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HomeMy WebLinkAboutORD 3729 - APPEAL TO SUPERIOR COURT DENIAL OF PROPERTY TAX R PROOF OF PUBLICATION i STATE OF CALIFORNIA) ) ss. COUNTY OF ORANGE ) 2005 AND APRIL 17, CITY OF HUNTINGTON 2005. AN ADDITIONAL. I am a Citizen of the United States and a BEACH LEGAL NOTICE SEVENTEEN (17) AP- PEALS WERE SETTLED resident of the County aforesaid; I am ORDINANCE NO.3729 WITHOUT THE NECES- Adopted by the City CoUICil SITY OF HEARING. over the age of eighteen yearsAT t and not a onFEBRUARY21,2DD6 THIS TIME, THE HEAEARING OFFICER IS "AN ORDINANCE OF THE NO LONGER AVAILABLE party to or interested in the below entitled CITY OF HUNTINGTON TO HEAR APPEALS AS matter. I am a principal clerk of the BEACH AMENDING OR- HE HAS BEEN AP- DINANCE NOS.3653 AND POINTED AS A COM- HUNTINGTON BEACH INDEPENDENT ADM IS DELETING THE MISSIOORANGE CO IN THE ADMINISTRATIVE APPEAL ORANGE COUNTY SU- PROCEDURE, AND PER- P E R I O R COURT. MITTING TAXPAYERS TO NONETHELESS, THE a newspaper of general circulation, DIRECTLY' APPEAL TO CITY RECEIVES AN SUPERIOR COURT ANY APPEAL AT THE RATE printed and published in the City of DENIAL OF PROPERTY OF ONE OR FEWER PER TAX REFUND CLAIMS MONTH. Huntington Beach, County of Orange, FILED IN CONNECTION ADMINISTRATIVELY, WITH THE CASE ENTI- IT IS NO LONGER State of California, and that attached TLED HOWARD IARVIS EFFICIENT TO CONTIN- TAXPAYERS ASSOCIA- U E THE HEARING Notice Is a true and com lete CO aS TION V. CITY OF HUN- PROCESS. C O N S E-' P PY TINGTON BEACH, OR- QUENTLY, IT IS REC- ANGE COUNTY SUPERI- OMMENDED THAT THE was printed and published in the OR COURT CASE NO. REFUND PROCEDURE BE Huntington Beach issue of said 81 SYNOPSIS: AMENDED TO PROVIDE THAT ANY CLAIMS IN ORDER TO PRO- THAT ARE DENIED, OR newspaper to wit the Issue(s) of: CESS TAXPAYER FUND HAVE NOT BEEN ACTED CLAIMS, THE CITY UPON AS OF DECEM- ADOPTED ORDINANCE BER 1 2005, BE PER- NO. 3653, AS MITTED-TO PROCEED AMENDED BY ORDI- DIRECTLY TO COURT. NANCE NO. 3663. THE COPIES OF THIS OR- ORDINANCE DIRECTED DINANCE ARE AVAIL- THE CITY ADMINIS- ABLE IN THE CITY TRATOR TO APPROVE CLERK'S OFFICE. MARCH OZ 2OOE) ALL "VALID" CLAIMS, PASSED AND ADOPTED WHICH WERE,DEFINED by the City Council of AS ANY CLAIM MADE the City of Huntington BY THE TAXPAYER Beach' at a regular THAT WAS FILED meeting held February WITHIN FOUR YEARS 21,2006 by the following AFTER PAYING THE roll call vote: RETIREMENT TAX, AYES: Bohr, Green, PROVIDED THAT NO Coerper,Sullivan,Hardy, CLAIM FOR A REFUND Hansen,Cook I declare, under penalty of perjury, that FILED ON OR BEFORE .NOES:None JANUARY 4, 2004, ABSENT:None the foregoing is true and correct. NTIIMELY.TREATEDAS This ordinance is effective 30 days after THE REFUND ORDI- NANCE ALSO CREATED adoption. AN ADMINISTRATIVE CITY OF Executed on MARCH 02,2006 APPEAL PROCESS FOR I HUNTINGTON BEACH DENIED CLAIMS. THE 2000 MAIN STREET BULK OF APPEALS' HUNTINGTON BEACH, at Costa Mesa, California. WERE FILED IN 2004 CA 42648 AND EARLY 2005. 714-536-5227 TWENTY (20) APPEALS. JOAN L FLYNN,CRY CLERK WERE HEARD BY A Published Huntington HEARING OFFICER BE- Beach Independent TWEEN MARCH 4, ,March 2,2006 031-974 Signature AWAQ N aZPo,J 2006 J41 19 AN 8 12 Council/Agency Meeting Held A-A �,� i,1 0 ' IL n Deferred/Continued to &0#0 �Q F UNT I N G i 0 � 0--A C H �I Approved ❑ Conditionally Approved ❑ Denied ity Jerk soignature Council Meeting Date 2/6/2006 Department ID Number CA 06-01 CITY OF HUNTINGTON BEACH REQUEST FOR CITY COUNCIL ACTION SUBMITTED TO HONORABLE MAYO ITY COUNCIL MEMBERS SUBMITTED BY JENNIFER MCGRATr&ity Attorney PREPARED BY JENNIFER MCGRAity Attorney SUBJECT Amend Ordinance Establishing Procedures to Pay Retirement Tax Refund Claims in Connection with Howard Jarvis Taxpayers Association v City of Huntington Beach [ l Statement of Issue Funding Source Recommended Action Alternative Action(s) Analysis Environmental Status Attachment(s) Statement of Issue