Agency to Recover Tax Overpayments

More than $1 million in property tax revenues is expected to be withheld from the Orange County Sanitation Districts during the next three years because of overpayments to them by the Santa Ana Redevelopment Agency, officials said Tuesday.

The Redevelopment Commission voted Tuesday to recover tax revenues it lost because of miscalculations during the past four years. The commission’s recommendation will go to the City Council, in its capacity as the Redevelopment Agency, for a vote in two weeks.

“We can live with that,” said Gary Streed, the Sanitation Districts’ finance director. “It won’t have a significant (budgetary) impact on us. Besides, it’s the right thing to do.”

Streed said the Sanitation Districts, which provide regional sewer service, would be able to absorb the reduced tax revenue and would not need to raise fees charged to customers to make up the difference.

In District 1, which includes most of Santa Ana, $432,580 will be withheld over the next three years. That district’s current operating revenues total just over $9 million a year, Streed said.

The second area affected by the repayment plan, District 7, extends along the city’s eastern border from Villa Park in the north to portions of Costa Mesa and Irvine in the south. Streed said that district’s operating revenues, which total almost $10 million, would have $658,974 withheld over the next few years.

John Reekstin, the Redevelopment Agency’s administrative services manager, said that the overpayment of taxes to the Sanitation Districts dates back to 1983 and totals about $1.5 million.

However, state law places a four-year limit on the money that can be recovered because of “mistakes” in the calculations, Reekstin said, resulting in a total of $1,091,554.

Instead of receiving a lump sum reimbursement, Reekstin said, officials of both agencies agreed to withhold for about three years the taxes otherwise due the Sanitation Districts.

“We think it’s a fair settlement that everybody will be able to adjust to over time,” Reekstin told the redevelopment commission. Of the approximately $300,000 annual windfall, he said, “obviously it’s a benefit to us because those extra revenues are available for redevelopment projects.”