Santa Cruz County has answered Scotts Valley’s lawsuit over property taxes by countersuing the city, claiming the city’s suit breached a redevelopment agreement between the governments under which the city would not cause the county any financial burden.
The dueling suits started in June about the way county Auditor-Controller Mary Jo Walker calculates the city’s share of property taxes. Each of the county’s other cities gets a 7 percent slice of the taxes paid in that city, but Scotts Valley’s portion is reduced by the amount of taxes collected by its Redevelopment Agency. The other cities also have redevelopment agencies.
Over the past seven years, the amount withheld totals $2.65 million, the city’s suit said. In future years, the city will lose about $600,000 a year under the arrangement. That’s not pocket change, Mayor Dene Bustichi said.
“That would fix a lot of the city’s woes,” he said.
Bustichi said the city sued only as a last resort after the county refused a request to have the state decide the matter. To do so, the city wanted both sides to sign a “tolling agreement” suspending the statute of limitations so the city would preserve the right to include 2000-01 taxes in the dispute.
“We talked to two county supervisors, and they seemed to be in favor,” he said. “After it was referred to lawyers, the county wouldn’t agree to it.”
The “cross-complaint,” filed in Santa Cruz County Superior Court, cited a 1990 agreement for the city redevelopment agency to do the following:
- Provide sufficient funds for a future library.
- Include in the city’s General Plan within 18 months enough affordable housing to meet the agency’s legal obligations.
- Build a 17-acre park at Skypark.
- Agree that the county “would not suffer any financial detriment of any type or any amount” because of the city’s redevelopment plan.
The county contends that the city violated all four provisions. The cross-complaint fails to note, however, that the county, not the city, decided how much money to set aside for the library each year, and the 33-acre Skypark park has been open since the late 1990s. Also, the county has waited until now, 15 years after the affordable housing deadline, to raise the issue.
Bustichi said he finds the issues in the cross-complaint irrelevant to the tax-allocation question.
“It’s too bad we’re at this point,” he said. “We didn’t want to sue. All we wanted was the tolling agreement so there could be a determination about (Walker’s) interpretation of the law.”
“I can’t figure why they wouldn’t do that unless they thought they were at risk (of losing),” he added. “It’s a total waste of money for both sides. Now, we’ll get the same thing, except instead of the state, some judge will decide.”
Under California law, property taxes are collected by each county, which uses a formula to allocate them to the state, the county, cities and other county government entities.
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