Lynwood to Cut Property Taxes in Settlement of Suit

A controversial property tax increase will be eliminated under a settlement accepted Monday in Superior Court by Lynwood officials, who hope to end 18 months of litigation by a group of property owners and the Howard Jarvis Taxpayers Assn.

The settlement scratches the increase the City Council approved in 1996 that tripled a portion of the property tax rate, from 12.5 cents per $100 of assessed valuation to 37.5 cents. The increase was intended to reimburse the city for the administrative costs of processing employees’ retirement funds, a cost that had been paid for 40 years from the general fund.

“I’m elated,” said Horace Denton, a Compton resident who owns five properties in Lynwood and has led resistance to the rate increase. “We kept insisting that this was illegal and too much. . . . This created a hardship for property owners that they can’t afford.”

The settlement, approved by the City Council last Tuesday, attempts to end litigation that alleges the increase violated Proposition 13. But there were signs Monday that the plan may unravel over the issue of refunds.

Council members have agreed to reimburse only those who submitted refund claims by Sept. 1. But Larry Straw, a Jarvis attorney, said the settlement provides refunds for taxpayers who filed claims in a “timely” manner, which, under city ordinances, should mean they have a year from the date they had to pay the tax, he said.

“The law here is pretty simple,” Straw said. “If there are people who are having claims denied, we’ll be back [in court].”

At least 100 people have filed for refunds, although probably thousands were affected by the tax increase, Straw said.

City Manager Ralph Davis declined to comment on how the city will administer refunds. He said the city had anticipated the settlement and had sliced its budget by about $3 million this year. But more cuts may be necessary, he said.

According to former City Manager Faustin Gonzales, the increase generated about $3.2 million.

Straw said the council’s 1996 rate increase violated state law, which froze property tax rates at their level in the early 1980s.

In August 1997, the council reduced the tax rate to 18.75 cents per $100, which remained 50% higher than the pre-1996 level.