Long Beach One of Many Cities To Reach Settlement With County Over Property Tax Fees

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Long Beach City Attorney Charles Parkin is pleased to announce that, along with 46 other cities, the City of Long Beach has settled its dispute with Los Angeles County over property tax administration fees the County withheld from the City for six fiscal years from 2006–2007 to 2011–2012. This ends a multi-year disagreement which the California Supreme Court decided for the cities in City of Alhambra, et al., v. County of Los Angeles, et al., in November 2012. Throughout Los Angeles County and statewide, this dispute involved millions of dollars.

The total payment to the City under this settlement is $4,610,296.00. The County will also refund $230,000 in legal fees for all the 47 cities which pursued this suit.

Each county collects property taxes and distributes revenue to cities, school districts, special districts and the county itself. Within certain limitations, a county is allowed to withhold part of this revenue to cover part of its costs to administer the property tax system. These withholdings are known as property tax administration fees, or “PTAF.”

The Legislature changed the way counties calculate PTAF beginning in 2006. Cities and counties around the state disagreed about how to implement this change. Indeed, spread over every city in the state, these different conclusions were separated by an estimated $40 million per year with approximately $14 million per year at stake in Los Angeles County.

After last November’s Supreme Court decision, Los Angeles County changed its method for calculating PTAF as the Court directed. However, this did not resolve how much the County should refund the City for PTAF withheld since 2006 and the interest rate to be paid on that refund. The recent settlement between the City and the County resolves these remaining issues. Pursuant to the settlement, the County agreed to pay the City of Long Beach:

1. Excess PTAF withheld from December 2007 through December 2011 (i.e. for 5 of the 6 fiscal years in issue); and

2. 7% annual simple interest on those excess withholdings, as allowed under the California Constitution.

City Attorney, Charles Parkin, stated: “I am pleased to have resolved this amicably and look forward to continued cooperation with the County in serving the people we both exist to serve. These general funds of over $4.6 million will help the City to fund essential services to our residents and property owners.”

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