Ukiah Daily Journal
The cities of Ukiah, Willits and Fort Bragg are suing the county of Mendocino and Auditor-Controller Meredith Ford for hundreds of thousands of dollars they claim she overcharged them in fees for administering the cities' property taxes.
Ford's office is responsible for distributing each city's share of the property taxes collected in the county, for which it charges an annual Property Tax Administration Fee.
At issue is whether the fee was calculated correctly after the state Supreme Court ruled in November that the fees could not include as a basis additional property tax money to compensate cities and counties when the state instituted two financing mechanisms -- known as the "Triple Flip" and the "VLF (vehicle license fees) Swap."
The state in 2004 made a quarter-cent cut to the Bradley-Burns Sales and Use Tax rate paid to cities and counties in order to repay state-issued economic recovery bonds, according to a summary written by Ukiah City Attorney David J. Rapport, Fort Bragg City Attorney James Lance and the Willits city attorney in a petition to recover the amounts the cities claim they were overcharged.
To replace the lost sales tax, state law temporarily instituted the Triple Flip, which provides that cities and counties get property taxes that would have otherwise gone to the county's Educational Revenue Augmentation Fund for schools, according to the summary.
The VLF Swap has no sunset. Starting in 2004, the state reduced
the amount of vehicle license fees paid to cities and counties from 2 percent to 0.65 percent, and, similar to the Triple Flip arrangement, provided that cities and counties would get "in-lieu payments of property taxes equal to the lost VLF," according to the summary.Ford's office also distributes the in-lieu property tax revenue to replace the revenue the cities lose in the Triple Flip and VLF Swap arrangements.
In November 2008, 47 cities in Los Angeles County sued that county, claiming it was charging a higher property tax fee than state law allows.
"The cities in that case alleged that beginning in ... 2006/2007 ... Los Angeles County and the other respondents charged the city petitioners more than the actual, incremental costs associated with the county's administration of the in-lieu payments for the VLF Swap and the Triple flip," and instead charged each city a share of the Property Tax Administration Fee "based on the increased distribution of property tax proceeds due to the Triple Flip and the VLF Swap rather than each city's proportionate share of the actual, incremental cost to administer" the two fiscal arrangements.
The California Supreme Court ruled on Nov. 19 that "counties could not charge cities for the additional cost of administering the allocation of property taxes resulting from the Legislature's enactment" of the Triple Flip and VLF Swap.
"More specifically," according to the city attorneys' summary and allegations, "the Court held that (state law) did not authorize California counties to calculate cities' proportionate share of the counties' property tax administration fee by including in the cities' base' those funds that would have been placed in the ERAF but were not deposited as a result of the Triple Flip ... and VLF Swap."
While it's uncertain whether the state Supreme Court's ruling applies to past fees or meant to correct the problem in the 2012-13 fiscal year, according to the city attorneys' filing, the amounts purportedly overcharged in administration fees add up to $339,630 for all four of Mendocino County's cities, from fiscal year 2006-07 to 2011-12.
The city attorneys' petition says the cities haven't heard from the county that it means to comply with the court's ruling "with respect to the past overcharge of property tax administration fees or future charges," making the petition the cities only recourse. The cities are asking for a writ of mandate to "obtain a review of the Respondents' actions in violation of their duty under (state law) and he Alhambra decision," the petition says.
Tiffany Revelle can be reached at udjtr@ukiahdj.com, on Twitter @TiffanyRevelle or at 468-3523.
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