Decision Time for County Assessor

A Superior Court judge gave Orange County Assessor Webster J. Guillory one week to decide if he will ask an appeals court to block a ruling invalidating the county’s method of assessing property, which is used throughout the state.

Judge John M. Watson urged Guillory’s attorney, Robert D. Luskin, to decide quickly so the case can be considered by the state’s 4th District Court of Appeal. Otherwise, Watson will begin the next phase in Superior Court, which will determine whether his ruling, issued in December, should apply to a broad class of affected taxpayers.

There is no reason to spend time and energy arguing over which taxpayers the decision should cover if a higher court invalidates it, the judge said. “I don’t want to inflict that on anybody,” he said.

Luskin, with the Washington law firm Patton Boggs, promised to tell the judge within a week whether Guillory will appeal, which he has been considering since January. Appealing the case would freeze it at the Superior Court level until the appellate court either upholds or overturns Watson’s decision.

Guillory has said he’s inclined to wait to appeal the entire case until after Watson rules on the class-action issue.

“If the case is going to be appealed, we need the whole case appealed so we can get all of the issues settled,” he said.

If Watson’s ruling is upheld, it would apply to every county in the state. In Orange County, taxing agencies would have to refund $285 million in excess property taxes paid from 1998 to 2001, Orange County Auditor-Controller David E. Sundstrom estimated. Statewide, the loss could go as high as $4 billion, he said.

Watson’s December ruling--in which he found that some Orange County property assessments violated Proposition 13, the landmark tax reform measure passed by California voters in 1978--sent shock waves throughout the state. The judge ruled that Guillory, following a practice used statewide, illegally raised the assessed value of attorney Robert Pool’s Seal Beach home by more than the 2%-a-year limit set by Proposition 13.

County attorneys defended the practice, used after properties have dropped in value and had their assessments lowered. When the values rebound, the new assessments routinely exceed the 2% limit, they said--a method called recapturing.

Guillory has two options in the controversial case. One is to file what is called an extraordinary writ with the 4th District Court of Appeal, asking justices to overrule Watson’s decision so far, or wait until Watson rules on whether to expand the case to class-action status and then appeal.

Watson’s ruling was the first court test of the method anywhere in California. “As your honor knows, your ruling is a novel one,” Luskin said Tuesday, noting that every county uses the practice.

“I see my ruling as a novel one because it’s the only one,” Watson said. “No matter what I decided, it would have been novel.”

In January, the Board of Supervisors sided with the judge’s interpretation of Proposition 13 and denounced the recapturing practice, but gave Guillory the authority to hire his own attorney to pursue an appeal. The board also ordered Guillory, Treasurer-Tax Collector John M.W. Moorlach and Sundstrom to notify taxpayers whose property assessments increased more than 2% in the past four years that they might be affected by Watson’s ruling--notification that county attorneys said Tuesday hasn’t been done.

Moorlach, who originally was sued with Guillory and the county, was brought back into the case Tuesday with Watson’s approval. Moorlach said he hasn’t been able to notify taxpayers of the ruling’s impact because Guillory hasn’t identified them.

For the second time in a court hearing, Watson indicated Tuesday that he may include any taxpayer who received an excessive assessment, not merely those who appealed their tax bills. He said he has heard anecdotally that some taxpayers were told by county employees not to bother filing appeals--advice they trusted even though it erroneously robbed them of their rights.

“I have no evidence that it did [happen, but] it’s possible there’s a real motive for people to say, ‘You don’t qualify,’ just lie to keep the number of claims down,” Watson said.

Supervisor Todd Spitzer said board members were told in January that it would take about six weeks to prepare a list of taxpayers whose assessments rose above 2% in a year for reasons other than sales or new construction. The board expects those taxpayers to be notified, he said.

But Guillory said Tuesday that by law, he cannot notify taxpayers of potential refunds. Sundstrom said Guillory is preparing a list of properties whose assessments rose more than 2% a year, and then Sundstrom will determine the amount of taxes potentially overpaid. Also, the law requires refund notifications to be sent to whoever paid the tax, not necessarily the owner of record, Sundstrom said. That’s where Moorlach comes in, because his office must determine who actually paid the bills.

The process of identifying affected taxpayers could take months, Sundstrom said, and cost the county as much as $2 million.