HomeMy WebLinkAboutORANGE COUNTY, THE AUDITOR-CONTROLLER, & THE TREASURER-TAX COLLECTOR - REFUND OF THE RETIREMENT PROPERTY TAX - 2004-03-01 ORANGE COUNTY BOARD OF SUPERVISORS
MINUTE ORDER
February 24, 2004
Submitting Agency/Department: County Counsel
Closed Session
CONFERENCE WITH LEGAL COUNSEL-EXISTING LITIGATION-Pursuant to Government Code Section
54956.9(a):
Name of Case: Howard Jarvis Taxpayers Association v. County of Orange, OCSC Case No. 818780
The following is action taken by the Board of Supervisors:
APPROVED AS RECOMMENDED O OTHER
HELD,THE CLERK READ: THE BOARD BY A UNAM[IMOUS VOTE, SUPERVISORS NORBY AND WILSON
BEING ABSENT,APPROVED A PROPOSED AGREEMENT REGARDING THE CASE OF HOWARD JARVIS
TAXPAYERS ASSOCIATION V. COUNTY OF ORANGE. A COPY OF THE AGREEMENT WILL BE
AVAILABLE IN THE OFFICE OF THE CLERK OF THE BOARD TO ANY PERSON WHO INQUIRES. THE
BOARD ALSO APPROVED A STIPULATION IN THE SAME CASE. A COPY OF THE STIPULATION IS
AVAILABLE IN THE OFFICE OF COUNTY COUNSEL TO ANY PERSON WHO INQUIRES.
Unanimous O (1)SMITH: (2)SILVA: (3)CAMPBELL: (4)NORBY: (5)WILSON:
Vote Key: Y=Yes;N=No;A=Abstain;X=Excused;B.0.=Board Order
Documents accompanying this matter:
0 Resolution(s)
O Ordinances(s)
0 Contract(s)
Item No. CS-3 -w
Special Notes:
Copies sent to: _ r�
CEO
CoCo/Ben de Mayo cry r'
Auditor c
I certify that the foregoing is a true and correct copy of the Minute Order
adopted by the Board of Supervisors,Orange County,State of California.
DARLENE J.BLOOM,Clerk of the Board
By:
Deputy
1
OFFICE OF THE COUNTY COUNSEL
COUNTY OF ORANGE
0 9ti 10 Civic Center Plaza,4"'Floor
n Santa Ana,California 92701
Direct No.: (714)834-3303
Fax No.: (714)834-2359
BENJAMIN P.de MAYO Agenda Item N0. CS J
COUNTY COUNSEL February 24, 2004
MEMORANDUM
PF10 ESS D BY.
February 11r;004
TO: Darlene J. Bloom, Clerk of the Board of Supervisors ;
FROM: Benjamin P. de Mayo, County Counsel
SUBJECT: Request for Closed Session
I am requesting a closed session on Tuesday,February 24, 2004, to discuss with the
Board the status of pending litigation,pursuant to Government Code Section 54956.9(a).
Accordingly,please prepare the Agenda Item to read:
"CONFERENCE WITH LEGAL COUNSEL --
EXISTING LITIGATION Pursuant to Government Code Section
54956.9(a).
Name of Case: Howard Jarvis Taxpayers Association v. County of
Orange, OCSC Case No. 818780.
RECOMMENDED ACTION: Conduct Closed Session.
Thank you.
JCH
cc: Members of the Board of Supervisors
James Ruth, CEO
David Sundstrom, Auditor-Controller
John Moorlach, Tax Collector
CITY OF HUNTINGTON BEACH
2000 MAIN STREET _-P6;kWNIA 92648
OFFICE OF THE CITY CLERRLEHR OF THE 130ARD
CONNIE BROCKWAY -< <� , 2004
CITY CLERK
EXTREMELY TIME SENSTIVE - ANY HELP PROVIDED TO EXPEDIATE
GETTING ALL SIGNATURES`-ON AGREEMENT--APPRECIATED!
LETTER OF TRANSMITTAL OF ITEM APPROVED BY THE CITY COUNCIL/
REDFVELOPhiENT AGENCY OF THE CITY OF HUNFINGTON BEACH
DATE- March 5, 2004
TO: Clerk of the Board of Supervisors ATTENTION: Darlene J. Bloom
Name
10 Civic Center Plaza, 4th floor DEPARTMEENT: _ (714) 8�4-2206_
Street rm. #465
Santa Ana, CA 92702 REGARDING:Agreement Between The City of
City.state,Zip Huntington Beach, The County of Orange, The
Orange Geoney Atiditer Gentreller, nd The
Orange County Treasurer-Tax Collector.
See Attached Action Agenda Item E-5 Date of Approval 3/1/2004
Enclosed For Your Records Is An Executed Copy Of The Above Referenced Agenda Item.
Remarks:
After Agreement executed by all parties at the
County, please mail us a certified copy for our
'Jnnte�y
records (at the above address - ATTN: CONNIE $ROCKWAY)
City Clerk
Thank you very much for your help!
Attachments: Action Agenda Page Agreement XXX Bonds Insurance `
RCA Deed Other
CC. Jennier McGrath City Attorney X
Name Deparmxnt RCA Agreement Insurance Othcr
Scott Field City Attorney X
Name Deparunent RCA Agreement insurance Other
Name Dr art:rnent RCA Agreement Insurance Other
Name Depanmcnt RCA Agreement Insurance Other
g:lfollowup/lenervcoverltr-doc (Telephone: 714.536-5227)
i
AGREEMENT BETWEEN THE CITY OF HUNTINGTON
BEACH, THE COUNTY OF ORANGE, THE ORANGE COUNTY
AUDITOR-CONTROLLER,AND THE. ORANGE. COUNTY
TREASURER-TAX COLLECTOR
This AGREEMENT is by and between the CITY OF HUNTINGTON BEACH
("CITY"), the COUNTY OF ORANGE ("COUNTY''), the ORANGE COUNTY
AUDITOR-CONTROLLER("AUDITOR-). and the ORANGE COUNTY
TREASURER-TAX COLLECTOR ("TAX COLLECTOR").
WHEREAS, the CITY first contracted with the California Public Employees
Retirement System ("PERS") in 1945 to provide retirement benefits to its police and fire
employees. Pursuant to the City Charter, the CITY has contracted with PFRS to provide
all CITY employees with a retirement program since at least 1966; and
WHEREAS, since at least 1966, the Huntington Beach City Charter has
authorized, and the City Council has levied a separate property tax to pay for CITY
employee retirement benefits (the "Retirement Tax"); and
WHEREAS, Proposition 13 was adopted in 1978. limiting property taxes to I% of
full cash value, but also authorizing taxes exceeding the limit to repay "any indebtedness
approved by the voters prior to July 1, 1978." In 1982, pursuant to Carmalr v_ Alvord
(1982) 31 Cal.3d 318, the California Supreme Court interpreted `-indebtedness" under
Proposition 13 to permit the CITY and other similar situated cities to continue to levy a
Retirement "fax above the 1% limit; and
WHEREAS, prior to 1978, the CITY was only responsible for paying the
employer contribution to PERS. Although after adoption of Proposition 13, the CITY
agreed to pay for additional employee retirement benefits, such as '-picking-up" the
employee contribution to PERS, the CITY never used the Retirement 'lax to pay for
anything other than the employer contribution to PERS prior to 1997-98; and
WHEREAS, prior to 1981, the Retirement Tax rate fluctuated from year to year.
Since Fiscal Year 1980-1981 through Fiscal Year 2000-2001, CITY levied the
Retirement Tax on all taxable property within Huntington Beach of at the rate of.0493%;
and
WHEREAS, beginning in Fiscal Year 1997-1999, the CITY's employer
contributions to PERS began to fall. Based upon the City Charter. which authorized, the
CITY levy a Retirement Tax "sufficient to meet all obligations of the CITY for the
retirement system in which the City participates," the CITY used a portion of the
Retirement Tax to pay for retirement obligations the CITY agreed to provide after 1978.
such as the PI RS pick-up, the Supplemental Retirement Plan and the Medical Insurance
Retirement Fund; and
Page 1 of'7
G .1-IE;LD.2004 Agreemenu`;I ax RCtiLnd 2rcemcnt_doc-2j17'2[xl4-4 32 I'M
• 0
WHEREAS, at issue in Howard Jarvis Taxpayers Association v. County of Orange
(Orange County Superior Court Case No. 81 87 80, Court of Appeal. Fourth District,
Case No. G029292) was whether Proposition 13 only permitted the Retirement Tax to
pay only for retirement benefits the CITY agreed to provide before July 1, 1978, or
whether it also the Retirement Tax to pay for benefits authorized after July 1, 1978. The
AUDITOR and COUNTY were named as defendants in the suit, and the CITY named as
the real party in interest; and
WHEREAS, the Superior Court held in Howard Jarvis Taxpayers Association v.
