ORANGE COUNTY IN BANKRUPTCY : Judge OKs Partial Property Tax Refunds

At least 11,000 Orange County taxpayers who are owed $17.8 million in property tax refunds will be getting most of their money back within the next few weeks after a bankruptcy judge Friday approved a county request to make the payments.

The county will pay about 88% of each tax refund due to property owners who were over-assessed. The refunds have been held up since the county filed for bankruptcy on Dec. 6.

The county plans to repay the remaining 12% when it makes more progress toward resolving its bankruptcy.

Another 62,000 pending appeals by property taxpayers will be paid as the Assessment Appeals Board determines they are legitimate, county bankruptcy attorney John Amsden said.

The county wanted to make the payments to minimize the impact of the bankruptcy on taxpayers, Amsden said.

“We want to preserve the sanctity of the tax collection system and keep taxpayers happy as much as possible,” he said.

The money will come from taxes collected since the bankruptcy and will not affect county coffers, according to court documents.

Typically, the county retains only about 12% of all collected property taxes; 88% goes to cities, redevelopment agencies and other agencies and districts. Some of that 88% is withheld regularly by the county to pay refunds on behalf of all the agencies.

The 12% portion that the county normally would have paid from its coffers as its contribution to the tax refund is the portion that taxpayers must wait for, Amsden said.

In approving the plan, U.S. Bankruptcy Judge John E. Ryan called it a “reasonable approach” to the tax refund problem. Ryan did not rule on how and when the remaining 12% must be paid.

Attorney Keith Parker, who represents Marriott International, one of the top 10 taxpayers in the county, said he was pleased by Ryan’s ruling and the county’s efforts. Marriott is owed more than $1 million in property tax refunds, he said.

Ryan also approved the county’s request for a fourth extension of a plan that will allow investors in the county’s collapsed pool to continue drawing emergency disbursements through the end of May.

The plan that allows pool investors to withdraw a total of $1.25 billion is particularly important to cities and school districts that have come to rely on the disbursements to meet debt obligations and pay vendors and employees.

Ryan’s action will extend by one month the period for investors to request money from the $5.7-billion pool. The county’s most recent figures show that from December through the end of March, the pool’s more than 200 investors have drawn about $818 million.