Loading...
HomeMy WebLinkAboutApprove for Introduction Ordinance No. 3653 Establishing Pro CITY OF HUNTINGTON BE-A%.;jH MEETING DATE: April 19, 2004 DEPARTMENT ID NUMBER: CA 04-04 Council/Agency Meeting Held: ' 0 Deferred/Continued to: b Approved ❑ Conditionally Approved ❑ Denied Cit CI rk's Oignat re Council Meeting Date: April 19, 2004 Department ID Number: CA 04-04 CITY OF HUNTINGTON BEACH REQUEST FOR COUNCIL ACTION 'S SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS SUBMITTED BY: RAY SILVER, City Ad ' istrator anR "' PREPARED BY: JENNIFER McGRAT , ity Attorney SUBJECT: Adopt an Ordinance Establishing Procedures to Pay Retirement Tax Refund Claims in Connection with Howard Jarvis Taxpayers Association v. City of Huntington Beach C) r Statement of Issue,Funding Source,Recommended Action,Alternative Action(s),Analysis, Environmental Status,Attachment(s) Statement of Issue: Staff recommends that the City Council adopt an Ordinance establishing procedures to process Retirement Tax refund claims following the decision in Howard Jarvis Taxpayers Association, et al., v. County of Orange and City of Huntington Beach, OCSC Case No. 818780. � Funding Source: Not applicable. �p�c-o�`Q�9 bY'�.�✓v�'Uc�c�rM �S nn4 CQ A-pn.J� \9\, o b Recommended Action: Adopt an Ordinance of the City of Huntington Beach Directing the City Administrator to Approve All Valid Tax Refund Claims Filed in Connection with the Case Entitled Howard Jarvis Taxpayers Association v. County of Orange and Real party in Interest City of Huntington Beach, Orange County Superior Court Case No. 818780, and Establishing Procedures to Determine Their Validity. Alternative Action(s): Do not adopt the Ordinance and provide Staff guidance. (C"ex".0 dv rj G -\ND, G:\RCA\2004\Extend Time to File Refund Claims.doc ` ' 4/7/2004 3:26 PM 1 KEQUEST FOR COUNCIL AC i iON MEETING DATE: April 19, 2004 DEPARTMENT ID NUMBER: CA 04-04 Background: 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.4t" 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: employee contribution rate to the California Public Employees' Retirement System (CaIPERS), the city provided Supplemental Retirement Plan and the city provided Retiree Medical Subsidy Plan. Consequently, Huntington Beach taxpayers are owed tax refunds for these invalid taxes. Analysis: It is necessary that the City Council establish procedures authorizing payment of claims. The attached ordinance would establish these procedures. Briefly, the ordinance does the following: 1. Directs the City Administrator, or his designee, to approve all valid claims. 2. Defines a valid claim as one that was: (1) verified by the person who paid the tax, his or her guardian, executor, or administrator, and (2) filed within four years after making of the payment of the Retirement Tax, provided that no claim for a refund filed on or before January 4, 2004, shall be treated as untimely. (The second term is consistent with the City Council action to extend the statute of limitations period while the legality of the Tax was being appealed.) 3. Creates an administrative appeal process for denied claims. For example, in some cases, different persons may file claims for the same property because one person paid the tax but another owned the property. A hearing officer will be appointed to hear appeals. 4. Sets the interest rate for refunds as 3.86% for the one year from April 2001 through March 2002 and 3% per year thereafter until refunds are issued. n014's a'` i Pam G:\RCA\2004\Extend Time to File Refund Claims.doc 4/7/2004 3:26 PM KEQUEST FOR COUNCIL AC i iON MEETING DATE: April 19, 2004 DEPARTMENT ID N UMBER:Resolution No. 2001-19 5. Establishes the percentage of Tax refunded for each of the years in question: Fiscal Year Percentage of Tax Collected that is to be Refunded 1997/1998 31.8% 1998/1999 41.9% 1999/2000 84.5% 2000/2001 100.0% 6. Authorize the City Administrator to adopt regulations to implement the Ordinance. Environmental Status: Not applicable. Attachment(s): City Clerk's Page Number No. Descripti(on ' 1 An Ordinance of The City Of Huntington Beach Directing The r ;: City Administrator to Approve All Valid Tax Refund Claims Filed In Connection With The Case Entitled Howard Jarvis Taxpayers Association v. County of Orange And Real Party In Interest City of Huntington Beach Orange County Superior