County of Orange that Proposition 13 only authorized the Retirement Tax to pay for
retirement benefits that the CITY provided prior to July 1, 1978, specifically the CITY's
employer contribution to PERS. The Court further found that for the period up to and
including fiscal year 1999/2000. that portion of the Retirement Tax used to pay for the
PERS pick-up, the Supplemental Retirement Plan and the Medical Insurance Retirement
Fund was invalid. This decision was affirmed by HJTA v_ City oJ-lluntington Beach, 110
Cal.App.4th 1375 (2003); and
WHEREAS, AUDITOR and TAX COLLECTOR are the parties most
knowledgeable of the amount of the Retirement Tax collected from taxpayers and
distributed to CITY; and
WHEREAS, CITY is the party most knowledgeable about the complicated
formula to determine what portion of Retirement Tax collected on each parcel was
declared invalid in Case No. 81 87 80. CITY has informed COUNTY, AUDITOR, and
FAX COLLECTOR that the invalid Retirement Tax was collected only in tax years
1997-1998, 1998-1999, 1999-2000, and 2000-2001, and on the corresponding
supplemental tax rolls; and
WHEREAS, AUDITOR and TAX COIL CTOR intended to exercise their
discretion under California Revenue and Taxation Code section 5097.2 to issue refunds
to taxpayers ol'the invalid portion of the Retirement Tax, provided that the County
Auditor was able to correct the tax rolls pursuant to California Revenue and "Taxation
Cade Section 48 31 The CITY ohjected to this procedure on the grounds that: (i) the
AUDITOR had no lawful authority to correct the assessment roll for non-clerical errors
and that the decision in llois,ard Jarvis Taxpayers Association v. County-of Orange
declaring invalid a portion of the Retirement Tax was such a non-clerical error; (ii) that
the AUDITOR only could correct the tax roll if he could determine the precise amount of
the invalid Retirement Tax, but only the CITY could make such a determination at the
time the City Council approves or denies an individual taxpavers refund claim; and (iii)
California Revenue & "Taxation Code Section 5101 reserved to CITY the authority to
Provide by ordinance the manner that tax refunds may be paid; and
WHEREAS, CITY passed Resolution 2001-19 on April 16, 2001 stating CITY's
intention to refund the invalid portion of the Retirement Tax to those taxpayers (or their
guardians, executors or administrators) who file valid claims. CITY intends to
incorporate Resolution 2001-19 into the form of an ordinance; and
Page 2 of 7
G TIFID'Q004 Agreement$,ISx Refund AL2recmem duc-11712 04-4 32 P\1
WHEREAS, CITY. COUNTY, AUDITOR, AND TAX COLLECTOR, desire
that all taxpayers or their guardians, executors or administrators who file valid claims,
have the opportunity to receive their refund in a manner that is efficient and taxpayer-
friendly; and
WHEREAS, COUNTY. AUDITOR, and TAX COLLECTOR would not enter
into this AGREEMENT absent CITY's assurance that all taxpayers or their guardians,
executors or administrators who file valid claims, will receive their refund of the
Retirement Tax; and
WHEREAS, COUNTY. AUDITOR, and TAX COLLECTOR would not enter
into this AGREEMENT absent CITY's commitment to reimburse COUNTY.
AUDITOR, and TAX COLLECTOR for all reasonable costs and expenses incurred in
assisting CITY in providing Retirement Tax refunds to taxpayers and CITY's
commitment to defend, indemnify and hold harmless the COUNTY, AUDITOR, and
"TAX COLLECTOR and its officers and employees relative to any act or omission
pursuant to this AGREEMENT: and
WHEREAS. CITY, COUNTY, AUDITOR, and TAX COLLECTOR wish to
avoid costly inter-governmental disputes or litigation that may result from the COUNTY,
AUDITOR, or TAX COLLECTOR refunding Retirement `lax collections to taxpayers.
NOW, "THFRE.FORE. CITY, COUNTY. AUTTOR, and TAX COLLECTOR
agree as follows:
1. CITY intends to adopt an ordinance consistent with Division 1, Part 9,
Chapter 5 (i.e. sections 5096 through 5180) of the California Revenue and Taxation Code
directing how Retirement Tax refunds will be paid.
2. CITY will approve all valid claims for refund of the Retirement Tax
lawfully filed and executed under Division 1, Part 9, Chapter 5 (i.e. sections 5096
through 5180) of the California Revenue and Taxation Code.
3. CITY will pay all Retirement Tax claims approved by CITY. A payment
of a Retirement Tax claim by CITY will constitute payment in full on such claim.
COUNTY, AUDITOR, and/or TAX COLLECTOR will not pay on any such claim
without a binding court order.
4. COUNTY. AUDITOR, and TAX COLLECTOR will not issue refunds of
the Retirement Tax under Revenue and Taxation Code section 5097.2 and will not
approve or deny claims for refund of the Retirement Tax. COUNTY will deliver to
CITY all Retirement Tax refund claims filed with COUNTY.
5. COUNTY, AUDITOR. and TAX COLLECTOR shall provide to the
CITY, an electronic file of the secured, unsecured, supplemental and corresponding
Page ; of 7
G':I:II.I.D.1004 Agrcemcn[s',rax Refund Agreement doc-2.1 7 2004-a 32 I'M
• •
i
delinquent property tax rolls for tax years 1997-1998, 1998-1999, 1999-2000, 2000-2001
and the corresponding supplemental years, the following information for each parcel or
unsecured property in Huntington Beach:
(1) Amount of Retirement Tax Paid
(2) Assessed land Value
Q) Assessed Value of Improvements (Building)
(4) Control Number
(5) Homeowner Exemption
(6) Legal Description
(7) Mailing Address
(8) Mailing Address 2
(9) Mailing City
(10) Mailing State
(I 1) Mailing Zip
(12) Other Description
(13) Owner of Record
(14) Owner of Record 2
(15) Owner of Record 3
(16) Owner of Record as of Date
(17) Parcel Number
(18) Penalty Amount Basic
(19) Penalty Amount Additional
(20) Property Location
(21) Retirement Tax Rate %
(22) Retirement Tax Value Rase
(23) Roll Type
(24) Roll Year
(25) Service Agency (for PERS Tax)
(26) Supplemental Event Date
(27) Supplemental Event Type
(28) Supplemental Proration End Date
(29) Supplemental Proration Start Date
(30) Service Agency (for PERS Tax)
(31) Tax Amount
(32) Tax Amount Paid
(33) Tax Amount Paid Date
(34) Tax Rate Area
(35) Tax Type (for PERS Tax)
(36) Tax Year Ending
(37) Total Net Taxable Value
(38) Vesting Code
(39) Any other information the CITY. AUDITOR, and TAX COLLECTOR
agree is necessary to process Retirement Tax Claims.
Page 4 of 7
G' ILLD;%.200-a Agreements fax Refund Aereement.doc-211-!2004-4 32 PM
• .
6. COUNTY shall provide CITY a list of all pending appeals of assessed
value in Huntington Beach, describing for each appeal: (i) appeal number, (ii) parcel or
bill number, (ill) street address, (iv)property classification (i.e., residential, business,
etc.), (v) applicant's opinion of value, and (vi) tax year(s) appealed (if available).
7. Because the CITY may need information in addition to that provided as
part of the electronic data base in order to verify refund claims, COUNTY. AUDITOR,
and TAX COLLECTOR shall provide CITY and its employees and consultants
reasonable access to property tax payment (and other related) microfiche and imaged
records on an as-needed basis so that CITY may verify Retirement Tax refund claims.
COUNTY, AUDITOR, and TAX COLLECTOR shall not assert any claim of
confidentiality regarding access of the CITY and its employees and consultants to tax
records, provided that the CITY and its employees and consultants follow. the same
taxpayer confidentiality procedures that the COUNTY, AUDITOR, and TAX
COLLECTOR follow.
8. CITY shall reimburse COUNTY, AUDITOR, and TAX COLLECTOR for
all reasonable expenses they may incur in the performance of this AGREEMENT. When
performing the «--ork described at Sections 5. 6 and 7 of this AGREEMENT, COUNTY,
AUDITOR, and TAX COLLECTOR shall bill the CITY according to the hourly wages
(including benefits and administrative overhead) of the personnel who will perform the
work, and the standard charges of the COUNTY, AUDITOR, and 'I'AX COLLECTOR
for data processing_ Prior to performing the work described at Sections 5, 6 and 7 of this
AGREEMENTr, COUNTY. AUDITOR, and TAX COLLECTOR shall provide the CITY
an estimate of the cost of such work.
9. If CITY should request and the COUNTY. AUDITOR, or TAX
COLLECTOR provide further help to verify Retirement Tax claims beyond the
assistance described at Sections 5. 6 and 7 of this AGREEMI--..N"r. CITY shall reimburse
COUNTY, AUDITOR, and TAX COLLECTOR for all reasonable expenses they may
incur. Prior to performing such work, COUNTY, AUDITOR, and TAX COLLECTOR
shall provide CITY with an estimate and the billing rates of the personnel who will
provide such assistance to the CITY.
1 U_ CITY acknowled;aes that if corrections are made to the assessment roll
after the CITY issues Retirement Tax refunds. (e.g., value changes by request of an
assessment appeals board or the Assessor, or a judgment related to C aunty of Orange v.
