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MINUTES - 05132008 - D.1
TO: BOARD OF SUPERVISORS r tiF CONTRA COSTA FROM: John Cullen, County Administrator Steve Ybarra, County Auditor-Controller COUNTY DATE: MAY 13, 2008 Y°�� s`" Sin counT� SUBJECT: PROPERTY TAX ADMINISTRATIVE COST RECOVERY SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATIONS: 1. CONTINUE to conduct the public hearing, previously fixed for April 8, 2008 at.9:30 a.m., on implementation of the property tax cost recovery provisions of Revenue and Taxation Code section 95.3. 2. ADOPT the report of the Auditor-Controller filed on February 26, 2008, of the 2006-2007 fiscal year property tax-related costs of the Assessor, Tax Collector, Auditor, and Assessment Appeals Board, including the proposed charges against each local jurisdiction excepting school entities, for the local jurisdiction's proportionate share of such administrative costs. 3. ADOPT Resolution No. 2008/217 regarding the implementation of the property tax administrative cost recovery provisions of Revenue and Taxation Code section 95.3 for fiscal year 2007-2008. FISCAL IMPACT: The fiscal year 2006-2007 net cost of property tax administration was $14,896,420. This amounts to approximately .74% of all 2006-2007 property taxes levied countywide. This cost is allocated to each taxing entity in the County based on net revenues of each entity as a percentage of total revenues. School districts, community college districts, and the County Office of Education are exempt from cost recovery. As a result, the County absorbs the schools' share, which this year amounts to $5,272,558. The net recovery to the County is $6,919,959. BACKGROUND: In 1997, the Board adopted Resolution 97/129 which provides procedures for property tax administrative cost recovery. The recommended actions are necessary for implementation of Resolution 97/129 for the current fiscal year. On April 8, 2008 the Board fixed a hearing on CONTINUED ON ATTACHMENT: X YES SIGNATURE: J RECOMMENDATION OF COUNTY ADMINISTRATOR_RECOMMENDATION OF BOAR E APPROVE OTHER SIGNATURE(S): ACTION OF BOARD ON APPROVED AS RnEC,OM/MEN'D/EI OTHER �l VOTE OF SUPERVISORS � l I HEREBY CERTIFY THAT THIS IS A UNANIMOUS(ABSENT I Q M Q" ) TRUE AND CORRECT COPY OF AN AYES: NOES: ACTION TAKEN AND ENTERED ABSENT: ABSTAIN: ON MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE SHOWN. Contact: Lisa Driscoll 5-1023 CC: County Administrator ATTESTED �� �✓ _ Auditor-Controller JOHN CULLEN,tXERK OF County Counsel—R.Hooley THE BOA D OF SUPERVISORS AND C TY ADMINISTRATOR O UTY Page Two (2) May 13, 2008 Implementation of the property tax cost recovery provisions of Revenue and Taxation Code Section 95.3. On April 8, 2008 the Board opened the.hearing and heard comments in opposition of the fee from a representative of the City of Concord and a Walnut Creek resident. The Board considered the comments and asked the County Administrator to host a meeting with the Auditor-Controller and cities to discuss the history of the fee and formula. By a unanimous vote, the Board continued the hearing to May 13, 2008 at 9:30. The Auditor-Controller is utilizing guidelines developed after the legislation passed, that was developed in consultation with the League of California Cities. Cities are now objecting to the inclusion of property tax in lieu of Sales Tax and Vehicle License Fees in the calculation of the fee. As directed, the County Administrator and Auditor-Controller held a meeting with cities. There was exchange of information and discussion on the views of the cities and county on implementation requirements. The County and cities, remain at odds over the interpretation of guidelines for implementation.of SB 1096/Revenue and Taxation Code 95.3. Conclusion Staff strongly suggests that the Board of Supervisors. adopt the Auditor-Controller's 2006-07 fiscal year property tax-related costs of the Assessor; Tax collector, Auditor, and Assessment Appeals Board, report; and Resolution 2008/217 regarding the implementation of the property tax administrative cost recovery provisions of Revenue and Taxation Code section 95.3 for fiscal year 2007-08. This is the last month that this action can be implemented for fiscal year 2007-08. ADDENDUM to D.1 May 13, 2008 On this day, the Board of Supervisors continued a-hearing from April 8, 2008, on implementation of the property tax cost recovery provisions of Revenue and Taxation Code §95.3, and on the adoption of the report of the Auditor-Controller filed on February 26, 2008, of the 2006/07 Fiscal Year property tax-related costs of the Assessor, Tax Collector, Auditor and Assessment Appeals Board, including the proposed charges against each local jurisdiction excepting school entities, for the local jurisdictions' proportionate share of such administrative costs. John Cullen, County Administrator, recalled the Board's request from the April 8, 2008 Board meeting, and said a meeting was held with cities to exchange information and discuss views of the cities and County on implementation requirements. He informed the Board the cities objected to including property tax;in lieu of Sales Tax and Vehicle License Fees in the calculation of the fee. He said a number of letters have been received from different cities stating a claim for the difference between what the cities believe their share of the fees should be and what the County charges. He informed the Board this is the last month this action could be implemented for fiscal year 2007-08. Chair Glover asked the public for comment and the following people spoke: • The Honorable Gregory L. Manning, Mayor of Clayton, told the Board because of severe fiscal problems at the state level, the state took the cities' .25 percent local sales tax, and also directed a swap for Vehicle License Fees for property taxes. He noted in both these instances the cities were assured by the Governor that the cities would be made whole. He requested the Board remand the proposal to County staff to calculate the property tax administrative cost recovery fees for 2007-08 in compliance with § 97.5 of California Revenue and Taxation Code and the January 2008 opinion of the State Coniroller's Office. He added, the correct application of the law should be applied retroactively to similar fees imposed in the City of Clayton. Supervisor Gioia explained if Chevron is successful in their appeal and their appeal includes lowering values for past years the refunds provided would not just come from the taxing districts where refineries are located but from every jurisdiction in the County. • Janet Keeter, Contra Costa.County Public.Managers Association, voiced her concern regarding the Revenue and Taxation Code § 97.5. She went on to say cities believe § 97.5 states ';for the 2006-07 fiscal year and each fiscal year thereafter, a county ntay impose a fee, charge or other levy on a city for those services, but the fee charge, or other levv shall not exceed the actual cost of providing these services." She said cities in the County have filed claims for the recovery of sums that have been overcharged for the administration of property taxes. She said the Public Managers Association would continue to explore options for remedying the disagreement with the County. Ms. Keeter concluded by saying she would take the Board's comments back to the PMA and talk to the 1 i i. i other city managers and noted the City Managers would be interested in further discussions about a Tolling Agreement. i. • Roland Katz, Business Agent, Public Employees Union Local One, concurred with Supervisor Gioia's comments regarding services provided to cities by the County. He encouraged the Board's delegates on CSAC and city delegates on League of Cities to spend time and have discussions on how to fiend services in the state. Supervisor Piepho said this matter should be resolved at the state level. She emphasized. the County would like to be a partner to find a resolution knowing there is disagreement on implementation today. Supervisor Gioia added the County provides services to residents and most of the services provided are to people in the cities. He said a good way to resolve this issue is through the League of Cities (LOC) and the California State