 19 20 21 , 22 23 24 25 26 NOTICE OF HEARING -2- i z 3� 4 5 6 7 8' 9 10 11 12 I 13 14 15 16 17 18 19 20 21 22 23 24 25 26 PROOF OF SERVICE BY MAIL (Code Civ. Proc. Secs. 1013a, 2015.5) I. Paul J. Mooney, do hereby declare that I am a citizen of the United States, employed in the County of Maricopa, State of Arizona, over 18 years old, and that my business address is Suite 2200, One Renaissance Square, Two North Central Avenue, Phoenix, Arizona 85004-2390. I am not a party to the within action; on the 2,Vtday of December, 1989, I deposited in the United States Mail a true copy of: NOTICE OF HEARING in said action, in a sealed envelope, with the postage thereon fully prepaid, addressed as follows: SEE ATTACHED LIST correct. I declare under penalty of perjury that the foregoing is true and EXECUTED at Phoenix, Arizona this Z411*day of December, 1989. Paul J. Mo ey IINOTICE OF HEARING I 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 James Williams, Esq. BOARD OF EQUALIZATION OF THE STATE OF CALIFORNIA 1020 "N" Street Sacramento, California 95814 DeWitt W. Clinton, Esq. Deputy Los Angeles County Counsel LOS ANGELES COUNTY 648 Hall of Administration 500 West Temple Los Angeles, California 90012 Ms. Kitt Berman COUNTY SUPERVISORS ASSOCIATION OF CALIFORNIA 1100 "K" Street Sacramento, California 95814 Robert F. Tyler, Esq. Supervising Deputy Attorney General 1515 "K" Street Sacramento, California 95814 Robert E. Murphy, Esq. Deputy Attorney General 350 McAllister Street 7th Floor, State Building San Francisco, California 94111 William E. Saul, Esq. SOUTHERN PACIFIC TRANSPORTATION COMPANY Southern Pacific Building One Market Plaza San Francisco, California 94105 G. Christopher Ritter, Esq. GORDON & REES 20th Floor, Embarcadero Center West 275 Battery Street San Francisco, California 94111 Sherwood M. Sullivan HOPKINS & CARLEY 150 Almaden Boulevard San Jose, California NOTICE OF HEARING Alan S. Marks, Esq. County Counsel COUNTY OF SAN BERNARDINO '4th Floor, 385 North Arrowhead San Bernardino, California 92415 James F. May, Esq. Senior Deputy County Counsel COUNTY OF ALAMEDA Room 463 1221 Oak Street Oakland, California 94612 Everett B. Gibson, Esq. LAUGHLIN, HALLE, GIBSON & McBRIDE Suite 650, Morgan Keegan Tower 50 North Front Street Memphis, Tennessee 38103-1106 James W. McBride, Esq. LAUGHLIN, HALLE, GIBSON & McBRIDE Suite 1000 1612 K Street, N.W. Washington, D.C. 20006-2802 Jay R. Martin, Esq. CROSBY, HEAFY, ROACH & MAY 1999 Harrison Street Oakland, California 94612-3573 Weyman I. Lundquist, Esq. Joan K. Irion, Esq. HELLER, EHRMAN, WHITE & McAULIFFE Suite 310, 333 Bush Street San Francisco, California 94105 Steven Woodside, Esq. County Counsel SANTA CLARA COUNTY COUNSEL 9th Floor 70 West Hedding San Jose, California 95110 Paul J. Mooney, Esq. FENNEMORE CRAIG 95113 Suite 2200, One Renaissance Square Two North Central Avenue Phoenix, Arizona 85004 -4- 1 2 3 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 John F. Hahn, Esq. County Counsel Paty Keene, Esq., Deputy COUNTY OF AMADOR 108 Court Street - Jackson, California 95642 Jeffrey Tuttle, Esq. County Counsel COUNTY OF CALAVERAS Calaveras City Government Center Post Office Box 667 San Andreas, California 95249 Dennis C. Graves, Esq. Deputy County Counsel COUNTY OF CONTRA COSTA County Administration Building Post Office Box 69 Martinez, California 94553 Devon L. Workman, Esq. County Counsel COUNTY OF GLENN 515 West Sycamore Street Willows, California 95988 Gregory L. James, Esq. County Counsel COUNTY OF INYO Post Office Box 428 Independence, California 93526 Bernard C. Barmann, Esq. County Counsel COUNTY OF KERN 5th Floor 1415 Truxtun Avenue Bakersfield, California 93301 Denis A. Eymil, Esq. County Counsel COUNTY OF KINGS Kings County Government Center 1400 West Lacey Boulevard Hanford, California 93230 NOTICE OF HEARING Susan Roff Minasian County Counsel COUNTY OF BUTTE 25 County Center Drive Oroville, California 95965-3380 William.s'James Murphy, Esq. County Counsel COUNTY OF COLUSA 1213 Market Street Colusa, California 95932 David W. Whittington, Esq. County Counsel COUNTY OF EL DORADO 330 Fair Lane Placerville, California 95667 Max E. Robinson, Esq. County Counsel COUNTY OF FRESNO Fifth Floor, 2220 Tulare Street Post Office Box 1549 Fresno, California 93716 Thomas M. Fries, Esq. County Counsel COUNTY OF IMPERIAL 940 West Main Street City Administration Center El