Court Case No. 818780, And Establishing Procedures to Determine Their Validity Resolution No. 2001-19 RCA Author: S. Field G:\RCA\2004\Extend Time to File Refund Claims.doc 4/7/2004 3:26 PM 3 ATTACHMENT # 1 ATTACHMENT #2 ORDINANCE NO. 3653 AN ORDINANCE OF THE CITY OF HUNTINGTON BEACH DIRECTING THE CITY ADMINISTRATOR TO APPROVE ALL VALID TAX REFUND CLAIMS FILED IN CONNECTION WITH THE CASE ENTITLED HOWARD JARVIS TAXPAYERS ASSOCIATION V. COUNTYOF ORANGE AND REAL PARTY IN INTEREST CITY OF HUNTINGTON BEACH, ORANGE COUNTY SUPERIOR COURT CASE NO. 818780, AND ESTABLISHING PROCEDURES TO DETERMINE THEIR VALIDITY 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 the case entitled 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 paying.the employees' 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. 'From Fiscal Year 1997-1998 through 2000-2001, 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 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 for retirement benefits the City agreed to provide before July 1, 1978, or whether it also permitted the Retirement Tax to pay for benefits authorized after July 1, 1978; and 1 GAORDINANC\2004\Extending Time-Tax Refund Claims.doc 4/22/04 Or,"'l.ance No. 3653 WHEREAS, on June 4, 2001,the Superior Court adjudged 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 in HJTA v. City of Huntington Beach, 110 Cal.App.4t' 1375 (2003); 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; and WHEREAS, on February 17, 2004, the Superior Court ordered that the City pay Plaintiff, Howard Jarvis Taxpayers Association, attorneys fees in the amount of$250,000.00 from the common fund of property tax reimbursements to be issued for Fiscal Years 1997/98 to 2001/02. The Court further ordered that the City shall reduce the tax refunds by the amount of the claimant's proportionate share of attorneys fees; and NOW, THEREFORE, the City Council of the City of Huntington Beach does hereby ordain as follows: SECTION 1. The City Administrator is directed to approve all valid claims for refund of the Retirement Tax between 1997-1998 to the present,provided that no refund shall be paid unless the"taxpayer or his or her guardian, conservator, executor or administrator has submitted a written claim, under penalty of perjury,to the City within four years of the overpayment or erroneous or illegal collection of said tax, except as provided for at Section 3. SECTION 2. The City Treasurer shall 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. SECTION 3. Pursuant to Section 5097 of the Revenue &Taxation Code, the City Administrator shall approve claims for a refund of Retirement Tax if the claim was: (1)verified by the person who paid the tax, his or her guardian, executor, or administrator, and(2) filed within four years after making of the payment of the Retirement Tax,provided that no claim for a refund filed on or before January 4, 2004, shall be treated as untimely. Otherwise, the City Administrator shall deny the claim and provide written notice to the claimant of the denial and the time and manner by which the claimant may appeal. SECTION 4. The City Administrator shall request a claimant to submit a corrected claim if he determines their claim form is incomplete or additional information is necessary to verify the claim. The corrected claim/additional information must be mailed and postmarked to the City, or otherwise delivered to the City within 35 days after the request was dated. If a corrected claim is not received by the 35th day, it shall be deemed denied. SECTION 5. Refunds shall be paid according to the amount of Retirement Tax paid. The percentage of the Tax to be refunded is: 2 GAORDNANCUOMExtending Time-Tar Refund Claims.doc 4/22/04 Ordi ace No. 3653 FY %of tax collected that is to be refunded 1997-98 31.8% 1998-99 41.9% 1999-00 84.5% .2000-01 100% SECTION 6. Interest shall be paid on Retirement'Tar refunds, pursuant to California Revenue & Taxation Code Section 5151,which specifies that interest is due if at least ten dollars ($10) or more of interest is due. Simple interest shall be paid on all refunds from April 2, 2001, or the date the Retirement Tax was paid, whichever is later,through 30 days prior to issuance of the refund checks. The interest rate shall be 3.86% for the one year from April 2001 through March 2002, and 3%per year