Association of Counties (CSAC) and said this would be a good way for cities to provide their advocacy. He said the issue here is to go forward and hopes this would be resolved at the state level. Supervisor Bonilla expressed her concerns regarding disagreements getting settled with lawsuits. She said she is not only interested in seeking resolution but also protecting the County and taxpayer's money from a potential lawsuit. Supervisor Bonilla requested County Counsel Silvano Marchesi to comment on'the idea of a Tolling Agreement that would allow cities to file claims and keep their right to come back and receive these funds as everything is solved at the state level. Mr. Marchesi said a Tolling agreement is entered with parties that have a dispute, and the intent is to avoid a statute of 11initations that would require some of the parties to file a lawsuit. He suggested if the cities are interested in taking that approach they could submit a proposed Tolling Agreement, which would be considered by the County. He said a Tolling Agreement proposal by the County icould be triggered by a number of different events, which would be difficult to anticipate at this time. Supervisor Gioia asked Mr. Marchesi what the deadline was to file a claim now. Mr. Marchesi said it would depend on when a city's cause of action begins and when the fee is deducted from a payment to the city. Supervisor Bonilla said it would be important to consider the fact that the outcome is unknown at present and it would be incumbent on the County to protect the County's interest to not have a negative impact down the road. She stressed her concern about collecting property tax administrative costs and then paying it back with interest. She said she is looking for a strategy that would allow;the process to be resolved statewide that does not put the County in a vulnerable position of not being assured of what that outcome will be. 2 Supervisor Uilkema strongly suggested adopting the recommendations on the Board Order. Addressing Ms. Keeter of the Public Managers Association, Supervisor Piepho said the Board and County Administrator's staff are committed to working with her at the state level through CSAC and the LOC and said the Board would stand behind the final outcome. She said if the Board moves forward on the recommendations presented today, she would not want this to be perceived as punitive or an action of a non partnership with the cities, but out of the fact that the County is operating from the foundation of available information. Supervisor Gioia stated the County should go forward today with the recommendation listed on the Board Order. Chair Glover said he believes this issue must be resolved at the state level and as the CSAC representative for the Board indicated he would provide testimony and leadership to find a resolution. In regards to cost of calculations, Steven Ybarra, County Auditor-Controller, said the disagreement with the cities is in where costs are allocated. By unanimous vote with all S1lpervlSorspresent the Boarcl tool=the following actio=n: CONDUCTED the public hearing previously fixed for April 8, 2008 at 9:30 am on implementation of the property tax cost recovery provisions of Revenue and Taxation Code § 95.3;ADOPTED the report of the Auditor-Controller filed on February 26, 2008, of the 2006-2007 fiscal year property-tax related costs of the Assessor, Tax Collector, Auditor, and Assessment Appeals Board, including the proposed charges against each local jurisdiction excepting school entities, for the local jurisdiction's proportionate share of such administrative costs; and ADOPTED Resolution No. 2008/217 regarding the implementation of the property tax administrative cost recovery provisions of Revenue and Taxation Code § 95.3 for fiscal year 2007-2008. 3 THE BOARD OF SUPERVISORS OF CONTRA COSTA COUNTY, CALIFORNIA AND THE AUDITOR-CONTROLLER OF CONTRA COSTA COUNTY, CALIFORNIA Adopted this Resolution on May 1.3, 2008, by the following vote: AYES: NOES: No i�4 ABSENT: No �f� ABSTAIN: Ko and the Auditor-Controller by his following signature. SUBJECT: Findings and Determination ) Concerning the Implementation of the Property ) Tax Administrative Cost Recovery.Pro- ) RESOLUTION NO. 2008/217 visions of Revenue and Taxation Code ) section 95.3 ) A public hearing having been held during the Board of Supervisors' meeting of April 8 and May 13, 2008, on implementation of the property tax cost recovery provisions of Revenue and Taxation Code section 95.3, as provided in Board of Supervisors' Resolution No. 97/129, the Board of Supervisors, and the Auditor-Controller, hereby makes the following findings and determination. A. Property Tax Administrative Cost Recovery 1. On February 26, 2008;the Auditor-Controller filed with the Clerk of the Board of Supervisors a report of the 2006-2007 fiscal year property tax-related costs of the Assessor, Tax Collector, Auditor and Assessment Appeals Board, including the applicable administrative overhead costs permitted by federal circular A-87 standards, proportionally attributable to each local jurisdiction and Educational Revenue Augmentation Fund (ERAF) in Contra Costa County, in the ratio of property tax revenue received by each local jurisdiction and ERAF divided by the total property tax revenue received by all local jurisdictions and ERAFs in the county for the current fiscal year. The report included proposed charges against each local jurisdiction excepting school entities, for the local jurisdiction's proportionate share of such administrative costs. 2. On April 8 and May 13, 2008 at the Board of Supervisors' meeting, a public hearing was held on the Auditor-Controller's report, notice of which was given as required by law and by Board of Supervisors' Resolution 97/129. 3. The report of the Auditor-Controller filed on February 26, 2008, is hereby adopted, and the Board of Supervisors and the Auditor-Controller find that amounts expressed in said report do not exceed the actual amount of 2006-2007 fiscal year property tax administrative costs proportionally attributable to local jurisdictions. 4. The additional,revenue received by Contra Costa County on account of its 2006-2007 fiscal year property tax administrative costs pursuant to Revenue and Taxation Code.section 95.3 shall be used only to fund the actual costs of assessing, collecting and allocating property taxes. An equivalent amount of the revenues budgeted to finance assessing, collecting and allocating property taxes in fiscal year 2007-2008 may be reallocated to finance other county services. In the event that the actual 2007-2008 costs for assessing, collecting and allocating properly taxes RESOLUTION NO. 2008/217 1 plus allowable overhead costs are less than the amounts determined in the February 26, 2008 report by the Auditor-Controller, the difference shall be proportionally allocated to the respective local jurisdictions which paid property tax administration charges. B. FINDINGS AND DETERMINATION 1. The amounts expressed in the Auditor-Controller's report of February 26, 2008 are correct. 2. Notice as required by law was given of the public hearing. 3. Written objections were received at the public hearing on the Auditor-Controller's report of February 26, 2008. The objections are overruled ori the ground that the Auditor Controller's report of February 26, 2008 properly includes property tax revenues resulting from the application of Revenue & Taxation Code §§ 97.68;and 97.70 in the calculation of administrative costs under Revenue and Taxation Code § 95.3. 4. The grounds stated herein to support findings are not exclusive and any findings may be supported on any lawful ground, whether or not expressed herein-. 