COUNTYWIDE : County, Agencies Settle Tax Lawsuits

The county this month will begin distributing about $4 million in settlement payments to the first of 82 public agencies that sued for a share of interest and penalties paid by delinquent taxpayers.

A state Superior Court ruling last year upheld a 1989 state law allowing counties to keep all of those funds. But Orange County agreed to pay off the suing agencies because it would likely cost more to appeal those cases, Deputy County Counsel David Chaffee said Friday.

“We could pursue each of these cases through the (state) Court of Appeal and wait, while the money remains impounded, but that’s not going to do anybody any good,” Chaffee said.

Chaffee worked out a settlement with the agencies after the court struck down a case by the city of Santa Ana, which challenged the state law stipulating that counties need not relinquish any interest or penalties collected from delinquent taxpayers.

The state law was passed by the Legislature in 1989 in response to a trial case in which Orange County was ordered to pay Anaheim $1.8 million for its share of delinquent property tax penalties and interest. The subsequent legal rulings do not affect the Anaheim case, Chaffee said.

After Anaheim’s victory, a host of other agencies--including cities, their redevelopment agencies, water districts and school districts--followed suit in filing claims against the county.

Under the agreement between the county and the suing agencies, the county will pay 22% of the amount each agency had sought in its suit, Chaffee said. The payments range from $225, to be paid to the Yorba Linda Library District, to $127,000 owed to the city of Santa Ana and its redevelopment agency.

Making the payments will not pose a problem for the county, despite its current budget crisis, Chaffee said. The settlement money has been impounded in an account since the legal disputes began, he said.

The county’s settlement payments are being made in two phases.

After Huntington Beach and Mission Viejo finalize legal documents, the county will begin cutting settlement checks to 54 agencies from 21 cities. Those payments should be completed within a month, Chaffee said.

The county’s 28 school districts--all of which have filed suits against the county--will be paid under a separate agreement, Chaffee said. The terms of that settlement will be the same, but it will not be finalized for about a month, he said.