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HomeMy WebLinkAboutUnbudgeted Expenditure - Funds to Pay Attorney's Fees to the�'I b373to 32a, 4s" " -'ITY OF HUNTINGTON BEAGH MEETING DATE: February 2, 2004 DEPARTMENT ID NUMBER: CA 04-02 Council/Agency Meeting Held: Deferred/Continued to: �ppr v d ©Co iti ally A proved ❑ D ied City Cl s 'g 'ture s —6� Council Meeting Date: February 2, 2004 Department ID umber: CA 04-02 CITY OF HUNTINGTON BEACH - REQUEST FOR COUNCIL ACTION C SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS N - SUBMITTED BY: RAY SILVER, City Administrator 494 7j PREPARED BY: JENNIFER McGRATH, City Attorney /^ .� � v SUBJECT: Appropriate Funds to Pay Attorney's Fees in Connection with the Settlement in Howard Jarvis Taxpayers Association, et al., v. City of Huntington Beach, et al. OCSC Case No. 818780; Court of Appeal, Fourth District, Case No. G029292 Statement of Issue, Funding Source, Recommended Action, Alternative Action(s), Analysis, Environmental Status, Attachment(s) Statement of Issue: Whether to appropriate funds to pay attorney's fees to the Howard Jarvis Taxpayers Association in connection with Howard Jarvis Taxpayers Association, et al., v. City of Huntington Beach. Funding Source Sufficient funds (not -to -exceed $250,000) exist as part of the $2.2 million property tax override revenue that was impounded in FY 2000-01. Because it is likely 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: Appropriate $250,000 from Fund 707, the Employees' Rate Contingency fund (identified as impounded property tax override revenue from FY 2000-01) to fund the agreement. Alternative Action(s): Do not appropriate the funds. G:\RCA\2004\HJTA.doc 4- 1/26/2004 10:25 AM t *QUEST FOR COUNCIL ACl iON MEETING DATE: February 2, 2004 DEPARTMENT ID NUMBER: CA 04-02 Analysis: Howard Jarvis Taxpayers Association ("HJTA") and Charles Scheid filed suit challenging whether the City's property tax override violated Proposition 13. At issue was whether the override was limited to funding only those retirement benefits the City paid for as of July 1, 1978, or for all City -paid retirement benefits, including those benefits authorized after July 1, 1978. The case was tried on February 26-27, 2001 in the Orange County Superior Court. On June 4, 2001, the Court issued a final judgment, holding that under Proposition 13, the retirement property tax was unconstitutional "to the extent it exceeds the City's employer contribution for PERS retirement benefits that were in existence prior to July 1, 1978." The judgment further provided that for the purpose of issuing refunds for FY 1997/98 through FY 2000/01, the City is to refund the tax to the extent it was used to pay the PERS employee pick-up and the City - funded retirement benefits. The Court of Appeal affirmed the judgment on July 30, 2003 in HJTA v. City of Huntington Beach, 110 Cal.App.4th 1375 (2003). Although Plaintiffs applied for an award of $329,400 in attorneys fees, they have agreed to accept $250,000. These fees are to be paid from the "common fund" of .taxes to be refunded. (In a similar case where a sales tax was invalidated under Proposition 13, the Court found that the attorneys fees should be paid out of the: fund - of -sales, tax reimbursements.. (Rider. v. County.of San Diego (1992) 11 Cal. App. 4th 1410.).) The effect of this payment is to reduce refunds by each taxpayer's proportionate share -of attorney fees. For example, if $20 million in refund requests are received and paid, the attorney fees reduction would reduce each refund by 1.25%. If only $1.0-million in refund applications are received, then the reduction would be 2.5%. Following the Court of Appeal's decision, in closed session on December 15, 2003, the City Council authorized the payment of attorney's fees of $250,000.00 from the common fund. The payment is due by March 1, 2004. This RCA is for appropriation of the $250,000.00 only. Environmental Status: Not applicable. Attachment(s): None RCA Author: A7Z�< Amended to add after the word, "agreement"— "entered into with the Howard Jarvis Taxpayers Association for their Attorney's fees in the litigation, Howard Jarvis Taxpayers Association, et al vs. City of Huntington Beach, et al, OCSC Case No. 818780; Court of