5. If any finding herein is held invalid, such invalidity shall not affect findings which can be given effect without the invalid provision, and to this end, the invalid finding is severable. So found and determined Steph n J. Yba a Contra Costa County Auditor-Controller 1 hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown ATTESTED: .lohn'Cullen,4elerk of the Board of Supervisors And Co my A.drninistrator By © puty ORIG. DEPT: County Counsel cc: Auditor-Controller County Administrator RESOLUTION NO. 2008/217 2 REQUEST TO SPEAK FORM (3 Minute Limit) I wish to sneak on Agenda Item #: Complete this form and place it in the upright box near theDate: c� speaker's podium, and wait to be called by the Chair. My comments will be: ❑ General Personal information is optional. This speakers card will be incorporated into the public record of this meeting. . ❑ For Name (PRINT): • � { gainst 7o ensure your name is announced correctly;you may want to include its phonetic spelling wish to speak on the subject of: Address: Lim City: Phone: X5 — a S7 3 4 ,2,33� I am speaking for: ❑ Myself Organization: C VAI't, ❑ Ido not want to speak but would like to leave conunents for the Board to consider �� � �5 "� the back of thisform)rm) RE OVEJ ST TO SPEAK FORM (3 Minute Limit) I wish to speak on Agenda Item Complete this form and place it in the upright box near the Date: e,- /( speaker's podium, and wait to be called by the Chair. My comments will be:. ❑ General Personal injiurntation is optional. This speaker's card ivill be incoiporated into the public record of this meeting. ❑ For �� Against Name (.PRINT): �}'. Ri ensure your name is announced o reedy,you rnnv ivant io include its phonetic spelling ❑. I wish to speak on the subject of: Address: 4e 000 17le Z, i `t 4q, �r/1 City: l�l4J 6 i-- Phone: `�2 S (0 7? — 7�D O I am speaking for: ❑ Myself XOc anization: �� y "� ` ��� ❑ I do not want to speak but would like to ,� leave comments for the Board to consider (Use the back of this form) OFFICE OF THE CLERK OF THE BOARD OF SUPERVISORS CONTRA COSTA COUNTY Administration Building 651 Pine Street, 1st Floor Martinez, CA 94553 ..Date: May 13, 2008 To: County Supervisors From: Jane Pennington Subject: Property Tax Admin Costs Correspondence from Cities Attached please find the following correspondence received by the Clerk of the Board: CtF` Date of Letter Antioch Aril 2, 2008 Brentwood March 25, 2008 Clayton 1 of 2 Aril 10, 2008 Clayton 2 of 2 Aril 22, 2008 Concord March 31, 2008 Danville Aril 1, 2008 EI Cerrito Aril 3, 2008 Martinez 1 of 2 Aril 2, 2008 Martinez 2 of 2 May 8, 2008 Oakley March 27, 2008 Orinda 1 of 2 May 9, 2008 Orinda 2 of 2 May 12, 2008 ,PittsburgAril 7, 2008 San Pab10 Aril 8, 2008 OF ANT/FpCy OFFICE OF CITY MANAGER CALIFORN�P' April 2, 2008 ANK u 2006 Contra Costa,Count CL:=RK BOARD OF SUPERVISORS County CONTRA COSTA CO. Board of Supervisors 651 Pine Street Martinez, CA 94553; Re: Property T ax Administration Fee Dear Chair Glover.and Members of the Board: On behalf of the City:of Antioch, I want to urge the Board to modify the proposed procedure for the Determination of Property Tax Administrative Cost Recovery for 2007/08. As you have heard in communication from other cities, the County's proposed methodology is inconsistent with the opinion of the State Controller's Office as to how Administrative Cost Recovery should be levied. The current method results in a . significant increase in property.tax administration cost, not just for Antioch,but for all cities in the county and throughout.the state. I hope that the Board of Supervisors will do the right thing and direct the County Auditor Controller and the County Administrator to collect the 2007/08 Property Tax Administrative Cost Recovery fees consistent with-the opinion and advice provided by the State Controller's Office and not in the current-manner being proposed. hely, j C JIM J kEL City Manager cc:. John Cullen, Contra Costa County Administrator Mayor and City Council of the City of Antioch P.O. Box 5007 Antioch, CA 94531-5007 (925) 779-7011 FAX 5) 779 7003 THE CITY OF UtNTWOOD H%EP.TAGE VISION OI,r'o RTUNITY MAILING ADDRESS: City Hall ' ' OFFICE OF THE MAYOR 708 Third Street Brentwood,CA 94513 Phone:925=516-5400 March 25;2008 Fax:925-516-5401 www.ci.brentwood.ca.us CITY reet ADMINISTRATION 708 Third StContra Costa County Board of Supervisors Phone:925-516-5440 651 Pine Street Fax:925-516-5441 Martinez,CA 94553-1229 COMMUNITY DEVELOPMENT Dear Chair Glover and Members of the Board: 104 Oak Street Phone:925-516-5405 In fiscal year 2006-07,.counties throughout the State (includin&.Contra.Costa County). Fax:925-51.6-W7 began including Sales and Use Tax (Revenue and Taxation Code section 97.68) and Vehicle License Fee (Revenue and Taxation Code section 97.70) adjustment amounts FINANCE&INFORMATION in their computation of property tax administration cost shares. This inclusion has led SYSTEMS to significant increases in property tax administration costs for cities.throughout the 708 Third street State. The City of Brentwood has been;'hit exceptionally hard by this change, having Phone:.925-516-5460 Fax:925-516-5401 endured a massive 63%increase in fiscal!.year 2006-07. While City staff did.not agree with the County's interpretation that the Sales and Use PARKS AND RECREATION Tax and Vehicle License Fee adjustment amounts should be included in the calculation 73o Third street Phone:925-516-5444 for administration charges, staff was aware that the State Controller's Office (SCO) Fax:.925-516-5445 had been asked to weigh in on the issue and elected to wait for their opinion before formally protesting the County's interpretation. POLICE 9100 Brentwood Boulevard The SCO legal office offered their opinion in a letter dated January 7, 2008. In this Phone:925-6,34-6911 letter, Jeffrey V. Brownfield, Chief of the Division of Audits for the State Controller's 24 Hr.Dispatch:925-778-2441 Office stated "As !the counties' assessors and treasurer-tax collectors incur no Fax:925-809-7799 additional costs in implementing Revenue and Taxation code sections 97.68 and 97.70, SCO legal counsel opined that Sales and.Use Tax and Vehicle License Fee adjustment PUBLIC WORKS amounts cannot be added to Revenue and Taxation Code section 96.1 and section 100 Operations Division computed property: tax shares in order to determine administrative cost shares. 2201 Elkins Way Statutes clearly.state that no amount should be charged for administrative services Phone:925-516-6000 that exceeds the actual cost of providing such services. Legal counsel further opined Fax: 925-516-6001 that counties must maintain separate ''documentation for Sales and Use Tax and Vehicle License Fe'e charges, as fees must be based on actual costs and the actual Engineering Division costs relating to each type of charge might differ from one another." 120 Oak Street Phone:925-516-5420 Staff recently received Contra Costa:' County's proposed 2007/08 Property Tax Fax:925-516-5421 Administrative Cost Recovery fees and was extremely disappointed that the recommendations of the. SCO have not been followed. The revenues collected for Sales and Use Tax and Vehicle License Fee adjustments have once again been included in the calculation of net revenue per jurisdiction. In direct contrast to what the SCO opined, this net revenue, inclusive of the additional adjustments, is then used to calculate the property tax administration charges. In addition, no separate documentation for Sales and Use Tax and Vehicle License Fee charges was offered as recommended by the SCO. We are therefore formally protesting the Determination of Property Tax Administrative Cost Recovery for 2007/08 as scheduled:to be heard at a public hearing . by the Contra.Costa County Board of Supervisors at your meeting scheduled for April 8,2008. Sincerely, Robert Taylor Mayor Cc: City.Council Members John Cullen,Chief Administrative Officer r • A._,. ' 01111(I Foundeil18S7:::;,;.LncorJJorafeil'19G4 C.:ryC l MANNING,Mnlne . . �.. . _ ... luLir.l:.13IElccc.Vic::A9nror COMMUNITY - [� G7^7 IJAVH)T.Smmy DEVELOPMENT (925)673-7340. H 6000 HERITAGE TRAIL • CLAYTON,CALIFORNI�7A 94517/-1250 HANK S"C I(AT FORD ENGINEERING (925)672-9700WILLIAM R.WAI.CUTT TELEPHONL (925) 673-7300 FA!,-'(925)6/2-491/ April 10, 2008 n77 _.- Contra Costa County Board of Supervisors i APR 7008 R c/o Clerk of the Board CL'LQRS 651 Pine Street E Martinez, CA 94553 RE: City of Clayton's protest of Contra Costa County's proposed Property Tax Administrative Cost Recovery Plan for FY 2007-2008 as inconsistent with Section 97.75 of the California Revenue and Taxation Code. Please see the attached letters that were mailed to each of the Supervisors on April 2; 2008. If you have any questions please do not hesitate w.contact me. Thank you, A, Aac . Jacks n City Clerk Fa wited IV,5..,h1forporald I91r4 JULIE M.M, LOMM(:HITY PPA-,D.i':SitorY . VIVELOPMEHT (925)673-734n11,.uk S'k. iOKn 6000 HERII'AGC1*1tA1L CLAYTON, C;M.TFORN.1A 94517-1250 1s+rlsFsplNG (9'5)G?:•1)700 IGLL.PHUNF (925)673-7300 FAX (925) 672-4917 —VA-t-4–"R.