Staff recommends that the City Council amend the ordinance establishing procedures to process Retirement Tax refund claims to eliminate all future administrative appeals and permit taxpayers whose claims are denied to proceed directly to court Funding Source Not applicable Recommended Action Amend the ordinance of the City of Huntington Beach establishing procedures to pay retirement tax refund claims in connection with Howard Jarvis Taxpayers Association v County of Orange and Real party in Interest City of Huntington Beach, Orange County Superior Court Case No 818780 Alternative Action(s) Do not amend the ordinance and provide Staff guidance I REQUEST FOR ACTION MEETING DATE 2/6/2006 DEPARTMENT ID NUMBER CA 06-01 Analysis In Howard Jarvis Taxpayers Assoclatlon v County of Orange and Clty of Huntington Beach OCSC Case No 818780 110 Cal App 4th 1375 (2003) the Court invalidated a portion of the Retirement Tax the City levied on the property tax rolls from 1997/98 through 2000/01 to fund employee retirement costs Consequently Huntington Beach taxpayers were owed tax refunds for these invalid taxes In order to process taxpayer refund claims the City adopted Ordinance No 3653 as amended by Ordinance No 3663 The Ordinance directed the City Administrator to approve all valid claims which were defined as any claim made by the taxpayer that was filed within four years after paying the Retirement Tax provided that no claim for a refund filed on or before January 4 2004 would be treated as untimely The January 4 2004 cut-off was established to allow additional time to file refund claims Pursuant to Revenue & Taxation Code Section 5097 the statute of limitations to file tax refund claims is four (4) years after the tax was paid Consequently for retirement taxes paid for tax year 1997/98 the four years expired in April 2002 The four years expired in April 2005 for retirement taxes paid for tax year 2000/01 the last year that invalid taxes were collected Because the Court of Appeal did not issue the final decision on the legality of the Retirement Tax until July 2003 the City Council extended the statute of limitations until at least January 4 2004 This allowed retirement tax claims for 1997/98 1998/99 and 1999/2000 to be timely brought Pursuant to this procedure the City approved 35 236 claims paying out $9 706 042 in refunds The refund ordinance also created an administrative appeal process for denied claims The bulk of appeals were filed in 2004 and early 2005 Twenty (20) appeals were heard by a hearing officer between March 4 2005 and April 17 2005 An additional seventeen (17) appeals were settled without the necessity of hearing At this time the hearing officer is no longer available to hear appeals as he has been appointed as a Commissioner in the Orange County Superior Court Nonetheless the City receives an appeal at the rate of one or fewer per month Administratively it is no longer efficient to continue the hearing process Consequently it is recommended that the refund procedure be amended to provide that any claims that are denied or have not been acted upon as of December 1 2005 be permitted to proceed directly to court The time to file a court action would be six (6) months after the denial of the claim In virtually all cases this would be a small claims action because the amount in dispute would be less than $1 000 and definitely within the maximum small claims court jurisdiction of$5 000 G\RCA\2006\06 Amend Tax Refund Ord doc 2 1/4/2006 3 48 PM REQUEST FOR ACTION MEETING DATE 2/6/2006 DEPARTMENT ID NUMBER CA 06-01 Environmental Status Not applicable Attachment(s) City Clerk's Page Number No. Description An Ordinance Of The City Of Huntington Beach Amending Ordinance Nos 3653 And 3663 By Deleting The Administrative Appeal Procedure and Permitting Taxpayers To Directly Appeal To Superior Court Any Denial Of Property Tax Refund Claims Filed In Connection With The Case Entitled Howard