Orange County-Assessment Appeals Board No_ 3 (Orange County Superior Court Case
No. 00CC03385)) the COLT I Y or AUDITOR could then issue refunds of the
Retirement "fax that duplicate CITY refunds, or the taxpayer may be owed an additional
refund of the Retirement Tax. The COUNTY, AUDITOR, TAX COLLFCTOR and
CITY shall provide, on at least a quarterly basis and in an electronic medium, a report of
all tax refunds paid by the COUNTY to taxpayers in Huntington Beach for tax years
1997-98, 1998-1999, 1999-2000, 2000-2001, and corresponding supplemental years.
Page 5 of 7
G:':F[FLD'--2004 Avreemcnu,'%'ra.x Refund Agreemerit.doc-2r17;200•1-4.32 PM
• • '
e ,
11. CITY will defend, indemnify and hold harmless COUNTY, AUDITOR,
TAX COLLECTOR and their officers and employees ("INDEMNITEES") with respect
to any claim, loss, damage, liability, expense, attorney fees or costs that is in any way
related to the failure of CITY or INDEMNITEFS to provide refunds of the Retirement
Tax to those lawfully entitled or any act or omission of the CITY performed or to be
performed pursuant to this AGREEMENT. COUNTY, AUDITOR, and TAX
COLLECTOR shall have the sole and exclusive discretion to retain legal counsel and
experts in the event of any legal or administrative proceeding related to the
implementation of the AGREE.MF.NT and CITY shall pay all attorney fees and litigation
costs or expenses incurred by COUNTY, AUDITOR, or TAX COLLECTOR in any such
legal or administrative proceeding.
12. COUNTY, AUDITOR, and TAX COLLECTOR shall be entitled to
conclusively rely on any and all direction, requests or representation of the CITY or its
officers, employees, agents, or consultants related to the implementation of this
AGREEEMENT. COUNTY, AUDITOR. and TAX COLLECTOR do not, and shall not,
have any duty or obligation to investigate any matter, action or determination relating to
this AGREEMENT, including, but not limited to, the validity of any claim or payment of
the Retirement Tax.
13. This AGREEMENT will become effective upon execution by all parties.
It will remain in force until the period for filing a claim for refund of the Retirement Tax
under Division 1, Part 9, Chapter 5 (Le. sections 5096 through 5180) of the California
Revenue and Taxation Code has expired. The indemnification provisions of Paragraph
No. 7 of this AGREEMENT shall survive the termination of this AGREEEMENT.
14. If any paragraph, part. clause, or phrase of this AGREEMENT is for any
reason held to be invalid or unconstitutional, the remaining sections shall not be affected
but will remain in full force and effect.
Page 6 o l'7
CYAFILLn:2004 AerccmentsJax Refund Agreement dm-2`I7 2004-4 32 1'M
IN WITNESS W'HERFOF, the parties hereto have caused this AGREEMENT to
be executed as of , 2004.
SIGNED AND CERTIFIED THAT A COUNTY OF ORANGE
COPY OF THIS DOCUMENT HAS BEEN
DELIVERED TO THE CHAIR OF THE BOARD
By. n�AAI r►•-- By:
CHAIR OF I HE BOARD OF SUPERVISORS DARLENE J. BIPM
CLERK OF THE BOARD OF
SUPERVISORS
ORANGE COUNTY, CALIFORNIA
AUDITOR-CONS' LLER
By:
DAVID UNDSTROM
AUDITOR-CONTROLLER
TREASURER-TAX COLLECTOR
B)
JO M.W'_ , LACH
TREASURER-TA LLECT R
/. CITY OF HUNTINGTON BEACH
Assi�taut City erk Bv:
for CONNIE BROCKWAY CATHY RE g -
CITY CLERK MAYOR
APPROVED AS TO FORM- APPROVED AS TO FORM:
COUNTY COUNSEL CITY ATTORNEY
ORANGE COUNTY. CALIFORNIA I IUNTINGTON BEACH, CALIFORNIA
JAMES C. HARM—AN 1 J :NIFE mki 7'1 bSF
DEPUTY COUNTY COUNSEL «/ ITY A'i-I'ORNEY
zAY/V
Page 7 of 7
GI,F1f.LD42004 Aureements`.Tax Refund Agreetnent_doc-2:17i2004-4 32 PM
l
OYtAIN E C(3U1\r'eY BOARD OF SUPEIWISOR S
MINU11E WIDER
February 24, 2004
uhmfraB._Z Agena lDen mf-,nt_.: Ct unt. Counsel
Closed Sessions
C0NFF,PXN*CF It1'TT14 I.F.GAL C OLINSEL••F-XISTING 1,TTEGATTON -Fursuant to Government Code Se:•tic'-n.
5495 f.9(a):
Name or Case:Howard Jarvis Taxpavers Assoc iation v_Counry of Orange,OCSC Case No. 818780
The following is action taken by the Board of SujNarvtxorss:
APPRovED AS RL.com41T3NDED 0 OTHER.W
HET ?.THE.CLERK R13AD: TfM BOARi?BY A UNAMIMOUS VOTE, SUPERVISORS WORDY AND WLLSON
BFX(%TG ABSENT,APPROVED A PROPOSED AGRT3EA/MN'T REGARDING THE CASE OF HOWARD JARVIS
TAXPAYERS ASSOCL4TION V.COUN'TY OF ORANGE. A COPY OF'H-P.AGRELMENT WILL BE
AVAILABLE IN THE OFFICE OF THE CLERK OF THE BOARD TO.A-NY PERSON WHO INQUIRES. THE
BOARD ALSO APPROVED A STIPULATION IN THE SAME CASE. A COPY OF THE STIPULATION IS
AVAILABLE IN-nM OFFICE.OF COi1NTY COUNSEL TO ANY PERSON WHO i'tis QUMES.
Unanimous 0 (1)s shuTH: (2)srr.VA: (3)C:AMI'B13T L- (4)NORBY: (5)VaLsox:
Yore Kt v: Y=Yew•Ar-No;A-Abstain;.X'=-Excused;13,Q.-=Socrrd Order
Documents accompanying this matter:
Cl ReS0lutioU(s)
0 Ordinances(s)
0 Coatract(s)
Item No. CS-3
special Notes:
Copies sent to:
CFO
C;oCo/lien de Mayo
Auditor
t ot2lify 11IN the frni- tq a true and corre_t cony of the Minute Order
adopte by d'e a*d uF upervisom,0—.mso County,State of.Catixornia.
DARN, Nfi L t?C3A Clerk of the)3oar i
RI
fi} - ------ - ----
uty
N
sa:•oI E O THE:COUNTY CO LINSEL
COUNTY OF ORANGE
:y S�n1Y Asa.Culiiorrda QY T11
Di:c«ar:u. 17ti;cA4- 3:T3
Fax'No.: Oi4,234- .W
BEND NUN P.tic �,Yo - Agenda Ytem No. CS
C.OUNTY COUNSF•i_ February 24,2004
February t 1, .' 004
O: "Uhtr)crnr.J-Bloom, CJe•rk of the. Board of Supervisors
FROM: Donjarnhi P. do Mayo, County Counsel
SUBJECT: Request for Closed Session
f am tel ue";ding a ckosedt -i ssicm on 'Fuescday, t~cbru try 24, 2004.,to discuss with.the
Board the status ofl?_rFiling.litig,i?ion, pursuant to Goverttnant Code Section 54956.9(a).
Accordingly,please prepare the Agenda Item to react:
"CON'FERLNC:E WITH LEGAL COUNSEL
EXISTING-, iATI('.WJ.*I0N Pursuant to Government Code Section
SaraSG.�+(a1,
:Ni'aun o of case-. ffc y•'ard darvhv v. County vf:
Orange, OCSC.`. Case No. 818780.
RFCC)1L1': EP-4DE:D ACTJO.N: Conduct Closed Session."
Maink you.
--------------
cc: Me,ttbers of 0--e.Board ofStgie.•visors
Janes Ruth, CEO
David Sisndstroxrt..Auditor-Contr•ollc-r
John Moorlach,Tax Collector
r
C%E= rl���oP AGREE•MENT BETWEEN TH E? CITY OF HUN INGTON
THE COUNTY OI°ORANGE,TnE ORANGE COUNTY
AUDITOR-CON TSHE ORANGE COUNTY
TREASURER-T.AUX COLLECTOR
This AGREEMENT is by and between, the CITY OF HUNTINGTON BEACH
("CITY").").the C[X-:NT'Y OF ORATrG1L("COUNTY-),the ORANGE COUNTY
AUDITOR.-CONTROI.LER("AUDITOR-). and the ORANGE COUNTY
7REASURER-1'AX COLLECTOR("TAX COLLi CTOW)
WHEREAS. the CITY first contracted with the California F'ublic. Ffnployees
Retirement System("PERS") itl 1945 to provide retirement benefits to its police and fire
employees. Pursuant to the City Charter, the CITY has contracted with PERS to provide
all CITY employees with are irement prow-a n since at least 1966; and
WHEREAS, since at least 1966, the. Huntington Beach City Charter has
authorized.and the City Council has levied a separate property tax to pay jror C H*Y
employee retirement 1wrietits(the"Retired lent Ta.x"): :end
WJTF.R.EAS,Proposition 13 w.ts adu-pted in 1978. limiting;property taxes to l;a of
hill cash value, but also :authorizing taxes exceeding the limit to repay "any indebtedness
approved by the voters prior to duly 1. 1978." In 1982,pursuant to Carman iy. .41vorcl
(1982) 31 Cal.3d 318,the Cati1'ornia Supreme Court interpreted "indebtedness-under
Proposition J 3 to permit the CITY arjd other similar situated cities to continue to levy,a
Retirement Tax above the I% limit; and
WT-IEREAS, prior to 1978, the CITY;was only responsible for paying the
employer contribution to P.ERS. Although ;after adoption of Proposition J 3.. the CITY
agreed to pay for additional employee retirement benefits, such as "pickinn up" the:
employee contribution to PERS,the CITY never used the Retirement Tax to pay for
anything other than the employer contribution to P.1sRS prior to 1997-98; and
WffEREAS. prier to 1981. the Retirement Tax sate:fluctuated frorn year to year.