Centro, California 92243-2869 James P. Lough, Esq. County Counsel Richard K. Kula, Esq. Deputy County Counsel COUNTY OF HUMBOLDT Humboldt County Courthouse Room 110, 825 Fifth Street Eureka, California 95501 Dawson Arnold, Esq. County Counsel COUNTY OF LASSEN 707 Nevada Street Post Office Box 150 Susanville, California 96230 -5- 1 2 3 i 4� 5i 6' 7' 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Jeffrey L. Kuhn, Esq. County Counsel COUNTY OF MADERA 209 West Yosemite Avenue Madera, California 93637 H. Peter Klein, Esq. County Counsel COUNTY OF MENDOCINO Room 202, Courthouse Ukiah, California 95842 Ruth Sorensen, Esq. District Attorney COUNTY OF MODOC Post Office Box 1171 Altura, California 96101 James A. Curtis, Esq. County Counsel COUNTY OF NEVADA Post Office Box 6100 Nevada City, California 95959-6100 Richard K. Denhalter, Esq. County Counsel COUNTY OF PLACER 175 Fulweiler Avenue Auburn, California 95603 L.B. Elam, Esq. County Counsel Robert Ryan, Deputy COUNTY OF SACRAMENTO Suite 2650 700 "H" Street Sacramento, California 95814 Lloyd M. Harmon, Jr., Esq. County Counsel COUNTY OF SAN DIEGO Room 355, 1600 Pacific Highway San Diego, California 92101 John F. Cheadle, Esq. County Counsel COUNTY OF SAN JOAQUIN Room 711 222 East Weber Avenue. Stockton, California 95202 NOTICE OF HEARING Douglas J. Maloney, Esq. County Counsel COUNTY OF MARIN Suite 342, Civic Center San Rafael, California 94903 Dennis L. Myers, Esq. County Counsel COUNTY OF MERCED 2222 "M" Street Merced, California 95340 Robert Westmeyer, Esq. County Counsel COUNTY OF NAPA Room 301, 1195 Third Street Napa, California 94559 David R. Chaffee, Esq. Deputy County Counsel COUNTY OF ORANGE Room 407, 10 Civic Center Plaza Post Office Box 1379 -. Santa Ana, California 92702-1379 Gerald J. Geerlings, Esq. Riverside Deputy County Counsel COUNTY OF RIVERSIDE Suite 300 3535 Tenth Street Riverside, California 92501-3674 Steven A. Sanders, Esq. County Counsel COUNTY OF SAN BENITO 498 Fifth Street Hollister, California 95023 John Doherty, Esq. Deputy City Attorney COUNTY OF SAN FRANCISCO 6th Floor, 1390 Market Street San Francisco, California 94102 I" 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Thomas Casey, Esq. County Counsel COUNTY OF SAN MATEO Hall of Justice 401 Marshall Street Redwood City, California 94063 Dwight L. Herr, Esq. County Counsel COUNTY OF SANTA CRUZ Room 505 701 Ocean Street Santa Cruz, California 95060 William W. Pangman, Esq. County Counsel COUNTY OF SIERRA Courthouse, Box 495 Downieville, California 95936 Thomas H. Gordinier, Esq. County Counsel COUNTY OF SOLANO Courthouse 580 Texas Street Fairfield, California 94533 Michael H. Krausnick, Esq. County Counsel COUNTY OF STANISLAUS 2nd Floor, 1100 "H" Street Post Office Box 74 Modesto, California 95353 Nelson D. Buck, Esq. County Counsel COUNTY OF TEHAMA Post Office Box 8189 Red Bluff, California 96080 Lita Blatner, Esq. County Counsel COUNTY OF TULARE County Civic Center 12900 West Burrel Visalia, California 93291 NOTICE OF HEARING James P. Lindholm, Jr., Esq. County Counsel COUNTY OF SAN LUIS OBISPO County Government Center Room 386 San Luis Obispo, California 93408 Enrique R. Sanchez, Esq. Deputy County Counsel COUNTY OF SANTA BARBARA 105 East Anapamu Street Santa Barbara, California 93101 David R. Frank, Esq. Shasta County Counsel COUNTY OF SHASTA 1640 West Street Redding, California 96001 Frank J. DeMarco, Esq. County Counsel COUNTY OF SISKIYOU 304 Lane Street Post Office Box 659 Yreka, California 96097 James Bots, Esq. County Counsel COUNTY OF SONOMA Room 116-A 575 Administration Drive Santa Rosa, California 95403-2881 Darrell W. Larsen, Esq. County Counsel COUNTY OF SUTTER 463 Second Street Yuba City, California 95991 David L. Cross, Esq. District Attorney Trinity County Courthouse Post Office Box 310 Weaverville, California 96093 James McBride, Esq. County Counsel COUNTY OF VENTURA 800 South Victoria Avenue Ventu.ra, California 93009 -7- 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 we, 21 22 23 24 25 26 James Mack, Esq. County Counsel COUNTY OF YOLO Room 201, 625 Court Street Post Office Box 127 Woodland, California 95695 Ralph R. Kuchler, Esq. Monterey County Counsel COUNTY OF MONTEREY Post Office Box 1587 Salinas, California 93902 NOTICE OF HEARING Timothy P. Hayes, Esq. County Counsel COUNTY OF YUBA Courthouse 3rd Floor, 215 Fifth Street Marysville, California 95901 5:11