��.L�.,n April 2, 2008 Honorable John Gioia s 11780 San Pablo Ave., Suite D CLEF; B - --'�) EI Cerrito, CA 94530 r` Re: Protestation of Co Property Tax Administrative Cost Recovery Formula Dear Honorable hn In Fiscal Year 2006-07, counties throughout the State of California (including Contra Costa County) began including Sales and Use Tax (Section 97.68 of the California Revenue and Taxation Code) and Vehicle License Fee (Section 97.70 of the California Revenue and Taxation .Code) state-reimbursement amounts in their computation of property tax administration cost formulas. Arising in part from State Budget deficits in. 2004 and the State of California's solution to issue Economic Recovery Bonds while creating the "Triple Flip" diversion of local sales and use tax apportionments, corresponding state legislation gave clear instruction to counties on implementation of this new Program: "Notwithstanding any other provision of law, for the 2004-05 and 2005-06 fiscal years, a county shall not impose a fee, charge, or other levy on a city, nor reduce a city's allocation of ad valorem property tax revenue, in reimbursement for the services performed by the county under Sections 97.68 and 9 7.70. For the 2006-07 fiscal year and each fiscal year thereafter, a county may impose.a fee, charge, or other levy on a city for these services, but the fee, charge, or other levy shaft not exceed the actual cost of nrovidinQ these services.'lemphasis added) In direct contradiction with enabling legislation, Contra Costa County commenced the inclusion of these "redistributed state property taxes" to cities in the County based on a cost recovery methodology that vastly exceeded any documented cost of actually providing the service. This erroneous interpretation of legislation led to a significant one year increase in our City's property tax administration fee for last fiscal year (06-07) amounting to a 98.6% single year increase for our small City. All other cities in Contra Costa County (and throughout the state) experienced similar jumps in extraordinary expense (see 2-Year History Table, Attachment 1). Letter to County Board of Supervisors Re:Property Tax Administration Fees April 2, 2008 Page 3 of 3 The Clayton City Council therefore took action at,its April 1, 2008 meeting to formally protest the draft Determination.of Property Tax Administrative Cost Recovery for 2007• 08, as scheduled to be heard at-a public hearing try the Board of Supervisors on April 8, 2008. We respectfully request the Board to remand the proposal to County staff with clear directive to calculate the property tax administrative cost recovery fees for FY 2007.08 in compliance with Section 97.75 of California Revenue and -Taxation Code and the January 2008 opinion of the State Controller's Office. .In addition, the correct application of the law shall also retroactively apply to similar fees imposed on the City of Clayton by the County in FY 2006-07, and rebated accordingly. Sinc ely, gory J. Manning Mayor Attachment: 1. 2-Year History of County Property I ax Administration Fees 11 pg.) * PROPERTY TAX ADMINISTRATION FEES CONTRA COSTA COUNTY 2-YEAR HISTORY CITY/ 05-06 06-07 0 -b7: DIFFERENCE PERCENT • INCREASE VLF SWAP 1 YEAR IN FEES ANTIOCH $ 77,939 $ 10,143,193 $ 153,125 $ 75,186 96.5 BRENTWOOD $ 58,054 $ 4,557,107 $ 94,550 $ 36,496 62.9% CLAYTON $ 5,980 $ 842;077 $ 11,875 $ 5,895 98.6516. CONCORD $ 86,726 $ 15,809,700 $207,117 $ 120,389 139.D% DANVILLE $ 55y571 $ 4,104,900 $ 80,751 $ 25,180 45.3 EL CERRI,TO $ 41,142 $ 2,396,520 $ 55,362 $ 14,220 34.6% HERCULES $ 8,513 $ 2,028,627 $ 23,560 $ 15,047 176.8 LAFAYETTE $ 24,096 $ 2,339,826 $ 39,717 $ 15,621 64.8 MARTINEZ $ 53,507 $ 3,588,408 $ 74,654 $ 21,147 39.5% MORA GA $ 11,806 $ .1,353,005 $ 21,016 $ 9,210 78.0 Vo OAKLEY $ 12,456 $ 2,581,874 $ 33,187 $ 20,731 166.4% ORINDA $ 25,962 $ 1,506,006 $ 34,438 $ 8,476 32.6516 PINOLE $ 12,993 $ 2,163,084 $ 29,159 $ 16,166 124.4 Vo PITTSBURG $ 16,026 $ 6,643,269 $ 70,365 $ 54,339 339.1 PLEASANT HILL. $ 16,037 $ 4,172,998 $ 48,269 $ 32,232 201.0% RICHMOND $196,327 $ 10,118,076 $ 243,560 $ 47,233 24.1 SAN PABLO $ 449 $ 2,662,345 $ 21,996 $ 21,547 4800.0516 SAN RAMON $ 87,081 $ 5,649,097 $ 125,236 $ 38,155 43.8516 WALNUT CRK. $ 82,611 $ '9,560,407 $ 149,574 $ 66,963 81.1 TOTALS $ 873,278 $ 92,220,519 $1,5177511 $ 644,233 73.8% Prepared by:City of Clayton Data Source:Contra Costa County Date:June 12,2007 J CITY OF' ' CLAYTON lwwd<d 1657...hIMPOWILd 1964 C:oMrrcrn:ry ' Uev«or,ir+i (925>G?)-�i40 . u: r,;:n, 0000 HERI T,aC:L TR Ott Ct..�>,roeC: , AI.IFI�RT�Ia 94517.1250 ct,:,. LNG IN I'LR INC. (925)67:-9700 U'.:. a=T..\'.°•.:.<, TF.T.}.PNON):(925)673-7300 I Ax(925)67/2-4911 April 2; 2008 Honorable Gayle B. Uilkema 651 Pine Street, Room 108A Martinez, CA 94553 Re-.Protestation of.County, r perty Tax Administrative Cost Recovery Formula. Dear Honorable Ga B. Uil ema: In Fiscal Year 2006-07, counties throughout the State of California (including Contra Costa County) began including Sales and Use Tax (Section 97.68 of the California Revenue and Taxation Code) and Vehicle License Fee (Section 97.70 of the California Revenue and Taxation Code) stale-reimbursement amounts in their computation of property tax administration cost formulas. Arising in part from State Budget deficits in 2004 and the State of California's solution to issue Economic Recovery Bonds while creating the "Triple Flip" diversion of local sales and use tax apportionments, corresponding state legislation gave clear instruction to counties on implementation of this new Program: "Notwithstanding any other provision of law, for the 2004-05 and 2005-06 fiscal years, .a county;shall not impose a fee, charge, or other levy on a city, nor reduce a city's allocation of ad valorem property tax revenue, in reimbursement for the services performed by the county under Sections 97.68 and 97.70. For the 2006-07 fiscal year and each fiscal year thereafter, a county may impose a fee, charge, or other levy on .a city for these services, but the fee, charge, or other levy shall not exceed the actual cost of providing these services."jemghasisadded] In direct contradiction with enabling legislation, Contra Costa County commenced the inclusion of these "redistributed state property taxes" to cities in the County based on a cost recovery methodology that vastly exceeded any documented cost of actually providing the service. This erroneous interpretation of legislation led to a significant one year increase in our City's property tax administration fee for last fiscal year (06-4' amounting to a 98.6% single year increase for our small City. All other cities in Contra Costa County (and throughout the state) experienced similar jumps in extraordinary expense (see 2-Year History Table, Attachment 1). i i CITY 0F'-JLAYTC`11 Fauadsd 1857•../i7taporaied 1964 jt'.:! ti.VI lll.. COMMUN,TY Di V• LOPMT..N' !9-N 6 3-�140 ) 6000 HI.x171AGE 1xAIL -.C�L.-,YTO\.C.41.1.0ORNI.1 94517-1251) Ex:�eFAtur. 