Since Fiscal Year 1980-1981 through Fiscal Year 2-000-2001. CITY levied the
Retirenle:nt Tax cin all taxable property within Huntington Beach of at the rate of.0493%;
and
WHEREAS, beginning in fiscal Year 1997-1998, the C1TY's emtptoyer
contribution;; to PERS began to .fall. Based upon the City Charter,Which authorized, the
C:JTY levy a Retirement Tax "sufficient to meet all obligations of the CITY fc-#r the
retirement system in which the City participates,"dhe CITY used a portion of the
R_etirement'T&N to pay fbr retirement obligations the CITY agreed to provide after 1478,
such as the PERS pick-up. the Su-pplemcntal Retirement Plan and the Medical Insurance -
Retirement fund; and
Page 1. of 7
G vV II:t.t),2f104 AimementiI.t'ax Rc:un t P F
"WHEREAS,at issue in Howard.larvis Taxpqvers Association v County of 0range
(Orange County Superior Court Case No. 81 87 90, Court of Appeal, Fourth District,
Case No.0029292)was-whether Proposition 13 only permitted the Retirement Tax to
pay only for retirement benefits the CITY agreed to provide before July 1, 1979, or
whether it also the Retirement Tax to pay for benefits authorized alter July 1, 1978. The
AUDITOR.and COUNTY were warned as defendants in the suit. and the CITY named as
the real tarty in interest: and
WHERE-AS, the Superior Court held in flowurd.larvis Taxpr{very Association v.
Cvunxy of Oran;;e that Proposition 13 only authorized the Retirement Tax to pay Far
retirement benefits;that the CITY provided prior to Juiy I. 1978, specifically the CITY's
c mplover contribution to PERS. The Court further found that for. the period tip to and
including fiscal year 1999;2000, that fx?rtion of the Retirement Tax used to pay for the
PERS.pick-up, the. Supplemental Retirement Plan and the lWe:dical Wsurance Retirement
Fund was invalid. '€liis decision was a#inzzed by gf1funtir:gton BeacA. 110
Cal.App.4cn 1375 (2003);and
WHEREAS, AUDITOR and T.AX COLLECTOR are the parties ntost
knowledgeable of the arr)ount of'the Retirement Ta,,collected from taxpayers and
distributed to CITY. and
WHEREAS,CITY is the party most knorjledgeable about the cornl.dicated
formula to determine:what portion o#'Retirement Tax collected on each parcel was
declared invalid in Case No. 81 87 80. CITY has informed COUNTY. AUDI'i OR. and
TAX COLLECTOR that the invalid Retirement Tax was collected only in tax years
1997-1998, 1998-1999, 1999•-2000, and 2000-200I, and on the correspwiding
supplemental tax rolls; and
Z' HER.EAS,,1.U.171TOR and-TAX COLLECTOR intended to exercise their
discretion under California Revenue and Taxation Code section 5097.2 to issue refunds
to taxpayers of the invalid portion of'the Retirement Tax, provided that the County
Auditor was able to correct the tax rolls pursuant to Cali#tirnia Revenue and Taxation
Code Section 4831. The CITY objected to this procedure on the grounds that: (i)the
AUDITOR had no lawful authority to correct the:assessment roll #ter non-clerical errors
and that the decision).in HovvardJarvis Taxpayers Association v. C ounly ref fhr)n��t
declaring invalid a portion of the Retirement Tax was such a noel-clerical error; (ii)that
the. AUDITOR only could correct the tax roll if he could determine the precise arriount of
the invalid Retirement Tax, but only the CITY could snake; such a determination at the
time the.City Council approves or denies an individual taxp►zye:r's refund Oahn: and(iii)
California Revenue & Taxation Coale Section 5101 reserved to CITY the authority to
provide by urdinance the manner that tax twfunds may be paid; and
WHEREAS, CITE' passed Resolution 2.001-19 on April 10, 2001 stating CITY's
intention to reflund the invalid portion of the Retirement Tax to those taxpayers(or their
guardians,executors or adutinistrators) who file valid clairns. CITY intends to
incorporate Resolution 2001-19 into the f ar[n cif an ordinance;and
Page 2 of 7
c_r'd'ilst,t�•?�)t)i rlgrcemr. ce.'iF'v�licfuru Arc-ci�scrit.doc-2!1'7r'�X�:}-�:37 Pl�i
WHEREAS. CITY, COUNTY,AUDITOR,:'1N.17 TAX COLLECTOR.desire
that all taxpayers or their guardians,executors or adininistratuirs who file valid claims,
have the opportunity to receive their refund in a manner that is efficient and taxpayer-
fricndiy; acid
W'FTME -,AS, COUNTY, AUDITOR,and TAX COLLECTOR would not enter
into this AGREEMENT abse-at CITY's assurance that ail taxpayers,or their guardians,
executors or auin;inistratots who file valid claims,will receive their refund of the
Retirement Tax; and
WHER-EAS, COUNTY. AI-TINTO'R.and 'i'.E1..X COLLECTOR would not enter
into this AGREEME,NNT absent CITY's commitment to reimburse COUNTY,
AUDITOR.and TAX C:.C).t:€..b'C:TOR for all reasonable costs and expenses incurred in
assisting CITY in providing Retirement Tax refunds to taxpayers and CITY°s
commitment to defend, £ndeartniiv and hold harmless the COUNTY. AUDITOR, and
TAX COLLECTOR and its officers and employees relative to any act or omission
pursuant to this AGRl':l_:11 E-1-�E'1;and
WHER-EAS,CITY.COU-INTY, AUDITOR, and`TAX COLLECTOR wish to
avoid costly inter-governmental disputes or litigation that anay result #turn the COUNTY.
A( I)ITC.)R,or TAX C-`OL1.l=.CTOR refunding Retirerrient Tax collections to taxpayers.
MOW. i'HEME,I~OR7 ,CITY, C`.Gt_WTY. AUDITOR, and'€'AX COLLECTOR
.agree as follows:
1. CITY intends to adopt an ordin3.nce consistent with Division J. fart
Chapter 5 (i.e. sections 5096 through 5180)of the California Revenue and Taxation Code
directing how Retirement Tax refunds will be paid.
2. CITY will approve all valid claims for refund of the Retirement Fax
lav-4tilly filed and executed under Division 1, Fart 9,Chapter 5 (i.e. sections 5096
through 5180) of the California Revenue and Taxation Code.
3. CITY will pay all Retire rent•T'ax claims approved by CITY. A payment
ofa Re•tirement'i'13x claim by CITY will constiWte payn-tent in full on slich claim.
COUNTY, AIJDITOP.,and'or'T'AX COLLECTOR will riot pity on :any such claim
without d binding court order.
#. COUNTY.. AUDITOR,and TALC COLLECTOR will not. issue refunds of
the Retirement'rax under PLe•:enue:and Taxation C',ode scetion 5097.2 and will not
approve or deny claims for refund of the Re-dremerit ax. COUNTY will deliver to
CITY all Retirement Tax refund claims filed with COt.NTY.
5. COUNTY, AUDITOR, and TAX COLLECTOR.sha1J provide to the
CITY, an electronic file of the secured, unsecured., supplemental ,and corresponding
Page '.! of 7
t3:�e ttit.L�t?y7L)�P.jrt:CA1G772•;:T%]K Rtfiaxl+lox•�c:nene.cteu2/I7i213U4-4tj?Pl•4
delinquent property tax rolls kr tax years 1997-1998, 1998-1999, 1999.21000. 2000-2001
and the corresponding supplenzentatl years. the following inforxnettion fior each parcel or
unseemed property in Huntington Beach:
(1) Amount of Redrement Tax Paid
(2) Assessed rand Value
(3) Assessed Value oi'Improvetnents (Building)
(4) Control Number
(5) Homeowner Exemption
(6) Legal'Uescriptiors
(7) Mailing Address
(8) Mailing Address 2
(9)_ Availing City
(10) Mailing State
(11) IAailing 75p
(I 2) Other Description
(13) Owner of Record
(14) Owner of Record 2
(15) Owner-'of Record 3
(16) C)vwner of•Record as of Date
(17) Parcel Number
Penalty Amount Basic'
(19) Penalty Amount Additional.
