Panorama City : $7-Million Payment Approved in GM Suit

The final step in the settlement of a case between General Motors Corp. and Los Angeles was taken Tuesday when the City Council approved releasing funds to pay GM $7.2 million in attorney’s fees, back taxes and interest.

The council’s decision is the result of a lawsuit the city lost last year in which a state court of appeals ruled that the city discriminated against General Motors by forcing the company to pay both a seller’s tax and a manufacturer’s tax. GM had operated an assembly plant in Panorama City for years before leaving that site in 1992.

The state appeals court ruled that the city’s tax was discriminatory because it exempted manufacturers within the city from paying a business tax on the sale of their products while imposing that tax on out-of-town manufacturers.

As a result of the court’s ruling the City Council dropped the manufacturer’s tax in January, and now imposes only a seller’s tax on companies that sell products or manufacture goods here.

The breakdown of the overall cost to the city includes $376,353 in attorney’s fees and costs, $3.65 million in taxes and interest from 1987 to 1995 and $3.14 million in interest.