9'tij(. ?.9:ou TF_LGP(111N)%(925) 073-7300 )-:1X (925) 672-4917 a11i[,eaR.WAI.:t'-1 CN April 2, 2008 Mary Piepho 309 Diablo Road Danville, CA 94526 i Re: Protestation of County Pro rty Tax Administrative Cost Recovery Formula11 . Dear Honorable Mary . •epfio: In Fiscal Year 2006-07,. counties throughout the State of California (including Contra Costa County) began including Sales and Use Tax (Section 97.68 of. the. California Revenue and Taxation Code) and Vehicle License Fee (Section 97.70 of the California Revenue and Taxation .Code) state-reimbursement amounts in their computation of property tax administration cost formulas. Arising in part from State Budget deficits in 2004 and the State of California's solution to issue Economic Recovery Bonds while creating the "Triple Flip" diversion of local sales and use tax apportionments, corresponding state legislation gave clear instruction to counties on implementation of this,new Program: "Notwithstanding any other provision of law, for the 2004-05 and 2005-06 fiscal years, a county shall not impose a fee, charge, or other levy on a city, nor reduce a city's allocation of ad valorem property tax revenue, in reimbursement for the services performed by the county under Sections 97.68 and 97.70. For the 2006-07 fiscal year and each fiscal year thereafter, a county rnay impose a fee, charge, or other levy on a city for these services, but the fee, cha[ge, or other levy shall not exceed the actual cost of providing these services."lemphasis added] j In airect contradiction with enabling legislation, Contra Costa County commenced the inclusion of these "redistributed state property taxes" to cities in the County based on a cost recovery methodology that vastly exceeded any documented cost of actually providing the service. This erroneous interpretation of legislation led to a significant one year increase in our City's property tax administration fee for last fiscal year (06-07) -amounting to a 98.6% single year increase for our small City. All other cities in Contra Costa County (and throughout the state) experienced similar jumps in extraordinary expense (see 2-Year History Table, Attachment 1). A1TY ,0F;`:CL.AY-TG1T . FOYtlIIPd IBS7:..IgCOrf+oratli(19L3 -• '�-oNirni ),...; K.111: .1:i.V,..:Af. I)rvr.lorul�: (925)673-7340 6000HLKITAGL ]RAIL • CLAYTON,CALIFORNIA 94517-1250 fl..\►S7aATF0Fn 1:TGIIi F,I.Rtti1: {y'`)f,7^9700 W11 LVA' K.WALCUTT reL>:.rrinv�(925) 673-7300 FAQ(925) G7_'-4917 April 2, 2008 Honorable Susan A. Bonilla 2151 Salvio Streeet, Suite R Concord, CA 94521 Re: Protestation of County MPperty Tax Administrative Cost Recovery Formula Dear Honorable Sunilla: In Fiscal Year 2006-07. counties throughout the State of California(including Contra Costa. County) began including Sales and Use Tax (Section 97.68 of the California Revenue and Taxation Code) and Vehicle License Fee (Section 97.70 of the California Revenue and Taxation Code) state-reimbursement amounts in their computation 'of property tax administration cost formulas. Arising in part from State Budget deficits in. 2004 and the State of California's solution to issue Economic Recovery Bonds while creating the "Triple . Flip diversion of local sales and use tax apportionments. corresponding state legislation gave clear instruction to counties on implementation of this new Program: °Notwithstanding any other provision of law, for the 2004-05 and 2005-06 fiscal years, a county shall not impose. a fee, charge, or other levy on a city, nor reduce a city's allocation of ad valorem property tax revenue, in reimbursement for the services performed by the county under Sections 97.68 and 97.70. For the 2006-07 fiscal-year and each fiscal year thereafter, a county may impose a fee, charge, or other levy on a city for these services, but the fee, charge, or other levy shall not exceed the actual cost of providing these services."lem phasis added] In direct contradiction with enabling legislation, Contra Costa County commenced the inclusion of these "redistributed state property taxes" to cities in the County based on a cost recovery methodology that vastly exceeded any documented cost of actually providing the service. This erroneous interpretation of legislation led to a significant one year increase in our City's property tax administration fee for last fiscal year (06-07) amounting to a 98.6% single year increase for our small City. All other cities in Contra Costa.County (and throughout the state),experienced similar -jumps in extraordinary expense (see 2-Year History'Table., Attachmentl).. ; i . 'n CITY 01 . 0LAYTOIT rwrnded 1857•..111c 0nrurnl1964 11-11, 1:.PILAF "i, C'oI m v m I r 7.S Ihvrfnrm,.\i 11- '- w.'.'7.'•9'J 6000 HFRITACF.TnALL - CLAYTff-1, Lk1.IFORN14 94517-1250 Aw, �:RAIA)b FN(;,wI.)A,ne •Sa{67'-9700 W.i..•,•f Wxvcrr: TELYTHONE(925)673-%300 FAX (925)672-4917 April 2, 2008 Honorable Federal D. Glover 315 E. Leland Road Pittsburg, CA 94565 Re: Protestation of County Prop ax dministrative Cost Recovery Form ula s� Dear Honorable Federal D. er: In Fiscal Year 2006-07, counties throughout the State of Califomia (including Contra Costa County) began including Sales and Use Tax (Section. 97.68 of the California Revenue and Taxation Code) and Vehicle;License Fee (Section 97.70 of the California Revenue and Taxation Code) state-reimbursement amounts in their computation of property tax administration cost formulas. 'Arising in part from.State Budget deficits in 2004 and the State of California's solution.to issue Economic Recovery Bonds while creating the "Triple Flip" diversion of local sales and use tax apportionments, corresponding state legislation gave clear instruction to counties on implementation of this new Program: "Notwithstanding any other provision of law, for the 2004-05 and 2005-06 t7scal years, a county shall not impose a fee, charge, or other levy on a city, nor reduce a city's allocation of ad valorem property tax revenue, in reimbursement for the services performed by the county under Sections 97.68 and 97,70. i For the 2006-07 fiscal year and each fiscal year thereafter, a county may impose a fee, charge, or other levy on a city for these services, but the fee, charge, or other levy shall not exceed the actual cost of providing these services."jemphasis added) In direct contradiction with enabling legislation, Contra Costa County commenced the inclusion of these "redistributed state property taxes" to cities in the County based on a cost recovery methodology that vastly exceeded any documented cost of actually providing the service. This erroneous interpretation of legislation led to a significant one year increase in our City's property tax administration fee for last fiscal year (06-07) amounting to a 96.6% single year increase for our small City. All other cities in Contra Costa County (and throughout the state) experienced similar jumps in extraordinary expense (see 2-Year History Table, Attachment 1). 1 C:A://• t vt TIM ' .. Ci y Council Founded,1857. .,� 'corporutec11964 :. ...... GRE(:ORYMANNIN(' A91' .:. . UnvinT.,SIIun,Via A1nr'ok COMMUNITY ftM(A.LAURENCE DEVELOPN EN-r (925)673-7340 6000 HERITAGE TRAIL • CLAYTON, CALIFORNIA 94517-1250 JULIE:K.PIERCE ENGINEERING (925)672-9700 TELEPHONE (925)673-7300 FAx(925) 672-4917 WILLIAM R.WALCUIT April 22; 2008 FCLERKBOARD EIVEED Clerk of the Board of Supervisors Contra Costa County COSTA r �SORS 651 Pine Street Martinez, CA 94553 Re: Claim for Overcharge of Property Tax Administration Fee Dear Clerk of the Board of Supervisors: This claim is submitted':on behalf of claimant City of Clayton("Clayton") for the recovery of sums Clayton has been overcharged by the County for the administration of the property tax system. Notices regarding this,claim should be sent to: J. Daniel Adams, City Attorney City of Clayton 924 Main Street P. O. Box 110 Martinez, CA 94553 (925) 228-3596:(fax) In fiscal year 2006/2007 and proposed for 2007/2008, the County of Contra Costa has charged and proposes to charge Clayton property tax administration fees in an amount in excess of that permitted by Revenue and Taxation Code Section 97.75. Specifically, the Office of the Contra Costa County Treasurer Tax Collector has included in its calculation of Clayton's property tax administration charges the ad valorem property taxes Clayton received in lieu of the local Bradley Burns Sales and Use Tax and the.Vehicle License Fee pursuant to Rev. & Tax. Code Sections 97.68 and 97.70 (aka, the "Triple Flip"). Section 97.75 states no amount should be charged for administrative services for the Triple Flip in excess of the actual cost of providing the services. By including the Triple Flip funds in its calculation of Clayton's administrative cost share instead of calculating the actual incremental service costs to administer the Triple Flip, the County has overcharged Clayton and violated applicable state law. Clayton is informed and believes that the Office of the Contra Costa County Treasurer-Tax Collector, currently held by William J. Pollacek, is responsible for the i Clerk of the Board of Supervisors Contra Costa County April 22, 2008 j Page 2 I overcharges. For the 2006/2007 fiscal year, Clayton estimates the overcharge to be no less than$ 5,895.00. Proposed for the 2007/2008 fiscal year, Clayton estimates the overcharge to be no less than$.9206.00. Clayton believes that until the Contra Costa County Treasurer-Tax Collector complies with the mandate of Section 97.75, Clayton will continue to suffer future, annual damages in similar amounts. Any suit to recover such funds would be an unlimited civil case. As the City Attorney of Clayton, I am authorized to make this claim on the City's behalf. I declare under penalty of perjury under the laws of the State of California that.all the information I have provided is true and correct to the best of my information and belief. Very t , qur 7. D I. I Adams City Attorney JDA:Iac cc: Gary A. Napper, City Manager City Council Clayton/Gen Corresp I Ltr CoBd Sup Overchg Pty Tax 080422 i i i i i I i i i 1 i i C.Il'1'OF CONCORD CITY COUNCIL IS)itO]';it ksidc 1)rit:: William D.Shim). \'lavur C n covd,(.alilurnia 9 15 19-2578 Flelen (\1.Allen.