(0) Property Location
(21) Retirement Tax Rate',•o
(22) Retirerneant'Tax Value Base
(23) Roll Type
(24) Roll Year
(25) Service Agency (for.1'E..RS Tax)
(26) Supplemental Event Date
(27) Supplemental Event.'.trpe
(28) Supplemental Proration End Date
(29) Supplemental.Proration Start Date
(30) Service Agency (for PERS Tax)
(31.) Tax.,'1%mounr
(32) Tax Amount Paid
(33) Tax Amount Paid Date
(34) Tax Rate Area
(3 5) Tax Type (Ibr PERS Tax)
(36) Tax.Year Ending
(i7) Total Nct T'.txable Value
(33 8) Vesting Code
(39) Any outer information the CITY, A13"D;TOR,and'TA-'X C:CZi LEC-•TOR
agree is necessat•y to process Retirement Tom: C]aims.
Page 4 (if 7
t;-FIE. DV200.1 Refund l+grcci:�en:.uac-2i 17i3U(u1-4:32 P t
6. COUNTY shall provide CTT'Y a list ofalf pen ding appeals of assessed
value in Huntington Beach, describing for each appeal: (i)appeal number, (ii)parcel or
hill number, (iii) street address,(i-.,)property classification (Le residential, business,
etc:.), (v) applicant's opinion of'value, and(vi)tax year(s) appealed (if available).
7. Because the CITY may steed information in addition to that provided as
part of the electronic data base in order to verify refiutci claims. COUNTY, AUDITOR,
grid'I AX COLLE cTC)R shall provide CITY and its employees and comultants
reasonable access to property tax payment(and other related) microfiche and imaged
records on an as-needed basis so that CITY may verify Retiret-rent Tax reftuld claims.'
COUNTY, AUDITOR, and TAX COLLECTOR shall not assert any claim of
'confidentiality regarding access of the CITY and its employees and c:onsttltants to tax
records,provided that the CITY and its employees and consultants follow the same
taxpayer confidentiality procedures that the C(X.,iNTrY,.AL1DI'rOR, and"FAX
COLLECTOR follow.
S. CITY shall reimburse COUNTY, !AUDITOR, and TAX COLLECTOR tier
all reasonable expenses they mny incur in the perdorinwir.e of this AGREEMENT. When
performing the work.described at Sections 5, 6 and 7 of this AGRE .-MENT, COUNTY.
AUDITOR, and Tf1X COLLECTOR shall bill.the CITY according to the hourly wages
(including benefits and administrative overhead) of the personnel who will perform the
work, and the :standard charges of the COUNTY,AUDITOR,and TAX COLLECTOR.
for data processing. Prior try performing the work described at Sections 5, 6 and 7 of this
AC;RE F.ME'_�IT,C01jNTY. nCIJ.)J'J'(_?K, and TAX COLLEC'rOR shall provida the CITY
;in t;,timrste of the cast of such work.
9. IJ'CITY should request and the C:OIJNTY, AUDITOR, or TAX
COLLI:CTO.R provide;further help to verify Ketiresneent Tax claims beyond the
assistance described at Sections 5, 6 Arid 7 of this AGREEMENT,C1TY shall.rcimbursc
COiJNTY, AIJDITOR, and TAX Cc)M,EC TOR for till reasonable expenses they may.
incur. Prior to performing such v,orl.,COUTNI TY, AIMITOR, and TAX C:OLL'ECTOR
shall provide CITY with an estimate and the billing rates of the personnel who Nszll
provide such assistance to the CITY.
10. CITY acknowledges that if corrections are made to the asses snient roll
after the CITY issues,Retirement Tax rtffinds. (e.g., value changes by request of an
assessment:appeals board or the Assessor, or a judgment related to C tang. of C9range t.
(lrc:rttic: G'��urrt► :;a:rFsr»:c nt Appeals Board h.'o. 3 (Orange C:'ounty Superior Court Case
No. OOCCO3385))the COL.TN'TY or ALJDFI'(:)R could then issue refunds of the.
Rctireatte:nt Tax that duplicate CITY refunds. or the taxpayer may be owed an additional
refund of the. Retirement Tax. -fTie C_OT N'FY,AUI)I'I'OR,T'A7i COLT, CTOR and
C:T'rY shall provide, on at least a quarterly basis and in an elecu-onic rnediurn.a report of
all tax refunds laid by the COCJNTY to taxpayers in Huntington Beach for tax years
1997-9b, 1998-1999. 1999-20(_►C). 2000-2001, and years.
Page 5 of 7
G:`J'11sL1YC004 Agrrcm:nn-% ax i elizod Agm:erec:tt.du....2117:(YJL-4-d:32 PAi
IL_ C 1'1-Y will defend, indemnify and hold harmless COUNTY, AUDITOR,
TAX COLLECTOR,and their officers and employees("INUEMNl.'J'EES")With respect
to any clam,, loss, damage,liability,expense:, attorney fees or costs than is in any-.vay
related to the failure of CITY eor IND EM. NYl`EES to provide re-funds of the Retircrnent
Tames to those I ativfully entitled or any act or omission of the CITY performed or to be
pertiarmed pursuant to this AGREEMENT. COUNTY.ALMITOR, aind 'rAX
COLLECTOR shall have the sole and exclusive discretion to retain legal counsel and
expe:.cts in the event oI'a ny legal or achninistrative proceeding related to the
implementation of the AGREEMENT and CITY shall pay aH attorney fees and litigation
costs or expenses iniumTed by COUNTY. AUTXTOR.or TAX COLLECTOR in any such
legal or administrative proceeding.
12. COI;NTY, AUI?I'I'OR, and T'AX' COLLECTOR.shall be entitled to
conclusively rely on any and all direction, requests or representation of the CITY or its
officers, employees, agents,or consultants related to the implementation of this
AGREEMAENT. COUNTY. AUDITOR,and TAX COLLECTOR do not.and shall not,
have any duty or obligation to investigate any matter. action or determination relating to
this AGI EEME•NT, including, but not limited to; the validity of any claim or payment s_e.f
the Retirement Tar..
This AGRE.1=;MF•NT will bc•conte•effective upon execution by all parties.
It will reinain in force until the period fur filing a claim for refund of the Retirement Tax-
under Division I, Part 9, Chapter 5 (i.e.sections 5096 through 5 ISO)of the California
Revenue kind Taixation Code has expired. The indemnification provisions ofParagraph
No. 7 of this AGREF::,°v€f NT shall survive the:termination of this ACME€ EMENT.
14. If any paragraph,part,clause:,or phrase of this AGREEMENT is for any
reason held to be invalid or unconstitutional,the remainitztt sections shall not be: affected
but will remain in frill force:acid effect.
Pagc H cal'7
(.AFIIEt.U..2004 Aszrcements`,'rax atefunat Agmement.doa:- .137,24W)4-4t.32 PTd
IN WI'l- ESS WHEREOF, the parties hereto, hevc causcd this AGREEMENT to
be c Necuted as of _ -, 2004•.
SIGNED AN.D C ERTIFIED '.THAT A COUNT TY OF ORANGE
COPY 01'"J'E.LiS DOCUMENT HAS BEEN
DELIVERED TO THL CHAIR O THE BOARD
B v: By:
CHAIR OF THE BOARD OF SUPE.RVISc_)RS DARLENE J. 13 • ONl
CLERK OF TFIV,BOARD OF
SUPER VISORS
ORANGE`:COUNTY. CALIFORNIA
AUDITOR-CO,
�T RQLEER
-------------------
17r1S JJ�:S1.3T�DS'JRC?A.l
AUD FOR--C:ON- TROLLS
I-REASURMR-TAX Ckll.LFC:TOJR
ii of '
JOfN NI.W. 0C LAC1•J
J-RE,AS12RER-TA 't>L.LECT R
C`YLY OF HUNTINGTON BE&CH
_ �Y:. -t7�
for CO' E3I2.00KWAY C'AT11Z'yCiRE �;jd
CITY CLERK NJAYOR
APPROVED AS TO FORM.- APPROVED AS TO FORM:
COUNTY COUNSEL CITY Al-FORNEY
ORANGE COUNTY, CALIFORNIA HUNTINGTONi REACH, CALIFORNIA
JAMS L f1A1�i4111�! ,1��,yrbd��'DEPL TY COUNTY COU..�SE:L: 'J'Y A'J"1't�RNi:Y
Page 7 cal'7
Li.^ ICUY•.2EIOa-.�r�+:c�ncnL:C1'ax
Toro �IS A C�i1RE!('T ODp'Y( ►
IN
r
OBlMaOA
BY/ DEPMY
i
j, CITY OF HUNTINGTON BEACH
2000 MAIN STREET CALIFORNIA 92648
OFFICE OF THE CITY CLERK
CONNIE BROCKWAY
CRY CLERK
EXTREMELY TIME SENSTIVE - ANY HELP PROVIDED TO EXPEDIATE
GETTING ALL SIGNATURES ON AGREEMENT APPRECIATED!
LETTER OF TRANSNUTTAL OF ITEM APPROVED BY THE CITY COUNCIL/
REDEVELOP4tENT AGENCY OF THE CITY OF HUNTIlrGTON BEACH
DATE: March 5, 2004
TO: Clerk of the Board of Supervisors ATTENTION: Darlene J. Bloom
Name
10 Civic Center Plaza, 4th floor_ DEPARTMENT: 714814-2206
Street rm. #455
Santa Ana, CA 92702 _ REGARDING:Agreement Between The City of
City.State.Zip Huntington Beach, The County of Orange, The
0 nd The
Orange County Treasurer-Tax Collector.