thereafter. For purposes of determining if at least $10 in interest is due, the interest shall be accumulated for all tax years that a single claimant seeks a refund for a single parcel. SECTION 7. All refunds shall be reduced by the claimant's proportionate share of the $250,000 paid in attorneys fees. SECTION 8. If the claimant was late paying the Retirement Tax for the year claimed, the proportionate share of any interest or penalties paid to the County associated with the Retirement Tax overpaid shall be refunded. SECTION 9. (a) Any person aggrieved by any decision of the City Administrator shall be required to comply with the appeals procedure of this section. Compliance with this section shall be a prerequisite to a suit thereon. [See Revenue &Taxation Code § 5141.] Nothing herein shall permit the filing of a claim or action on behalf of a class or group of taxpayers. (b) If any person is aggrieved by any decision of the City Administrator, he or she may appeal by filing a notice of appeal with the City Clerk Nrithin fourteen(14) days of the date of the decision. (c) The matter shall be set for hearing no more than ninety(90) days from the receipt of the appeal. The appellant shall be served with notice of the time and place of the hearing, as well as any relevant materials, at least fourteen(14) calendar days prior to the hearing. The: hearing may be continued from time to time upon mutual consent. At the time of the hearing,the claimant, the City Administrator, and any other interested person may present such relevant evidence as he or she may have relating to the determination from which the appeal is taken. (d) Based upon the submission of such evidence and the review of the City's files, the Hearing Officer shall issue a written notice and order upholding, modifying or reversing the determination from which the appeal is taken. The notice shall be given within fourteen (14) days after the conclusion of the hearing and shall state the reasons for the decision. The notice shall specify that the decision is final and that any suit for judicial review pursuant to Revenue & Taxation Code § 5141 shall be filed within six months from the date of the decision. If the 3 GAORDINANC\2004- Extending Time-Tar Refund Claims.doc 4/22/04 Ord' -ince No. 3653 Hearing Officer fails or refuses to act on a refund claim within the fourteen(14) day period, the claim shall be deemed to have been rejected on the fourteenth(14th) day. (e) All notices under this section may be sent by regular mail,postage prepaid, and shall be deemed received on the third calendar day by following the date of mailing, as established by a proof of mailing. (f) The City Administrator, in consultation with the City Attorney, shall appoint the Hearing Officer. SECTION 10. The City Administrator, in consultation with the City Attorney, may adopt regulations to implement this Ordinance. The City Administrator may designate in writing any other person to perform the functions delegated to the City Administrator pursuant to this Ordinance. SECTION 11. This ordinance supercedes Resolution No. 2001-19. SECTION 12. This ordinance shall become effective 30 days after its adoption. PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on the 3rd day of May , 2004. Mayor APPROVED AS TO FORM: City4'CiOAttorne Clerk ' Y INITIATED AND APPROVED: City Kdministrator 4 GA0RDINANC\2004\Ertending Time-T&x Refund Claims.doc 4/22/04 Ord. No. 3653 STATE OF CALIFORNIA ) COUNTY OF ORANGE . ) ss: CITY OF HUNTINGTON BEACH ) I, CONNIE BROCKWAY, the duly elected, qualified City Clerk of the City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do hereby certify that the whole number of members of the City Council of the City of Huntington Beach is seven; that the foregoing ordinance was read to said City Council at a regular meeting thereof held on the 19th day of April, 2004, and was again read to said City Council at a regular meeting thereof held on the 3rd day of May, 2004, and was passed and adopted by the affirmative vote of at least a majority of all the members of said City Council. AYES: Sullivan, Coerper'.Hardy, Green, Boardman,=Cook NOES: None ABSENT: Houchen ABSTAIN: None I,Connie Brockway,CITY CLERK of the City of Huntington Beach and ex-officio Clerk of the City Council,do hereby certify that a synopsis of this ordinance has been