County Vows Property Tax Refunds Soon

The county’s impending emergence from bankruptcy promises to bring thousands of property owners a modest but long-awaited windfall.

Property tax appeals, some filed as far back as four years ago, resulted in rulings that Orange County owed certain property owners more than $100 million in refunds, because their parcels had been assessed too high a value.

But when the county declared bankruptcy 18 months ago, the refunds due on a two-year backlog of appeals could only be paid at 88 cents on the dollar, roughly the same percentage paid out on average to agencies that had money deposited in the county’s investment pool.

The remainder--which totals about $21 million--was promised once the county’s financial crisis was resolved.

Officials now expect the county to be out of bankruptcy by June 11, and plan to mail checks for the balances of the tax refunds this summer.

“Unless there is some unforeseen delay, we expect to have this done within 90 days,” said Treasurer-Tax Collector John M.W. Moorlach. “We should soon have this behind us.”

The refund balances will go to the owners of 40,000 to 60,000 parcels whose tax assessments were lowered by an appeal board or were subject to a “roll correction” by the assessor’s office.

Only assessment cases that originated before the Dec. 6, 1994 bankruptcy filing are due the 12% refund. People with successful appeals filed after the bankruptcy received full refunds as their cases were decided.

Some residents might not be aware they are due the money. But Moorlach said the county will automatically send checks to all eligible recipients, and that property owners don’t have to call the treasurer’s office to make formal requests.

“We want to be fair,” he said. “If they received 88 cents, they are guaranteed the 12 cents. . . . We are working to get that done as soon as possible.”

The county counsel’s office is now trying to determine whether the property owners are also entitled to interest on the withheld funds, though Moorlach said no final decision has been made.

County leaders expressed satisfaction at the upcoming refunds, saying they represent yet another indication that the financial situation is stabilizing.

“That’s good news,” said Supervisor Don Saltarelli. “There are a lot of people who have been affected [by the bankruptcy]. It’s our intention to pay our debts . . . and help restore confidence in the county.”

The refunds are expected to range from a few hundred dollars for individual homeowners to many thousands of dollars for major developers who own numerous parcels.

When real estate values dropped in the early 1990s, more than 100,000 homeowners and businesses deluged the county with requests to have their property tax assessments reduced.

The demand created a backlog in the hearing appeals process that allowed some appeals to lapse past the deadline without action. In those cases, the county was forced to accept the property owner’s proposed value, which was often lower than the county’s.

Hearing boards also reduced the assessments on many properties and approved tax refunds for owners who overpaid.

But the refunds due thousands of property owners got tied up when the county filed for bankruptcy. For months the owners anxiously waited for word about whether they would be getting the money and if so, how much. Finally, in April 1995, the U.S. Bankruptcy Court approved a county plan that gave the owners 88% of what they were due.

Owners should finally receive the remainder within the next few months. The treasurer’s office is now preparing a list of who will receive checks and plans to make processing the payments a top priority once the county officially emerges from bankruptcy.

“We’ve anticipated this from day one,” said Mahesh Patel, systems manager at the treasurer’s office. “We are now working on finalizing the figures and doing the verifications.”

Anti-tax activists said Thursday that the action is long overdue.

“When the average person is told he has a tax refund coming, he deserves it. Period,” said Robert Ault, president of the Committee of Correspondence, a citizens watchdog group. “Paying them . . . should be a high priority.”