\'ice '41amr r:x: (!)`?i) 7!IK-0636 (stn'S.Hjc•rkc Laura M.H(tl'I'nicisit•r \•lark: .Pctcrs( u 52 01:1;1u:or 1-11f:1-11f:On'IViIANAGr•.R � , v \'larc l ac l.chm.ut,(:it Clerk O c = _ a �— ThematiJ.N-1-c:ntli)j ,l:ile"LYe:(s(nrr lcicphonc: (925) 671-`,150 Edw:u'd R:Mantes, Lvcv'im(:in \ianagcr a March 31, 2008 . Chair Federal Glover tiNK 2008 Board of Supervisors ICL_:RK BOARD uF suNEavlsc,3S County of Contra Costa CONTRA COSTA co. 651 Pine Street Martinez, Ca 94553-1229 Re: Property Tax Administration Fee Dear Chair Glover and Members of the Board: Upon review of the documentation provided in support of the Public Hearing to be held on April 8, 2008, addressing the Property Tax Administration Fee, the City of Concord has determined that it must protest the methods used in the calculation of this fee. As you are aware, there has been a change in the transmission of a portion of Sales Tax (the"triple- flip") and Motor Vehicle in-Lieu (VLF) Tax to local agencies. Under prior programs these amounts were transmitted directly from the State to both the counties and the cities. Currently these funds are transferred from the State to the cities via the counties. The change in procedure and additional work is minor, yet based upon your staff report we estimate that our Property Tax Administration Fee has increased 1361/o. In other.words, we calculate that the increase to the City of Concord is approximately $157,000 raising the proposed charge to the City of Concord to $272,450. The City of Concord understands, supports and makes use of the concept of cost recovery. However, underlying the use of cost recovery is a basic assumption and understanding that the cost recovered represents the.,full costs incurred.,no more, no-less. The increase you propose for the City of Concord alone would more than pay for a year's services of a full time accountant—clearly an overstatement of cost. Restating the full property tax administration program to charge the agencies receiving the "triple-flip" and the VLF in- Lieu, flies in the face of logic,reasonableness and the law governing this procedure for these programs (Revenue and Taxation Code Section 97.75), which states that". . . For the 2006-07 fiscal year, and each fiscal year thereafter, a county may impose a fee, charge, or other levy on a city for these services [calculation of the "triple-flip" and the VLF in-Lieu], but the fee, charge, or other levy shall not exceed the actual cost of providing these services. " (Emphasis,added.) unil: ('its'infncirc:i.<'nnc((rcLca.t(. • webw[r: trt st.cittnl'anu:rnrL(n;q Chair Federal Glover March 31,2008 Page 2 The State Controller has agreed with this opinion in stating "that counties must maintain separate documentation for Sales and Use Tax and Vehicle License Fee charges, as fees must be based on actual costs and actual.costs relating to each type of charge might differ from one another." In light of the law,the opinion of the State Controller's Office, and generally accepted accounting principles with regard to cost recovery, we in the City of Concord respectfully request that, at the Property Tax Administrative Fee Public Hearing on April 8, 2008, the Board of Supervisors direct staff to recalculate the portion of the fee attributed to the "triple-flip" and the VLF in-Lieu so that its imposition is in compliance with State law. Thank you for your consideration. Respectfully, Edward R.Jame Interim City Manager "Small Town Atmosphere Outstanding Quality of Lifc" CelPbvs 1ating 1.50ye;a April 1, 2008 , HNn u s 20ud Contra Costa County Board of Supervisors CLARK BOAA OF!F;A viscas 651 Pine Street CONTRA cosTA Co.co Martinez, CA 94553-1229 Re: Determination of Property Tax Administrative Costs for 2007-08 Chair Glover and Members of the Board of Supervisors: In 2006-07, Contra Costa County began including Sales and Use Tax (Revenue and Taxation Code section 97.68) and Vehicle. License Fee (Revenue and Taxation Code section 97.70) adjustment amounts in the computation of property tax administration costs charged to cities. This resulted in a 45% increase in property tax administration costs to the Town of Danville. ,In 2007-08, these costs are proposed to increase even further. In January, 2008, as a result of a request for clarification on this matter, Jeffrey V. Brownfield, Chief of the Division of Audits for the State Controller's Office issued a letter stating that: "As the counties'. assessors and treasurer-tax collector$ incur no additional costs.in.implementing Revenue and Taxation code sections 97.68 and 97.70, SCO legal counsel opined that Sales and Use Tax and Vehicle License Fee adjustment amounts cannot be added to Revenue and Taxation Code section 96.1 and section 100 -connoted property t'x shares in order to d telmine administrative cost shares.. Statutes clearly state that no amount should be charged. for administrative services that exceeds the actual cost of providing such services. Legal counsel further opined that counties must maintain separate documentation for Sales and Use Tax and Vehicle License Fee charges, as fees must be based on actual costs and the actual costs relating to each type of charge might differ from one another.' Despite the opinion of the State Controller's Office, Contra Costa County's proposed- 2007-08 Property Tax Administrative Cost Recovery fees continue to include Sales and Use T'ax and Vehicle License Fee adjustments as part of the total fee calculation. For C ; U0 510 LA GONDA WAY, DANVILLE, CALIFORNIA 94526 Administration Building Engineering&Planning Transportation Maintenance Police Parks and Recreation (925)314-3388 (925)314-3330 (925)314-3310 (925)314-3310 (925)314-3450 (925)314-3410 (925)314-3400 Contra Costa County Board of Supervisors April 1, 2008 Page 2 Danville, this fee assessment methodology results in an overcharge of approximately $43,000 for 2007-08. Pursuant to the SCO's opinion, no separate documentation has been provided for Sales and Use Tax and Vehicle License Fee charges, to identify actual County costs incurred in assessing these fees. Danville has been notified that the Board of Supervisors will be considering these charges at a public hearing scheduled for April 8, 2008. We are hereby requesting that Contra Costa County abide by the opinion of the -State Controller's Office in determining the Property Tax Administrative Cost Recovery fees to be charged for 2007-08. Sincerely, TO DA Can a e e Mayor cc: Town Council —, Mary Dodge, CPA APP 5 Teoo���H� � iy .o I Finance Director/City Treasurer EL C E R R 1 T D t.•--- ......