published in the Huntington Beach Fountain Valley Independent on May 13,2004. In accordance with the City Charter of said City Connie Brockway, Ci1y Clerk City Clerk and ex-officio erk Deputy Citv Clerk of the City Council of the City of Huntington Beach, California PROOF OF PUBLICATION STATE OF CALIFORNIA) SS., County of Orange ) MOO Hunt>IM B 1 am a Citizen of the United States and a UGALBOM _ 00.303 I resident of the County aforesaid; I am A&pW by&10, ,",] over the age of eighteen years, and not a on1Aay3,20- i "AN ORDINANCE OF THE; party to or interested in the below CITY OF HUNTINGTON, BEACH DIRECTING THE+ entitled matter. I am a principal clerk of CITY APPRO VE ALL AVEALL RATOR VALID TAX CLAIMS fILED the HUNTINGTON BEACH INDEPENDENT, a NF CONNECTION:WITH` newspaper of general circulation, printed THE CASE ENTITLED HOWARD JARVIS'2TAX;g and published in the City of Huntington PAYERS A OF. ORANGE COUNTY OF. ORANGE AND REAL PARTY SIN Beach, County of Orange, State of INTEREST CITY=A�OF, HUNTINGTON BEACH; California, and that attached Notice is a ORANGE COUNT..'ASE PERIOR COURT*`:CASE true and complete copy as .was printed NO. 818780,.AND1 ES TABLISHING PROCE-r. and published in the Huntington Beach DUKES TO DETERMINE" THEIR VALIDITY" and Fountain Valley issues of said SYNOPSIS: This ordinance, estab== fishes procedures, to newspaper to wit the issue(s) of: process Retirement Tax refund claims following' the decision in:Howard . , .. Jarvis Taxpayers__Asso� ciation,etal.,v:.County, of Orange.and ,City:%of, Huntington Beach,`OCSC` May 13, 2004 Case No.818780. ';7i :'t The ordinance::_;1) Directs the City Admin- istrator,or his'designee; to approve all,,vilicl-, claims. 2) DefineV,i'l valid claim.,3);Creat'esj an administrative appeal I declare, under penalty of perjury/ that process for denied •claims, and 4) Sets theterest rate , the foregoing is true and correct. 'nCOPIES"QF THISbR'- DINANCE ARE 'AVAIL- _ ABLE IN THE CITY CLERK'S OFFICE. "` PASSED AND ADOPTED Executed on Ma 13 2004 by the City Councii:of, y the City of Huntington` at Costa Mesa, California. Beach at a .regular, meeting held May.,3, 2004 by the following roll call vote: AYES: Sullivan, Coer-: per, Hardy, Green;' Boardman,Cook. NOES:None- ABSENT:Houchen This ordinance'­,Is: adoptive 30 days:aher' adoption.CITY OF HtUNTING-' TON BEACH,. 2000 Signature �MAIN STREET, HUN-, TINGTON BEACH, CA 92648 714-536-5227 CONt{IE BROCKWAY. CITY'CLERK Published Huntington Beach Independent May 13,2004 052-508 i RESOLUTION NO. 2001-19 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH EXTENDING THE TIME TO FILE TAX REFUND CLAIMS AND LAWSUITS IN CONNECTION WITH THE CASE ENTITIED HOWARD JAR VIS TAXPA YERS ASSOCIA TION V. COUNTY OF ORANGE AND REAL PARTY IN INTEREST CITY OF HUNTINGTON BEACH ORANGE COUNTY SUPERIOR COURT CASE NO. 818780 WHEREAS, the City first contracted with the California Public Employees Retirement System ("PERS") in 1945 in order to provide retirement benefits to City employees; and As part of the City Charter elections of 1966, and later, 1978,Huntington Beach voters authorized a property tax override to pay for employee retirement benefits; and Since at least 1966, the City has levied a property,tax override to pay for employee retirement benefits; and = Since 1981-82, the City of Huntington Beach has levied a property tax override in the amount of 0.0493 percent of assessed value to support its employee retirement system; and The Orange County Superior Court declared pursuant to a judgment filed on April 2, 2001 in the case entitled Howard Jarvis Taxpayers Association v. County of Orange and Real Party in Interest City of Huntington Beach, Orange County Superior Court Case No. 818780 ("Case No. 818780") that the City property tax override violates Proposition 13 "to the extent that the tax exceeds the City's employer contribution for PERS retirement benefits that were in effect prior to July 1, 1978"; and The City Council has authorized an appeal of the judgment in Case No. 818780; and It is likely that the appellate process will not be completed in less than three years, and even longer, should any party seek Supreme Court review; and 1 SF-2001 Resolutions:Extending Time—Tax Refund Claims 4/l 7/01 Many property owners already have filed refund claims based upon the Superior Court judgment in Case No. 818780; and