Jarvis Taxpayers Association v City Of Huntington Beach Orange County Superior Court Case No 818780 6RZ/n0VCe A)d G\RCA\2006\06 Amend Tax Refund Ord doc 3 1/4/2006 9 01 AM ATTACHMENT # 1 ORDINANCE NO 3729 AN ORDINANCE OF THE CITY OF HUNTINGTON BEACH AMENDING ORDINANCE NOS 3653 AND 3663 BY DELETING THE ADMINISTRATIVE APPEAL PROCEDURE AND PERMITTING TAXPAYERS TO DIRECTLY APPEAL TO SUPERIOR COURT ANY DENIAL OF PROPERTY TAX REFUND CLAIMS FILED IN CONNECTION WITH THE CASE ENTITLED HOWARD JAR VIS TAXPAYERS ASSOCIATION V CITY OF HUNTINGTON BEACH ORANGE COUNTY SUPERIOR COURT CASE NO 818780 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 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 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 and WHEREAS in Howard Jar vis Taxpayers Association v County of Orange and Real Party in Interest City of Huntington Beach (Orange County Superior Court Case No 81 87 80 Court of Appeal Fourth District Case No G029292) the Court determined that under Proposition 13 the City was only permitted the Retirement Tax to pay for retirement benefits the City agreed to provide before July 1, 1978 and WHEREAS, pursuant to Revenue and Taxation Code Section 5097(a)(2) the statute of limitations to file all claims for tax refunds is four years after the tax was paid Consequently for Retirement Taxes paid for tax year 1997-98 the four years expired in April 2002 and for a Retirement Taxes paid for tax year 2000 01 the four years expired in April 2005 and WHEREAS City adopted Ordinance No 3653 on May 3 2004 establishing procedures to refund the invalid portion of the Retirement Tax to those taxpayers (or their guardians executors or administrators) who file valid claims The City Council later amended Ordinance No 3653 pursuant to Ordinance No 3663 and i 1 G\0RDINANC\20WAniend 3653 Tax Refund Claims doc i/4/06 Ord #3729 WHEREAS pursuant to Ordinance No 3653 the City extended the limitation period to January 4 2004 or four years after the tax was paid which ever is later This extended the limitation period until almost five months after the Court of Appeals determined the legality of the Retirement Tax and WHEREAS Ordinance No 3653 directed the City Administrator or his/her designee to approve all valid claims A valid claim is one that was (1)venfied 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 and WHEREAS Ordinance No 3653 created an administrative appeal process to review claims the City Administrator denied and WHEREAS between March 4 2005 and April 17 2005 a hearing officer acted upon 20 appeals and the City was able to settle an additional 17 appeals and WHEREAS the City still receives occasional refund claims but it is now administratively more efficient to allow the claimant to proceed directly to court without an intermediate administrative appeal NOW THEREFORE the City Council of the City of Huntington Beach does hereby amend Ordinance No 3653 as amended by Ordinance No 3663 in its entirety to read 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 i SECTION 2 The City Treasurer shall pay all Retirement Tax claims approved by City i 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 i 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 wittun 35 days after the request was dated If a corrected claim is not received by the 35th day it shall be deemed denied 2 1 V Ord #3729 SECTION 5 Refunds shall be paid according to the amount of Retirement Tax paid The percentage of the Tax to be refunded is FY % of tax collected that is to be refunded 1997-98 318% 1998 99 41 9% 1999-00 84 5% 2000-01 100% SECTION 6 Interest shall be paid on Retirement Tax 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 i 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 I (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 within fourteen (14)days of the date i of the decision i (c) The matter shall be set for hearing no more than ninety (90) days from