_ 10940 San Pablo Avenue CLi F1•;E'?i-.;I:Li. .I:' I �';S RJ 'i EI Cerrito, CA.94530 (510) 215-4312 FAX(510) 215-4319 Email: mdodge@ci.el-cerrito.ca.us Website: www.el-cerrito.org April 3,2008 Contra Costa County Board of Supervisors 651 Pine Street Martinez, CA 94553-1229 Dear Chair Glover and Members of the Board, This letter is intended to be a formal protest of the Determination of Property Tax Administrative Cost Recovery for 2007-08. It is with disappointment that staff has become aware of the continued inclusion of the Vehicle License Fee and Sales and Use Tax amounts passed.through to cities in the calculation of net revenue per jurisdiction. After concerns were raised by Cities in regards to the 2006-07 calculation and the State Controllers Office Division of Audits issued an opinion stating that those revenues cannot be added to property tax to determine administrative cost shares, it was anticipated that a separate basis and calculation that reflected the actual cost of providing such services would be presented. As I am sure you are aware, this matter is scheduled'to be discussed at a public hearing in your Chambers on Tuesday, April 8, 2008. I hope that when I am in attendance a discussion by the Board of Supervisors will be heard that recommends,revision of the proposed calculation to one that provides a separate calculation for Vehicle License Fees and Sales and Use Tax. Sincerely, Mary Dodge Finance Director/City Treasurer L)J 1360 s'' t City of Martinez 525 Henrietta Street, Martinez, CA 94553-2394 (925)372-3505 FAX(925)229-5012 April 2, 2008 �-�ECE'll. APR 0 4 7008 CLERK BOARD OF' UP•=i�:':SORIS CONTRA COSTA CO. Honorable Federal Glover, Chair:: and Members of the Board of Supervisors 651 Pine Street— Rm. 106 Martinez, CA 94553 Dear Federal: In fiscal year 2006-07, counties throughout California (including Contra Costa County). began including Sales and Use Tax.(Revenue and Taxation Code section 97.68) and Vehicle License Fee (Revenue and Taxation Code section 97.70) adjustment amounts in their computation of property tax administration;cost shares. This inclusion has led to significant increases in property tax administration costs for cities throughout the State. This action has significantly impacted the City of.Martinez, having suffered.an increase of 41.5% in administration charges in fiscal year 2006-07. Our administration charges soared from $51,705 in 2005=06 to $73,174 in 2006-07. The State Controller's Office issued an opinion on this matter in a letter dated January . 7, 2008. In this letter, Jeffrey V. Brownfield, Chief of the Division of Audits for the State Controller's Office stated "As the counties' assessors and treasurer-tax collectors incur no additional costs in implementing Revenue and Taxation code sections 97.68 and 97.70, SCO legal counsel opined that Sales and Use Tax and Vehicle License Fee adjustment amounts cannot be added to Revenue and Taxation Code section 96.1 and section 100 computed property tax shares in order to determine administrative cost shares. Statutes clearly state that no amount'should be charged for administrative services that exceeds the actual cost of providing such services. Legal counsel further opined that counties must maintain separate documentation for Sales and Use Tax and Vehicle License Fee charges, as fees must be ;based on actual costs and the actual costs relating to each type of charge might differ from one another." Staff recently received Contra Costa County's proposed 2007-08 Property Tax Administrative Cost Recovery fees and was extremely disappointed to find that the recommendations of the SCO have not been followed. The revenues collected for 1 ROB SCHRODER,MAYOR Honorable Federal Glover, Chair and Members of the Board of Supervisors April 2, 2008 Page 2 Sales and. Use Tax and Vehicle License Fee adjustments have once again been included in the calculation of net revenue per jurisdiction, directly contradicting the legal opinion of the SCO. In addition, no separate documentation for Sales and Use Tax and Vehicle License Fee charges was offered as recommended by the SCO. The City. of Martinez is therefore formally protesting the Determination of Property Tax Administrative Cost Recovery for 2007-08 as scheduled to be heard at a public hearing by the Contra Costa County Board of Supervisors at your meeting scheduled for April 8, 2008. Si re Rob Schroder Mayor Cc: City Council Members John Cullen, Chief Administrative Officer ROB SCHRODER, MAYOR of Martinez 525 Hen.rietta Street; Martinez, CA 94553-2394 (925)372-3505 FAX(9 5)229-5012 May. 8, 2008 E C.. Gz L,Ls 1 Clerk of the Board of Supervisors Q `�'�U '- Contra Costa County cLtn;QC).4FiG 651 Pine Street Martinez, CA 94553 Re: Claim for Overcharge of Property Tax Administration Fee Dear Clerk of the Board of Supervisors: This claim is submitted on behalf of claimant City�of Martinez ("Martinez") for the recovery of sums Martinez has been overcharged by the County for the administration of the property tax system. Notices regarding this claim should be sent to: Jeffrey A. Walter, City Attorney 670 W. Napa Street, Suite F Sonoma, CA 95476 (707) 996-9693 (fax) In fiscal year 2006/2007 and proposed for 2007/2008, the County of Contra Costa has charged and proposes to charge Martinez property tax administration fees in an amount in excess of that permitted by Revenue and Taxation Code Section 97.75. .Specifically, the Office of the Contra Costa County Auditor-Controller has included in its calculation of Martinez' property tax administration charges the ad valorem property taxes Martinez received in lieu of the local Bradley Burns Sales and Use Tax and the Vehicle License Fee pursuant to Revenue and Taxation Code Sections 97.68 and 91.70 (the"i ripie Flip"). Section 97.75 states no amount should be charged for administrative services for the Triple Flip in excess of the actual cost of providing the services. By including the Triple Flip funds in its calculation of Martinez' administrative cost share instead of calculating the actual incremental service costs to administer the Triple Flip, the County has overcharged Martinez and violated applicable State law. Martinez is informed and believes that the Office of the Contra Costa County Auditor- Controller is responsible for the overcharges. For the 2006/2007 fiscal year, Martinez estimates the overcharge to be $15,843, and for the 2007/2008 fiscal year, Martinez estimates the overcharge to be $34.241. Martinez believes that until the Contra Costa County Auditor-Controller complies with the mandate of Section 97.75, Martinez ' will continue to suffer future, annual damages in similar amounts. Anv suit to recover such funds would.be an unlimited civil case. CO: 005 CA0, 660`cDn-e� � DONALD A. BLUBAUGH, CITY MANAGER Clerk of the Board of Supervisors May 8, 2008 Page 2 As the City Manager of Martinez, I am authorized to make this claim on the City's behalf. I declare under penalty of perjury under the laws of the State of California that all the information I have . provided is true and correct to the best of my information and belief Sincerely, orald ,^.. Blubaugh City Manager DAB:elm cc: Jeffrey A. Walter, City Attorney Martinez.City Council DONALD A. BLUBAUGH, CITY MANAGER Cf11 ILI Yd ®AKLEY m ri,.Hr::ucir Nv DMA'A ( � ? 1. 3231 Main Street.. - � C!ir;i•::::;J:F:..i:: `.. . •.. _�,r,.,� Oakley; CA 94561 925.625 701.10 tel 925 625 9854 fax wti���.c:i.oaklcy:ca.us OFFICE OF THE MAYOR MAYOR .. . Bruce Connelley March 27, 2008 VICE MAYOR ' Carol Rios C.OUNCILMEMBERS Pat Anderson Contra Costa County Board of Supervisors Brad Nix 651 Pine Street Devin Romick Martinez,CA 94553-1229 Dear Chair Glover and Members of the Board: In fiscal year 2006-07, counties throughout the State (including Contra Costa County) began including Sales and,Use Tax (Revenue and Taxation Code section 97.68) and Vehicle License Fee (Revenue and Taxation Code section 97.70) adjustment amounts in their computation of property tax administration cost shares. This inclusion has led to significant increases in property tax _ administration costs for cities throughout the State. As a result of this change, the City of Oakley's charge was 1426/o higher in fiscal year 2006-07 than it would have been without it. While City staff did not agree with the County's interpretation that the Sales and Use Tax and Vehicle License Fee adjustment amounts should-be included in the calculation for administration charges, staff was aware that the State Controller's Office (SCO) had been asked to weigh in on the issue and elected to wait for their opinion before formally protesting the County's interpretation- .The SCO legal office offered their.opinion in a letter dated January 7, 2008. T.. i rr___ �>' n_:.,_.., �"-.-_C r aL..., Tt:z r . ,�._. r .