Appeal, Fourth District, Case No. G029292". G:\RCA\2004\HJTA.doc -,3 1/26/2004 10:25 AM oZ. (13) February 2, 2004 - Cou..,,M/Agency Agenda - Page 13 Redevelopment Agency Actions: 1. Approve the following modifications to the Redevelopment Agency's 2003-04 Budget: Appropriate $324,057 as General Fund Overhead Charge; Eliminate $102,830 Accounting Charge; Reduce Revenue by $705,000 for Hilton TOT shift to General Fund; and Reduce General Fund Debt Repayment by $926,227; and 2. Adopt Agency Resolution No. 348 — "A Resolution of the Redevelopment Agency of the City of Huntington Beach Electing to Remit to the City of Huntington Beach Transient Occupancy Tax Revenues for the Waterfront Beach Hilton Allocated to the Redevelopment Agency Pursuant to Redevelopment Agency Ordinance Nos. 1 and 2,"and 3. Authorize the Agency Chairperson and the Agency Clerk to execute the Grant Deed from the Agency to the City for the Shank House parcels and send to the County for recordation after the City Clerk has affixed the acceptance certificate of the City. Submitted by the Administrative Services Director and the Economic Development Director. Funding Source: The recommended actions and policy direction being affirmed do not result in any expenditures. There will be a number of budget modifications and changes in the balance sheet of the City and Redevelopment Agency as a result of the recommended actions. These will be reflected in the FY 2003-2004 Financial Statement once completed. Approved 5-0-2 (Cook out of room, Houchen absent) E-12. (City Council) Authorize Appropriation and Create Business Unit for the Police Department's State Narcotics Forfeiture Account (320.10) — 1. Establish a new State Narcotic Forfeiture expense business unit and approve the expenditure of those funds to pay for costs within the Police Department; and 2. Appropriate $250,000 from the Narcotics Forfeiture Fund to the newly established expense account. Submitted by the Chief of Police. Funding Source: As stated above. Police Chief reported on the reason for establishing the new Business Unit. Approved 5-0-2 (Cook out of room, Houchen absent) E-13. (City Council) Authorize Appropriation of Funds to Pay Attorney's Fees in Connection with the Settlement in Howard Jarvis Taxpayers Association„ et al., versus City of Huntington Beach, et a/. OCSC Case No. 81870, Court of Appeal, Fourth District, Case No. G029292 (Property Tax Refund Claims) (320.45) — Appropriate $250,000 from Fund 707, the Employees' Rate Contingency fund (identified as impounded property tax override revenue from FY 2000-01) to fund the agreement. Submitted by the City Attorney. Funding Source: Sufficient funds (not -to -exceed $250,000) exist as part of the $2.2 million property tax override revenue that was impounded in FY 2000-01. Because it is unlikely city will be required to expend the impounded $2.2 million dollars 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. (Refer to Agenda Items E-14 and E-15.) Amended to add after the word, "agreement"— "entered into with the Howard Jarvis Taxpayers Association for their Attorney's fees in the litigation, Howard Jarvis Taxpayers Association, et al vs. City of Huntington Beach, et a/, OCSC Case No. 818780; Court of Appeal, Fourth District, Case No. G029292". Approved 6-0-1 (Houchen absent) w,. COVER PAGE REQUEST FOR LATE SUBMITTAL (To accompany RCA) CONSEQUENCES How shall delay of this RCA adversely impact the City?)\A . rr� a vld eye Ci RCA ROUTING SHEET INITIATING DEPARTMENT: City Attorney SUBJECT: Appropriate Funds to Pay Attorney's Fees in Connection With the Settlement of HJTA v. City COUNCIL MEETING DATE: February 2, 2004 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 City Attorney) Not Applicable Subleases, Third Party Agreements, etc. (Approved as to form by City Attorne) Not Applicable Certificates of Insurance (Approved by the City Attorney) Not Applicable Financial Impact Statement (Unbudget, over $5,000) Attached Bonds (If applicable) Not Applicable Staff Report If applicable) Not Applicable Commission, Board or Committee Report (If applicable) Not Applicable Findings/Conditions for Approval and/or denial Not Applicable .. EXPL�►NA°TIONS FOR MISSING,ATTACHMENTS EXPL'ANATICiR FOR RETURN OF ITEM: ` ....... RCA Author: