Size of property tax case unresolved

NEWPORT-MESA -- A property tax case that has major financial

implications for the school district and cities inched closer to becoming

a class-action lawsuit on Tuesday when a judge directed attorneys for

both sides to create guidelines for who should be eligible to sue.

The case revolves around Rob Pool, a property tax lawyer, who sued the

county for raising his property assessment above the 2% limit mandated by

Proposition 13. In December, a Superior Court judge found the county

acted unconstitutionally in trying to recapture lost assessment when a

home loses value and then rebounds.

The Orange County Board of Supervisors has already recommended the

county counsel not appeal the decision. But county assessor Webster

Guillory still has the option to appeal until Feb. 26.

At a Tuesday hearing, Judge John Watson said he wants to see how the

two sides define the group hurt by the recapturing practice before he

decides to expand the case to other plaintiffs, said James Harmon, deputy

county counsel.

Pool and his attorneys will argue that possible plaintiffs, or

“class,” should be defined as broadly as possible under the law. Pool

said the strategy is based on Watson’s remarks that people who had called

the county after being slapped with the same type of assessment were

allegedly told they had no recourse.

“If people were calling the county and asking what to do and being

told by the county, ‘you can’t do anything,’ then it’s not fair,” Pool

said.

The county is still exploring how it will define the eligible class,

Harmon said.

At issue is about $285 million in refunds and a future reduction of

$147 million a year in the tax base for school districts, cities and

other agencies that rely on property taxes, according to a report

recently released by Auditor-Controller David Sundstrom. These numbers

cover a four-year period of recapturing from 1998 to April 2002.

The Newport-Mesa Unified School District could lose as much as $11.5

million this year, though officials say a loss more likely would be near

$4 million. In subsequent years, the district could lose nearly $6

million.

Newport Beach faces a shortfall of $3.4 million the first year and

$1.7 million in subsequent years. Costa Mesa would get off the easiest,

with an estimated $1.5-million loss the first year and $780,000 in

subsequent years.

Pool anticipates that the county will take the opposite tack and make

the class as limited as possible.

“Clearly this is a hot potato for all of these elected politicians. If

they’re too staunch in their positions, the voting public is not going to

be happy and we may be saying adios to Webster Guillory and some of the

others,” Pool said. “But at the same time, I can’t begrudge them that

they have an obligation to protect the county’s public [treasury].”

Watson will hear the case again March 11.