the receipt I of the appeal The appellant shall be served with notice of the time and place of the hearing, as i well as any relevant materials at least thirty (30) 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 forjudicial review pursuant to Revenue & 3 G\ORD[NANC\2006\Amend 36�3 Tar Refund Claims doc 1/4/06 Ord #3729 Taxation Code § 5141 shall be filed within six months from the date of the decision If the 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 certified mail return receipt requested (f) The City Administrator in consultation with the City Attorney shall appoint the Hearing Officer SECTION 10 Notwithstanding Section 9 no administrative appeal shall be available to any person whose claim was denied after December 1 2005 or whose appeal was pending as of December 1 2005 Instead, any such person shall be given notice when their appeal is denied that they may bring an action in the Orange County Superior Court to recover the Retirement Tax pursuant to Revenue and Taxation Code Section 5140 and that any such action must be commenced within six (6) months after the City has denied the claim pursuant to Revenue and Taxation Code Section 5140 SECTION 11 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 12 This Ordinance supercedes Resolution No 2001-19 Ordinance No 3653 and Ordinance No 3663 SECTION 13 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 21 st day of February 2006 Mayor , A PROVED AS TO FORM cita i City Clerk City Attorney INITIATED AND APPROVED \ 7Ay Administrator 4 G\ORDINANC\2006\Amend 3653 Tax Refund Claims doc 1/4/06 Ord No 3729 STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss CITY OF HUNTINGTON BEACH ) I JOAN L FLYNN 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 6th day of February, 2006, and was again read to said City Council at a regular meeting thereof held on the 21st day of February, 2006, and was passed and adopted by the affirmative vote of at least a majority of all the members of said City Council AYES Bohr Green Coerper Sullivan Hardy Hansen Cook NOES None ABSENT None i ABSTAIN None I Joan L Flynn CITY CLERK of the City of Huntington I Beach and ex-of icio Clerk of the City Council do hereb} i certify that a synopsis of this ordinance has been published in the Huntington Beach Fountain Valle) Independent on March 2 2006 f In accordance with the City Charter of said C�N 00a.,M) I Joan L Flynn, City Clerk CiU Clerk and ex-officio erk Deputti Citti Clerk of the City Council of the City of Huntington Beach California I RCA ROUTING SHEET INITIATING DEPARTMENT City Attorney SUBJECT Amend Ordinance Establishing Procedures to Pay Retirement Tax Refund Claims in Connection with Howard Jarvis Taxpayers Association v City of Huntington Beach COUNCIL MEETING DATE February 6, 2006 RCA ATTACHMENTS- b 3 STATUSI�lr Ordinance (w/exhibits & legislative draft if applicable) Attached Not Applicable ❑ Resolution (w/exhibits & legislative draft if applicable) Attached ❑ Not Applicable Tract Map Location Map and/or other Exhibits Attached ❑ Not Applicable Attached ❑ Contract/Agreement (w/exhibits if applicable) Not Applicable (Signed in full by the Clty Attorney) Subleases Third Party Agreements etc Attached ElNot Applicable (Approved as to form by City Attorney) Certificates of Insurance A roved b e Cit orne Attached El( pp y th y Att y) Not Applicable Attached ❑ Fiscal Impact Statement (Unbudget over $5 000) Not Applicable Bonds (If applicable) No Applicableached A hcable Staff Report (If applicable) Attached ElNot Applicable hed El Board or Committee Report (If applicable) Not Attac Applicable Findings/Conditions for Approval and/or Denial Attt A ed El Nopucable w , - EXPLANATION FORMISSINGZATTACHIUIENTS 17F REVIEWED,' � RETURNED, FORWARDED Administrative Staff Assistant City Administrator (Initial) ( ) ( E ) City Administrator Initial City Clerk ( ) EXPLANATION FOR.RETURN OF ITEM 77, I Only)(Below Space For City Clerk's Use i i ell