See Attached Action Agenda Item E-5 Date of Approval 3/1/2004
Enclosed For Your Records Is An Executed Copy Of The Above Referenced Agenda Item.
Remarks:
After Agreement executed by all parties at the
County, please mail us a certified copy for our
.onrue y
records (at the above address - ATTN. COt�iNIE BRpCKWAY)
City Clerk
Thank you very much for your help!
Attachments: Action Agenda Page Agreement XXX Bonds Insurance
RCA Deed Other
CC: Jennier McGrath City Attorney X
Name Department RCA Asreement Insurance Other
Scott Field City Attorney X
Name Department RCA Agr"nicot Insurance Other
Name Deparunent RCA Agreemenr Insurance Other
Name Department RCA Asrrcment Insurance Other
I
glfollouvpAetterVcoveri r.doc iTelephone:71453"227I �Scx—c,� ► —+—JE- o
=�.3�� ►ale���� C�i�
CITY OF HUNTINGTON BE�V
MEETING DATE: March 1, 2004 DEPARTMENT ID NUMBER: CA 04-01
Council/Agency Meeting Held:
Deferred/Continued to:
fiwproved ❑ Conditionally Approved ❑ Denied y Cl k's tur
Council Meeting Date: March 1, 2004 Depart nt I umber: CA 04-01
CITY OF HUNTINGTON BEACH
REQUEST FOR COUNCIL ACTION
SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS c-3,
SUBMITTED BY: RAY SILVER, City Administratort:qizB
PREPARED BY: JENNIFER McGRAT ity Attorney �a _
SUBJECT: Approve An Agreement Between The City of Huntington Beag, TRe
County of Orange, The Orange County Auditor-Controller, And The.
Orange County Treasurer-Tax Collector
Statement of Issue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Status,Attachment(s)
Statement of Issue: Staff recommends that the City Council approve an Agreement with
the County of Orange, the Auditor-Controller, and the Treasurer-Tax Collector regarding
issuing refunds of the Retirement Property Tax for fiscal years 1997-1998, 1998-1999,
1999-2000, and 2000-2001.
Funding Source: Sufficient funds (not-to-exceed $50,000) exist as part of the $2.2 million
property tax override revenue that was impounded in FY 2000-01. Because it is likely the
City will be required to expend the impounded $2.2 million as part of processing or paying
refund claims before it is able to issue a judgment or refunding bond to cover the total cost
of the refunds, Staff is, recommending that the City Council appropriate the impounded
moneys to fund refund-processing costs.
Recommended Action:
1. Approve an Agreement between the City of Huntington Beach, the County of Orange,
the Orange County Auditor-Controller, and the Orange County Treasurer-Tax Collector;
and to authorize the Mayor and City Clerk to execute the agreement.
2. Appropriate $50,000 from Fund 707, the Employees' Rate Contingency fund (identified
as impounded property tax override revenue from FY 2000-01) to fund the Agreement.
IE7— rJ
G:1RCA\20041Tax Refund MOU 3-1-04.doc �' 2/24/2004 2:21 PM
WEQUEST FOR COUNCIL AM iJN
MEETING DATE: March 1, 2004 DEPARTMENT ID NUMBER: CA 04-01
Alternative Action(§): Do not approve the Agreement and provide additional direction to
the City Attorney.
Analysis: Pursuant to the decision in Howard Jarvis Taxpayers Association, et al., v.
County of Orange and City of Huntington Beach, OCSC Case No. 818780, 110 Cal.App.4tn
1375 (2003), the Retirement Tax the City levied on the property tax rolls from 1997/98 to
2000/01 to fund employee retirement costs was invalidated to the extent it was used to pay
for the following benefits: the PERS pick-up, the Supplemental Retirement Plan and the
Medical Insurance Retirement Fund. Consequently, Huntington Beach taxpayers are owed
tax refunds for these invalid taxes. To date, the City has received approximately 46,000
refund claims.
The City has already retained the services of Moreland and Associates to assist in
processing these claims. However, in order to verify claims, it is necessary to obtain the
electronic files of the Huntington Beach property tax rolls from the County of Orange, the
Orange County Auditor-Controller (David Sundstrom), and the Orange County Treasurer-
Tax Collector (John Moorlach). In some cases to verify refund claims, it also may be
necessary to review the County's microfiche and imaged records of property tax payments.
Finally, in a few cases, additional County assistance may be needed.
When the City initially contacted the County, the County suggested that they, (arid not the
City) process the refund claims as part of a "roll correction." There were several problems
with this approach, including that it could result in the refund being paid to the current
owner, not the person who paid the tax. Further, under California Revenue & Taxation
Code Section 5101, the State has reserved to the City (and not the County) the authority to
issue refunds. And in fact, the City Council already had established preliminarily the
procedure for obtaining refunds pursuant to City Resolution 2001-19. For example, in
order to extend the statute of limitations while the City was appealing the trial court
decision, the Resolution provided that taxpayers could file refund claims with the City within
four years after the taxpayer paid his taxes, except that for all taxes paid prior to January 4,
1998, the taxpayer had until January 4, 2004 to file a claim.
Ultimately, the County agrees that the City should process refunds, and in order to secure
the County's cooperation, Staff has negotiated an Agreement with the County, the County
Tax Collector and Auditor-Controller. The essential terms of the Agreement are as follows:
1. The City will adopt an ordinance directing how retirement tax refunds will be
paid. (This Ordinance will be placed on the March 15, 2004 agenda and will mirror and
replace Resolution 2001-19.)
2. City will approve and pay all valid claims for refund of the retirement tax. The
County will not approve or deny tax claims or issue tax refunds, absent a court order. Any
refund claims the County receives will be forwarded to the City.
G:1RCA120041Tax Refund MOU 3-1-04.doc 2/17/2004 5:08 PM
rxEQUEST FOR COUNCIL AM i0N
MEETING DATE: March 1, 2004 DEPARTMENT ID NUMBER: CA 04-01
3. The County will provide an electronic file for each parcel in Huntington Beach
for tax years 1997/98 through 2000/01 describing Retirement Taxes paid. The County also
will provide the City access to tax payment (and other related) records so the City may
verify refund claims.
4. The City shall reimburse the County for its reasonable expenses incurred in
assisting the City in processing claims.
5. The City will defend, indemnify and hold harmless the County should the
County be sued regarding any failure of the City to provide tax refunds.
It is recommended that the City Council approve the Agreement.
Environmental Status: Not applicable.
Attachment(s):
City Clerk's'
Page Number N Description
Agreement Between The City Of Huntington Beach, The County
Of Orange, The Orange County Auditor-Controller, And The
Orange County Treasurer-Tax Collector
RCA Author: S. Field
G:\RCA\2004\Tax Refund MOU 3-1-04.doc 2/17/2004 5:08 PM
3
ATTAC HM ENT 1
AGREEMENT BETWEEN THE CITY OF HUNTINGTON
BEACH,THE COUNTY OF ORANGE, THE ORANGE COUNTY
AUDITOR-CONTROLLER,AND THE ORANGE COUNTY
TREASURER-TAX COLLECTOR
This AGREEMENT is by and between the CITY OF HUNTINGTON BEACH
("CITY"), the COUNTY OF ORANGE("COUNTY"), the ORANGE COUNTY
AUDITOR-CONTROLLER("AUDITOR'), and the ORANGE COUNTY
TREASURER-TAX COLLECTOR("TAX COLLECTOR").
WHEREAS,the CITY first contracted with the California Public Employees
Retirement System ("PERS") in 1945 to provide retirement benefits to its police and fire
employees. Pursuant to the City Charter, the CITY has contracted with PERS to provide
all CITY employees with a retirement program since at least 1966; and
WHEREAS, since at least 1966,the Huntington Beach City Charter has
authorized, and the City Council has levied a separate property tax to pay for CITY
employee retirement benefits (the "Retirement Tax"); and
WHEREAS, Proposition 13 was adopted in 1978, limiting property taxes to 1%of
full cash value,but also authorizing taxes exceeding the limit to repay"any indebtedness
approved by the voters prior to July_1, 1978." In 1982,.pursuant to Carman v.Alvord
(1982) 31 Cal.3d 318,the California Supreme Court interpreted"indebtedness"under
Proposition 13 to permit the CITY and other similar situated cities to continue to levy a
Retirement Tax above the 1% limit; and
WHEREAS,prior to 1978,the CITY was only responsible for paying the
employer contribution to PERS. Although after adoption of Proposition 13,the CITY
agreed to pay for additional employee retirement benefits, such as "picking-up"the
employee contribution to PERS, the CITY never used the Retirement Tax to pay for
anything other than the employer contribution to PERS prior to 1997-98; and
WHEREAS,prior to 1981, the Retirement Tax rate fluctuated from year to year.
