Refund Checks Start to Arrive

More than $9.6 million in property tax refund checks should arrive in the mail starting today for nearly 35,000 Huntington Beach property owners.

The refunds stem from a court case that found the city had illegally charged a property tax from July 1, 1997, through June 30, 2001, to fund city employee retirement benefits.

The first batch of refunds represents 74% of the 46,815 claims filed by taxpayers. The city has set an appeals process for residents who were denied or filed duplicate claims.

The refunds, which the city initially estimated could cost $27 million, end a chapter in city history that stirred taxpayer emotions, Mayor Cathy Green said.

“Now everybody is getting their money back,” Green said. “But many have told me they expected far more and there’s nothing the City Council can do about that.

“They wanted to be paid back immediately, but the city had to get bonds approved to pay this back.”

Property taxes were increased to pay for city employee retirement benefits that were approved by voters in 1966 and 1978.

A lawsuit brought by resident Chuck Scheid and filed by the Howard Jarvis Taxpayers Assn. claimed the tax increase violated provisions of Proposition 13, the 1978 voter initiative that includes limiting the tax to 1% of a property’s assessed value.

Scheid said Friday he was pleased with the delivery of the refunds. He said he hopes to establish a nonprofit organization with seed money from those who receive refunds. The organization would monitor City Council decisions and challenge questionable actions with public interest lawsuits, he said.

“I may make that suggestion at Monday’s [televised] City Council meeting,” Scheid said.

He said he was bothered that the city may have collected as much as $27 million illegally, yet is paying out less than $10 million because not all property owners claimed refunds. “Who’s to stop them from doing something like this in the future?” he said.

Last month, the city sold $12.5 million in bonds, which will mature over 15 years, to cover the refunds. The cost to repay the bonds is $16.4 million, with an annual debt of at least $1.1 million, the city said.

The retirement tax represented less than 5% of a property owner’s tax bill.

The refund checks equal about $49 for each $100,000 of assessed property value during those years that the retirement tax was paid.