Section 5097 of the Revenue and Taxation Code of the State of California provides that refund claims may be submitted within four years of having paid the property tax. Further, Section 5141 provides that if a refund claim is made, and denied by the City, the claimant has six months to file a lawsuit based upon the claim. Failure to file such a lawsuit results in forfeiture of the claim; and The City Council wishes to establish an orderly procedure so that any claims filed can be addressed after all appellate proceedings in Case No. 818780 have been completed; NOW, THEREFORE, the City Council of the City of Huntington Beach hereby resolves as follows: SECTION 1; .Notwithstanding Section 5097 of the Revenue and Taxation Code, 'a., property tax refund claim may be filed with the City Clerk to include any property tax payments made after July 1, 1997 to the present provided the claim for a refund is filed no later than within 90 days following issuance of a remittitur by an appellate court affirming, modifying or reversing the judgment of the trial court in Case No. 818780 ("the Remittitur"). SECTION 2. Notwithstanding Section 5141 of the California Revenue and Taxation Code, any person having filed a claim for refund after January 1,.200.1,based upon the judgment in Case No. 818780 may commence such action within 180 days after issuance of the Remittitur. SECTION 3. Should the Remittitur either affirm or modify the April 2, 2001 judgment in Case No. 818780, declaring that a portion of the property tax override violates Proposition 13, it is the intent of the City Council of the City of Huntington Beach to refund within a reasonable time all property taxes paid from July 1, 1997 to the present consistent with the Remittitur upon 2 SF-2001 Resolutions:Extending Time—Tax Refund Claims 4/18/01 presentation of a refund claim in compliance with the California Revenue and Taxation Code. Any person issued a refund based upon the final judgment shall be entitled to interest pursuant to Section 5151 of the California Revenue and Taxation.Code at the greater of three percent (3%) per annum or the County pool apportioned rate, when that interest is Ten Dollars ($10.00) or more. The interest computation period will commence as of April 1, 2001. PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on the 16th day of April , 2001. Mayor ATTEST: / APPROVED AS TO FORM: City Clerk City Attorney REVIEWED AND APPROVED: INITIATED APPROV - - L-� <2� — City ministrator Director o Administrative Services 3 SF-2001 Resolutions:Extending Time—Tax Refund Claims 4/17/01 Res. No. 2001-19 STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss: CITY OF HUNTINGTON BEACH ) I, CONNIE BROCKWAY, the duly elected, qualified City Clerk of the City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do hereby certify that the whole number of members of the City Council of the City of Huntington Beach is seven; that the foregoing resolution was passed and adopted by the affirmative vote of at least a majority of all the members of said City Council at a regular meeting thereof held on the 16th day of April, 2001 by the following vote: AYES: Green, Boardman, Cook, Julien Houchen, Garofalo, Dettloff, Bauer NOES: None ABSENT: None ABSTAIN: None City Clerk and ex-officio C erk of the City Council of the City of Huntington Beach, California RCA ROUTING SHEET INITIATING DEPARTMENT: City Attorney SUBJECT: Adopt an Ordinance Establishing Procedures to Pay Retirement Tax Refund Claims in Connection with Howard Jarvis Taxpayers Association v. City of Huntington Beach COUNCIL MEETING DATE: April 19, 2004 ' _ "N 1 , j TT CHM NT' STATUS.Ordinance (w/exhibits & legislative draft if applicable) Attached 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 Attomey) Not Applicable Subleases, Third Party Agreements, etc. (Approved as to form by City Attomey) Not Applicable Certificates of Insurance (Approved by the City Attorney) Not Applicable Financial Impact Statement (Unbudget, 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 Approval and/or Denial Not Applicable .. . . ....................... T PL 'INA 0N'_FOR A 1;NG A T 7TT, .. ...... ......0'' RETURNED F, Q" Administrative Staff Assistant City Administrator (initial) City Administrator (Initial) azn& City Clerk RE txPLA' AT1'0N`F,'o UOr-' ITEM R.- -'T­UR RCA Author: S. Field