Since Fiscal Year 1980-1981 through Fiscal Year 2000-2001, CITY levied the
Retirement Tax on all taxable property within Huntington Beach of at the rate of.0493%;
and
WHEREAS, beginning in Fiscal Year 1997-1998,the CITY's employer
contributions to PERS began to fall. Based upon the City Charter, which authorized,the
CITY levy a Retirement Tax "sufficient to meet all obligations of the CITY for the
retirement system in which the City participates,"the CITY used a portion of the
Retirement Tax to pay for retirement obligations the CITY agreed to provide after 1978,
such as the PERS pick-up, the Supplemental Retirement Plan and the Medical Insurance
Retirement Fund; and
Page 1 of 7
Q'IFIELM12004 Agreements\Tax Refund Agreement.doc-2/17.2004-4:32 PM
WHEREAS,at issue in Howard Jarvis Taxpayers Association v. County of Orange
(Orange County Superior Court Case No. 8187 80,Court of Appeal, Fourth District,
Case No. G029292)was whether,Proposition 13 only permitted the Retirement Tax to
pay only for retirement benefits the CITY agreed to provide before July 1, 1978, or
whether it also the Retirement Tax to pay for benefits authorized after July 1, 1978. The
AUDITOR and COUNTY were named as defendants in the suit, and the CITY named as
the real party in interest; and
WHEREAS,the Superior Court held in Hoirard Jarvis Taxpayers Association v.
County of Orange that Proposition 13 only authorized the Retirement Tax to pay for
retirement benefits that the CITY provided prior to July 1, 1978, specifically the CITY's
employer contribution to PERS. The Court further found that for the period up to and
including fiscal year 1999/2000,that portion of the Retirement Tax used to pay for the
PERS pick-up, the Supplemental Retirement Plan and the Medical Insurance Retirement
Fund was invalid. This decision was affirmed by HJTA v. City of Huntington Beach, 110
Cal.App.4t' 1375 (2003); and
WHEREAS,AUDITOR and TAX COLLECTOR are the parties most
knowledgeable of the amount of the Retirement Tax collected from taxpayers and
distributed to CITY; and
WHEREAS, CITY is the party most knowledgeable about the complicated
formula to determine what,portion of Retirement Tax collected on each parcel was
declared invalid in Case No. 81,87 80. CITY has informed COUNTY,AUDITOR,and
TAX COLLECTOR that the invalid Retirement Tax was collected only in tax years
1997-1998, 1998-1999, 1999-2000, and 2000-2001,and on the corresponding
supplemental tax rolls; and
WHEREAS, AUDITOR and TAX COLLECTOR intended to exercise their
discretion under California Revenue and Taxation Code section 5097.2 to issue refunds
to taxpayers of the invalid portion of the Retirement Tax, provided that the County
Auditor was able to correct the tax rolls pursuant to California Revenue and Taxation
Code Section 4831. The CITY objected to this procedure on the grounds that: (i)the
AUDITOR had no lawful authority to correct the assessment roll for non-clerical errors
and that the decision in Howard Jarvis Taxpayers Association v. County of Orange
declaring invalid a portion of the Retirement.Tax was such a non-clerical error; (ii)that
the AUDITOR only could correct the tax roll if he could determine the precise amount of
the invalid Retirement Tax,but only the CITY could make such a determination at the
time the City Council approves or denies an individual taxpayer's refund claim; and (iii)
California Revenue & Taxation Code Section 5101 reserved to CITY the authority to
provide by ordinance the manner that tax refunds may be paid; and
WHEREAS, CITY passed Resolution 2001-19 on April 16, 2001 stating CITY's
intention to refund the invalid portion of the Retirement Tax to those taxpayers (or their
guardians, executors or administrators)who file valid claims. CITY intends to
incorporate Resolution 2001-19 into the form of an ordinance; and
Page 2 of 7
GAFIELD12004 Agreements\Tax Refund Agreement.doc-2:17/2004-4:32 PNt
WHEREAS, CITY, COUNTY,AUDITOR, AND TAX COLLECTOR, desire
that all taxpayers or their guardians, executors or administrators who file valid claims,
have the opportunity to receive their refund in a manner that is efficient and taxpayer-
friendly;and
WHEREAS,COUNTY,AUDITOR,and TAX COLLECTOR would not enter
into this AGREEMENT absent CITY's assurance that all taxpayers or their guardians,
executors or administrators who file valid claims, will receive their refund of the
Retirement Tax; and
WHEREAS, COUNTY, AUDITOR, and TAX COLLECTOR would not enter
into this AGREEMENT absent CITY's commitment to reimburse COUNTY,
AUDITOR, and TAX COLLECTOR for all reasonable costs and expenses incurred in
assisting CITY in providing Retirement Tax refunds to taxpayers and CITY's
commitment to defend, indemnify and hold harmless the COUNTY, AUDITOR, and
TAX COLLECTOR and its officers and employees relative to any act or omission
pursuant to this AGREEMENT; and
WHEREAS, CITY, COUNTY,AUDITOR, and TAX COLLECTOR wish to
avoid costly inter-governmental disputes or litigation that may result from the COUNTY,
AUDITOR, or TAX COLLECTOR refunding Retirement Tax collections to taxpayers.
NOW, THEREFORE,.CITY, COUNTY,AUDITOR, and TAX COLLECTOR
agree as follows:
1. CITY intends to adopt an ordinance consistent with Division 1,Part 9,
Chapter 5 (i.e. sections 5096 through 5180) of the California Revenue and Taxation Code
directing how Retirement Tax refunds will be paid.
2. CITY will approve all valid claims for refund of the Retirement Tax
lawfully filed and executed under Division 1,Part 9, Chapter 5 (i.e. sections 5096
through 5180) of the California Revenue and Taxation Code.
3. CITY will pay all Retirement Tax claims approved by CITY. A payment
of a Retirement Tax claim by CITY will constitute payment in full on such claim:
COUNTY, AUDITOR, and/or TAX COLLECTOR will not pay on any such claim
without a binding court order.
4. COUNTY, AUDITOR, and TAX COLLECTOR will not issue refunds of
the Retirement Tax under Revenue and Taxation Code section 5097.2 and will not
approve or deny claims for refund of the Retirement Tax. COUNTY will deliver to
CITY all Retirement Tax refund claims filed with COUNTY.
5. COUNTY, AUDITOR, and TAX COLLECTOR shall provide to the
CITY, an electronic file of the secured, unsecured, supplemental and corresponding
Page 3 of 7
G:IFIELD�2004 Agreements\Tar Refund Agreement.doc-2/17/2004-4:32 PM
delinquent property tax rolls for tax years 1997-1998, 1998-1999, 1999-2000, 2000-2001
and the corresponding supplemental years,the following information for each parcel or
unsecured property in HuntingfokBeach:
(1) Amount of Retirement Tax Paid
(2) Assessed Land Value
(3) Assessed Value of Improvements (Building)
(4) Control Number
(5) Homeowner Exemption
(6) Legal Description
(7) Mailing Address
(8) Mailing Address 2
(9) Mailing City
(10) Mailing State
(11) Mailing Zip
(12) Other Description
(13) Owner of Record
(14) Owner of Record 2
(15) Owner of Record 3
(16) Owner.of Record as of Date
(17) Parcel Number
(18) Penalty Amount Basic
(19) Penalty Amount Additional
.(20) Property Location
(21) Retirement Tax Rate%
(22) Retirement Tax Value Base
(23) Roll Type
(24) Roll Year
(25) Service Agency(for PERS Tax)
(26) Supplemental Event Date
(27) Supplemental Event Type
(28) Supplemental Proration End Date
(29) Supplemental Proration Start Date
(30) Service Agency(for PERS Tax)
(31) Tax Amount
(32) Tax Amount Paid
(33) Tax Amount Paid Date
(34) Tax Rate Area
(35) Tax Type (for PERS Tax)
(36) Tax Year Ending
(37) Total Net Taxable Value
(38) Vesting Code
(39) Any other information the CITY, AUDITOR, and TAX COLLECTOR
agree is necessary to process Retirement Tax Claims.
Page 4 of 7
GAFIELD 2004 Agreements\Tax Refund Agreement.doc-2/17/2004-4:32 PM
6. COUNTY shall provide CITY a list of all pending appeals of assessed
value in Huntington Beach, describing for each appeal: (i) appeal number, (ii)parcel or
bill number, (iii) street address, (iy)property classification(i.e.,residential, business,
etc.), (v) applicant's opinion of value, and(vi)tax year(s) appealed(if available).
7. Because the CITY may need information in addition to that provided as
part of the electronic data base in order to verify refund claims, COUNTY,AUDITOR,
and TAX COLLECTOR shall provide CITY and its employees and consultants
reasonable access to property tax payment(and other related)microfiche and imaged
records on an as-needed basis so that CITY may verify Retirement Tax refund claims.
COUNTY, AUDITOR, and TAX COLLECTOR shall not assert any claim of
confidentiality regarding access of the CITY and its employees and consultants to tax
records, provided that the CITY and its employees and consultants follow the same
taxpayer confidentiality procedures that the COUNTY, AUDITOR, and TAX
COLLECTOR follow.
8. CITY shall reimburse COUNTY,AUDITOR, and TAX COLLECTOR for
all reasonable expenses they may incur in the performance of this AGREEMENT. When
performing the work described at Sections 5, 6 and 7 of this AGREEMENT, COUNTY,
AUDITOR, and TAX COLLECTOR shall bill the CITY according to the hourly wages
(including benefits and administrative overhead) of the personnel who will perform the
work, and the standard charges of the COUNTY, AUDITOR, and TAX COLLECTOR
for data processing. Prior to,performing the work described at Sections 5,6 and 7 of this
AGREEMENT,COUNTY,AUDITOR;and TAX COLLECTOR shall provide the CITY
an estimate of the cost of such work.