� _ In this letter, Jeu,Cy . LcC,Wnf•:eld, .lief o. the Division o AuLlI s c%;r t,�c State Controller's Office stated "As'the counties'assessors and treasurer-tax collectors incur no additional costs in implementing Revenue and Taxation code sections 97.68 and 97.70, SCO legal counsel opined that Sales and Use Tax and Vehicle License Fee adjustment amounts cannot be added to Revenue and Taxation Code section 96.1 and section 100 computed property tax shares in order to determine administrative cost shares. Statutes clearly state that no amount should.-be charged for administrative services that exceeds the actual cost of providing such services. Legal counsel further opined that counties must maintain separate documentation for Sales and Use Tax and Vehicle License Fee charges, as fees must be based on actual costs and the actual costs relating to.each type ofcharge;might differfrom one another." .. Staff recently received Contra Costa County's proposed 2007/08 Property Tax Administrative Cost Recovery fees and were disappointed that the recommendations of the SCO have not been followed. The revenues collected for Sales and Use Tax and Vehicle License Fee adjustments have once again been included the calculation' of net revenue per jurisdiction. In a direct - contrast to what the SCO opined, this net revenue, inclusive of the additional adjustments, is then used to calculate the property tax administration charges. In addition, no separate documentation for Sales and Use Tax and Vehicle License Fee charges was offered as recommended by the SCO. We are therefore formally protesting the Determination of Property Tax Administrative Cost Recovery for 2007/08 as scheduled to be heard at a public. hearing by the Contra Costa County Board of Supervisors at your meeting scheduled for April 8, 2008. Sincerely, Bruce Connelley Mayor Cc: City Council Members John Cullen, Chief Administrative Officer �, p i I� .. i _. _i J, %I..1.:��1 • 21� `�,•��"i"'r _i..l' } i ° .i�!I '�l�i • ,.��„f�)�";_.I�';.. • �•'% — . May 9, 2008 t�G E.fi,.:i�',: 'elf. it 1�..5' Clerk of the Board of Supervisors ++ Contra Costa CountyMAY ; ,r • �, I 651 Pine Street I _�)'J Martinez CA 94553CLERK 30ARLD - - _Fi, Ns, D. Re: Claim for Overcharge for Property Tax Administration Fee. Dear Clerk of the Board.of Supervisors: This claim is submitted on behalf of claimant City of Orinda ("Orinda") for the recovery of sums that Orinda has been overcharged by Contra Costa County ("County") for the administration of the property tax system. Notices regarding this claim should be sent to: Osa Wolff, City Attorney City of Orinda P.O. Box 2000 Orinda', CA 94563 (925) 254-2068 (fax) In fiscal year 2007/2008, the County has proposed charging the City of Orinda property tax administration .fees in an amount in excess of that permitted by Revenue and Taxation Code Section 97.75. Specifically, the Office of the Contra Costa County Auditor-Controller has proposed including in its calculation of Orinda's property tax administration charges the ad valorem property taxes Orinda receives in lieu of the local Bradley Burns Sales and Use Tax and the Vehicle License Fee pursuant to Rev. & Tax. Code Sections 97.68 and 97.70 (aka,the "triple flip" and "VLF Swap", respectively). Section 97.75 states that for fiscal years 2006-07 and thereafter, the County may charge a fee for the services'mandated by Sections 97.68 and 97.70, but that the fee shall not exceed the actual cost of providing the services. By including the triple flip and VLF swap funds in its calculation of Orinda's administrative cost share instead of calculating the actual incremental service costs to administer the triple flip, the County will overcharge Orinda and violate applicable state law. Orinda is informed and believes that the Office of the Contra Costa County Auditor-Controller, currently held by Stephen Ybarra, is responsible for the proposed overcharge. For the 2007/2008 fiscal year, Orinda estimates the currently proposed administrative fees would result in an overcharge of no less than $11,000. Orinda believes that until the Contra Costa County Auditor- Controller and Board of Supervisors complies with the mandate of Section 97.75, Orinda will continue to suffer future, annual damages in similar amounts. Any suit to recover such funds would be an unlimited civil case. ' E�05, CAO, e)&D Cprre General Information Rdministration Planning Park, C, Recreation Police Public Works As the City Manager of Orinda, I am authorized to make this claim on the City's behalf.. I declare under penalty of perjury under the laws of the State of California that all the inforii-iation I have provided is true and correct to the best of my information and belief. Very y ours.. et . Keeter ✓ City anager cc: City Council Osa Wolff, City Attorney j Nlay 12, 200S l'i( 1101,11bi. C1 ain-Tlar, and C<-?Linty Supt;-, Ay C%.o Clerk ole the P-Gai-d of Supervisot-s - Contra. Costa County "ONTr1A�,Ur_ 651 Pine `>treet ?\/Iartinez, CA 943 ; REGARDING Item 13.1 CON"I'IN-UED TAE''.-dLR.I�!� #romn kprii. 8, =cel;., (7.n( implementation of the properly tar cost recover` prox i iv6s of Fwyenue and rax;athm Code §95.3 DcL.a- Chairman Glover all c Super�'?sc l-�:. 41] 'behalff o the Contra ('ostd County Publi(.: iviara tl 'rs ani v,!-FItinu, tC'> eXPTCSS our disgUffecnica! ' ,:ith the C_ )L It\,';; implementabor o ('.A T 1.\'1.111 e and A)::lWmi Code §95-,') i-cga.-di11p, the Catcula.tion and allocation of t!lC adminiFti-ati,? l:(`StS :!.' SCr::1: i.i:C1 with property i:_v by the C(1Un, br is i:liR& : tie:; ( Dow I' = ( _ ! t ;!Ill-{ ;Clt.'.'.1 or :i _ in _..:>'1?t�'�t �. i.'•i.i: .(1]t:v riot ii`l.:i'i %1t:U. _ J'.Jill l 1 i 1:11 (;} .� nv-;, i.!. 10 -t!% _. .�: .'1 °c iCAV P01i:tom ,IT[ the 1 `l:lli]i�; :i ])ass ai]il. 11T(ir)Cr C ..Cllil:!_'::!• .at11oi!i2,1', ll!C. 'I .I' 1• 1...V.:i::' , :itit i7L 'citi'L.. r;;j_-)e:ir'Iltiiti',•cm in siI'. :I. di.'o r'- ;:r.]t:'!il. `•,:.:.!I nlr. . LE': N11f. `". ;i i n .. i!]lclt)1': i._1.i i;_lri of tile'.LppliL'abkC Ly say.n` th:. C ,y 1 .CC rneeting, ;r.i. `L I :ym A:1'l,: .(1(:ll 111: .... :t•:;L� lI :: "IL!ili:i• .Iilr .. .:� .i;i' .ori_ rl'pIc: F,ip .Safes olid U-st:: 1 a)7 TH. and the Of ` L, aw. M MAWn 49, .. J: ., i ,> .,::Ild- (11!t a.skr.':l and :il],timwed the quetitlC)l; A 1-1,,- t c ..L I`.m.l`;.1:• Iws . •:_�?,7]V tYl�' t?"1C1't:f15C:�;� One: of the most frcgLieiv.: L1skt:Ci is it _'1 I) !''--�.' a , _�: ;i s I. _ l?lam ]' 1' 'i: .I TI. I .i c.: ilial 1; �.]"L:.I:I; .:C is a react of additional Aculation Wo is b'tiri_ added 7c t: r. ... runh Ad ti;'_: a;lsy:m A ICV. Me P]•C,•.C7.1_ �' ?; AC11171n matl''C' Fee {' lr costs r; .__:;(...'.';i I'1 g. ?C1L1;11]Z.if' C•i)lltiill"1'� and allocathig pnqvmy tax . .t'\'A iV; MV1107 �.:Ct:'C! !h.: :i..'!_lCl' LUld reus tll..Jbl _ c-usts inc:l.rrleci �i,: the cm-Linty to pec '1ommi111T l'1'. icC . .. I1( l.r•Ir.,'ll l 1 c:'L le'J iiia; di:. Cos! iil .'._,U7_ ]'7];)i' 1 J Ocncrcil 1r,16rmnuon r-Iti nmM--.1.::;n ?lennir.q Pcr4; Rev.-nue and Taxation, Coi-R: 1-MT-t. 01.At _1 III Ll _TjtjcL:-j fiscal year thereafter.. it O.Amly M,-.i,,; 11.11pOse a fec. ch.al-zC: other 1,,VV or. al city, }:i: l' 111 os C services. but the Pe, or other shal/ n14 cwre?d t'he,aclmaf, cwl of nrovidinex thrs-i! services." ('1eark..by the ALidit.or-Controllu-'s owri. the. 1't:es b-11-AR: exceed'the actual cost of p-rovicling the additional ser,,,ict. .A✓Iii..:l, is contrary to the }purpose of a recover-N, It stands to reason, tlici-,ZForc fjial, th,.:: impos;�d 1'r-_.eS E-.1 J.c(-)n plute L-In unlawful tax by the County against its nineteen cities in t1-11, <jrpj)rcjxh-Y)w,1, amOU111- W'S miHiOrl for FY 2006-2007 and planned for FY 2007-2t 01S. n nai 11"n- cla'.,ms, v,,*!:h flttt ':01.111TV Cities V1 Contra Costa Courity have Eiled c1alins.,. W c.1 i. ft.)r the rccmrery Of'SUrns that have been OVeT(:h,,:rged 1,61- >he .:(:-!Iliilistratioll of[fic nmm!: , t;rkluls. At its meetHig on .Nday St". the Public Mamigeris 1',115 Ul-liiu(i ff! .3CC,Kill [i resolution oftlwdispute 4.vlth the Coun-tv I() avoid litlaaw-m. -1111d �;-c i;;xpeut acanS2 fl_-"kvard "hat th COUnt.), 'a-1]l appl�.i the f,ce Lo (.over I);,.):" actuaj properly tax adininistratlo-j-.1 "sCl"VICO. I ha-A ,"()U. I'Orl 'aVltntjm L0 Ou'l 'i'll C- U 71 C-ter K YS.Marm-gcT, ('ITV OfO7111111 Chair, Public Managers A_ssoclavol,., 'en. Couri niri.' ( 01.0 i,v C 1-1: 3oAr CuIj strato, w ii ....... Stephen Ybama. CUT-11-a Cc),Ii:j I A I Contra Costo C-cuniv Public V.-CM a: