Surf City Refund Claims Due by Jan. 4

Huntington Beach residents have until Jan. 4 to file for court-ordered refunds of property taxes illegally collected by the city to help pay for retirement benefits.

More than 39,000 applications have been filed at the city clerk’s office, officials said.

The city expects to start paying the refunds this summer, after the claims have been validated and bonds have been issued to finance the payouts.

The amount the city will have to repay will not be known until all claims have been verified, said a spokeswoman for the city.

The city was forced to pay the refunds after resident Chuck Scheid challenged its authority to collect the tax, which was in addition to the 1% limit on property tax allowed under Proposition 13.

The proposition allows for exceptions to that limit to pay for city debts approved by voters before the proposition’s passage in 1978. Huntington Beach had been using the tax money above the 1% limit to pay for retirement benefits ever since voters approved the overcharges as part of charter elections in 1966 and 1978.

Scheid argued the city was illegally collecting the overpayments because the money was not going for the programs that the city specified.

His challenge was picked up by the Howard Jarvis Taxpayers Assn., which successfully sued the city.

The state’s 4th District Court of Appeal upheld the Superior Court ruling that said the increased tax was unconstitutional and property owners were entitled to a refund.

The city chose not to appeal that ruling and is now faced with repaying millions of dollars for the years 1997 to 2001.

Refunds for earlier years are prohibited because of the statute of limitations. In anticipation of the court battle, the city stopped collecting the tax in June 2001.

The deadline for the refund applications is the first step toward concluding and resolving this part of the city’s budget woes, said Laurie Payne, a spokeswoman for the city.

In July the city was forced to cut programs and laid off 37 city workers to make up for an $11.5-million shortfall caused by a weak economy and revenue losses.