9. If CITY should request and the COUNTY, AUDITOR, or TAX
COLLECTOR provide further help to verify Retirement Tax claims beyond the
assistance described at Sections 5, 6 and 7 of this AGREEMENT, CITY shall reimburse
COUNTY,AUDITOR, and TAX COLLECTOR for all reasonable expenses they may
incur. Prior to performing such work, COUNTY, AUDITOR, and TAX COLLECTOR
shall provide CITY with an estimate and the billing rates of the personnel who will
provide such assistance to the CITY.
10. CITY acknowledges that if corrections are made to the assessment roll
after the CITY:issues Retirement Tax refunds, (e.g.,value changes by request of an
assessment appeals board or the Assessor, or a judgment related to County of Orange v.
Orange County Assessment Appeals Board No. 3 (Orange County Superior Court Case
No. OOCC03385)) the COUNTY or AUDITOR could then issue refunds of the
Retirement Tax that duplicate CITY refunds, or the taxpayer may be owed an additional
refund of the Retirement Tax. The COUNTY, AUDITOR, TAX COLLECTOR and
CITY shall provide, on at least a quarterly basis and in an electronic medium, a report of
all tax refunds paid by the COUNTY to taxpayers in Huntington Beach for tax years
1997-98, 1998-1999, 1999-2000, 2000-2001, and corresponding supplemental years.
Page 5 of 7
GAFIELD\2004 AgreementslTax Refund Agreement.doe-2/17/2004-4:32 PM
11. CITY will defend, indemnify and hold harmless COUNTY, AUDITOR,
TAX COLLECTOR and their officers and employees ("INDEMNITEES") with respect
to any claim, loss, damage, liatiil4y, expense, attorney fees or costs that is in any way
related to the failure of CITY or INDEMNITEES to provide refunds of the Retirement
Tax to those lawfully entitled or any act or omission of the CITY performed or to be
performed pursuant to this AGREEMENT. COUNTY,AUDITOR,and TAX
COLLECTOR shall have the sole and exclusive discretion to retain legal counsel and
experts in the event of any legal or administrative proceeding related to the
implementation of the AGREEMENT and CITY shall pay all attornev fees and litigation
costs or expenses incurred by COUNTY,AUDITOR, or TAX COLLECTOR in any such
legal or administrative proceeding.
12. COUNTY, AUDITOR, and TAX COLLECTOR shall be entitled to
conclusively rely on any and all direction,requests or representation of the CITY or its
officers, employees, agents, or consultants related to the implementation of this
AGREEEMENT. COUNTY,AUDITOR, and TAX COLLECTOR do not, and shall not,
have any duty or obligation to investigate any matter, action or determination relating to
this AGREEMENT,including,but not limited to,the validity of any claim or payment of
the Retirement Tax.
13. This AGREEMENT will become effective upon execution by all parties.
It will remain in force until the period for filing a claim for refund of the Retirement Tax
under Division 1, Part 9, Chapter 5 (i.e. sections 5096 through 5180)of the California
Revenue and Taxation Code has expired. The indemnification provisions of Paragraph
No. 7 of this AGREEMENT shall survive the termination of this AGREEEMENT.
14. If any paragraph,part, clause, or phrase of this AGREEMENT is for any
reason held to be invalid or unconstitutional,the remaining sections shall not be affected
but will remain in full force and effect.
Page 6 of 7
GAFIELD12004 Agreements\Tax Refund Agreement.doc-Z'17/2004-4:32 PM
IN WITNESS WHEREOF, the parties hereto have caused this AGREEMENT to
be executed as of ,.2004.
SIGNED AND CERTIFIED THAT A COUNTY OF ORANGE
COPY OF THIS DOCUMENT HAS BEEN
DELIVERED TO THE CHAIR OF THE BOARD
By: By:
CHAIR OF THE BOARD OF SUPERVISORS DARLENE J.BLOOM
CLERK OF THE BOARD OF
SUPERVISORS
ORANGE COUNTY,CALIFORNIA
AUDITOR-CONTROLLER
By:
DAVID SUNDSTROM
AUDITOR-CONTROLLER
TREASURER-TAX COLLECTOR
By:
JOHN M.W.MOORLACH
TREASURER-TAX COLLECTOR
t CITY OF HUNTINGTON BEACH
Assistant City erk By:
for CONNIE BROCKWAY CATHY06RE&N
CITY CLERK MAYOR
APPROVED AS TO FORM: APPROVED AS TO FORM:
COUNTY COUNSEL CITY ATTORNEY
ORANGE COUNTY, CALIFORNIA HUNTINGTON BEACH, CALIFORNIA
By: B
JAMES C. HARMAN �r9 )I�TTY�ATTORNEY
E McG T ��-�
DEPUTY COUNTY COUNSEL
Page 7of7
GAFIELD\2004 Agreements\Tax Refund Agreement.doc-2/17/2004-4:32 PM
RCAIZOUTING S* HEET
INITIATING DEPARTMENT: City Attorney
SUBJECT: Approve Tax Refund MOU
COUNCIL MEETING DATE: March 1, 2004
RCA ATTACHMENTS STATUS
Ordinance (w/exhibits & legislative draft if applicable) Not Applicable '
Resolution (w/exhibits & legislative draft if applicable) Not Applicable
Tract Map, Location Map and/or other Exhibits Not Applicable
Contract/Agreement (w/exhibits if applicable)
(Signed in full by the C;t Attome Attached
Subleases, Third Party Agreements, etc.
(Approved as to form by City Affome Not Applicable
Certificates of Insurance (Approved by the Ci Attome Not Applicable
Financial Impact Statement (Unbud et, over $5,000) Not Applicable
Bonds (if applicable) Not Applicable
Staff Report (If applicable) _ Not Applicable
Commission, Board or Committee Report (If applicable) Not Applicable
Findings/Conditions for ARproval and/or Denial Not Applicable
EXPLANATION FOR MISSING ATTACHMENTS
REVIEWED RETURNED FORMEDED
Administrative Staff
Assistant City Administrator Initial
City Administrator Initial
City Clerk
EXPLANATION FOR RETURN OF ITEM:
Only)(Below Space For City Clerk's Use
RCA Author: S. Field
REQUEST FOR LATE SUBMITTAL
(To accompany RCA's submitted after Deadline
Department: City Atty. Subject Am o OU with Orange County -
Property Tax Refund
Council Meeting Date: 311104 1 Date of This Request: 2119/04
REASON (Why is this RCA being submitted late?):
The Coun approved the agreement on 2/17/04.
EXPLANATION (Why is this RCA necessary to this a enda? :
The Board of Supervisors will consider the agreement on 2/24104. It is important to approve
the agreement soon, so we can continue the claims process expeditiously.
CONSEQUENCES How shall delay of this RCA adversely impact the City?):
Delay in processing tax refunds.
Signature: Q-Approved 0 Denied
r �JrJr�.
Department Head Ray Silver
Ci Administrator
Uoc3 07114194
1— �,
CITY OF HUNTINGTON BEA%,rI
MEETING DATE: March 1, 2004 DEPARTMENT ID NUMBER: CA 04-01
Council/Agency Meeting Held:
Deferred/Continued to:
❑Approved ❑ Conditionally Approved ❑ Denied City Clerk's Signature
Council Meeting Date: March 1, 2004 Department ID Number: CA 04-01
CITY OF HUNTINGTON BEACH 7we'-C
REQUEST FOR COUNCIL ACTION o r
SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS �=
SUBMITTED BY: RAY SILVER, City Ad istratorafi j
PREPARED BY: JENNIFER McGRAT�, City Attorney
wc'
SUBJECT: Approve An Agreement Between The City of Huntington Bead, Tlie
County of Orange, The Orange County Auditor-Controller, And The
Orange County Treasurer-Tax Collector
Statement of Issue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Status,Attachment(s)
Statement of Issue: Staff recommends that the City Council approve an Agreement with
the County of Orange, the Auditor-Controller, and the Treasurer-Tax Collector regarding
issuing refunds of the Retirement Property Tax for fiscal years 1997-1998, 1998-1999,
1999-2000, and 2000-2001.
Funding Source: Sufficient funds (not-to-exceed $50,000) exist as part of the $2.2 million
property tax override revenue that was impounded in FY 2000-01. Because it is likely the
City will be required to expend the impounded $2.2 million as part of processing or paying
refund claims before it is able to issue a judgment or refunding bond to cover the total cost
of the refunds, Staff is recommending that the City Council appropriate the impounded
moneys to fund refund-processing costs.
Recommended Action:
1. Approve an Agreement between the City of Huntington Beach, the County of Orange,
the Orange County Auditor-Controller, and the Orange County Treasurer-Tax Collector.
2. Appropriate $50,000 from Fund 707, the Employees' Rate Contingency fund (identified
as impounded property tax override revenue from FY 2000-01) to fund the Agreement.
G:1RCA120041Tax Refund MOU 3-1-04.doc 2/17/2004 5:08 PM
1