Wednesday, July 11, 2012

Uh-Oh, Here Comes The State Again! (Updated)***

Costa Mesa Communication Director Bill Lobdell sent out the following brief, but cryptic, press release a few minutes ago:

The State of California is demanding that Costa Mesa pay an additional $1.4 million in property taxes generated from its redevelopment areas by Thursday or face a 10% penalty and the taking of $1.4 million in sales tax. The City disputes it owes the money. The City Council will hold a special meeting Thursday at 2 p.m. to vote on the matter.

His message included an agenda for the meeting, which will be a Closed Session event, but the results will likely be "reported out" at the end of the meeting.  We have NO idea how long this meeting might last, but hope to attend to hear how the city plans to handle this very important issue.
This appears to be highway robbery on the part of the state, so I'm going to be VERY interested to see how our council handles this.  This very well could mean even MORE legal fees!  Geez!

A commentor asked a very good question - is this a State or County demand?  Here's the scoop on that.

I called the county Auditor-Controller's office and spoke with one of the men listed on the letter.  He tells me that the county - his office - is required by State law (quoted in the letter below) to calculate and demand payment of the debt.  The city is required to pay them by tomorrow, 7/12/12!  As far as I know, and as far as he knows, there is NO grace period.  It's tomorrow, or else!

That "or else" is the State withholding the $1.4 million due from our Sales Tax revenues due to be paid to us on 7/17/12 PLUS a 10% penalty!  Here's an irony for you superstitious folks - the county will notify the State of our non-payment on Friday, the 13th!

If we make the payment that money DOES NOT go to Sacramento, it stays in Orange County and is placed in a trust fund and will subsequently be re-distributed to various agencies within our old Redevelopment Agency area.  That would be The City, the NMUSD, the Costa Mesa Sanitary District, the Mesa Consolidated Water District and any other special district in the old RDA area.   By not making the payment we, The City, suffer big time.  We would NOT be receiving just over $1.5 million in Sales Tax revenues (including the penalty).  Plus, all those other agencies will also suffer.  Sounds like it will be a short meeting tomorrow.

The following images are 1) the demand letter and 2) the calculation of the purported debt by the Auditor-Controller.  Click on each image to enlarge for easier reading.

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Anonymous I'm the Taxman, Yeah I'm the Taxman said...

Another example of Riggy and Mensy "running the city like a(their) business?"

Will they and/or cohorts Bever and Monahan be "suspended" like they did to Julie Folcik?

Or what's another couple mill among friends..

7/11/2012 01:56:00 PM  
Anonymous Make up your mind said...

Is it the State or the County? That letterhead is clearly from the County and the Daily Pilot article lists that County as the requesting party.

7/11/2012 02:26:00 PM  
Anonymous Barry said...

And some of the folks on this blog want the State to continue to control Costa Mesa as a general law City? Really.

We need a Charter and we need one NOW!

7/11/2012 02:34:00 PM  
Anonymous Spin Master said...

Is the Costa Mesa Minister of Information sending out misleading info or his he not paying attention and not doing his job? It looks better for the pro charter crowd to say that the State wants it's money, when it's really the County. I wonder what Riggy will do about getting away from County control?

7/11/2012 02:41:00 PM  
Blogger The Pot Stirrer said...

Make up your mind,

Great question! I called the Auditor-Controller for an explanation. I will add it to the body of the blog entry. Thanks for asking.

7/11/2012 02:56:00 PM  
Anonymous Thanks! said...


Thanks for the diligence on this - great info.

7/11/2012 03:19:00 PM  
Anonymous Wyatt Earp said...

Barry my Santa Ana a charter city or general law city? That's right Barry, lovely Santa Ana is a CHARTER city. How much did the state take from Santa Ana? Right again Barry! The state took $20,000,000 from our neighbor to the north. What do we learn from this example? Charter city or general law city makes no difference, the state will get what it wants. Here ended the lesson.

7/11/2012 03:34:00 PM  
Anonymous holysmokes said...

Jeez Barry.... you really are stupid. If it wasn't for this blog, I would have never realized that people as clueless as you are to how things work are out there.

7/11/2012 03:58:00 PM  
Anonymous Byron de Arakal said...

This comment has been removed by a blog administrator.

7/11/2012 04:17:00 PM  
Anonymous Byron de Arakal said...

What is going is the State's "July True-Up Process" authorized in AB 1484 as part of the redevelopment unwind. It's happening to nearly ever CA city that had a redevelopment agency. See this link:

7/11/2012 04:19:00 PM  
Blogger Gericault said...

I'd like to point out to Barry ,that in the three most recent city bankruptcies, Of Stockton ,San Bernadino
and Mammoth Lakes, two of those are Charter cities.
Mammoth Lakes was unique in that it got into a law suit with a private developer and when the judgement turned against them they filed bankruptcy.
Being a Charter city won't fix anything. It would allow much more latitude to get into the exact same problem Stockton and San Bernadino are now suffering.
Wake up and smell the facts Barry.

7/11/2012 04:41:00 PM  
Anonymous Sam Grady said...

If these properties were city owned, why is there property taxes due? It was my understanding that government agencies do not pay property taxes. However I am not an expert on any of this. Maybe someone in the know will chime in.

7/11/2012 04:59:00 PM  
Anonymous OCGOP Strategy said...

Riggy: "Help me Scott, I'm looking like a nitwit here with this seven figure bill!"

Baugh: "I know! We'll blame it on Bustamante!"

7/11/2012 05:07:00 PM  
Anonymous solution 1 said...

Based on prior experience Jim Righeimer says, "Don't pay what you owe, it takes like forever for them to finally make you pay and always at a discount." "This, afterall is how it works in the real world, paying full bills is for fools and governments."

7/11/2012 05:23:00 PM  
Anonymous untocaesar said...

This is all very confusing. All we can know at this point with certainty is that if it is bad it is Righeimer's fault. If it is good, we should thank the city clerk who is on leave. Let's see it play out and then bestow blame/praise accordingly. Leece gets a pass because she has never done anything in years so not her fault if bad, just other councilmembers. Remember in November!

7/11/2012 05:58:00 PM  
Anonymous Themosticles said...

From the department of finance website...

"property tax distributed to redevelopment agencies in December 2011 or January 2012 should have been subject to distribution through the AB x1 26 mechanism. In part due to confusion about the Supreme Court’s order regarding the changes in deadlines under AB x1 26, Finance believes very few, if any, counties correctly adjusted the June 1 property tax payments to successor agencies to capture the amount of funds owed to taxing entities for the January through June period."

For a long time redevelopment agencies were collecting a share of the property tax in redevelopment zones. The state is now sending that money back to the local school districts and other government agencies that it was being diverted from.

This should not come as a huge surprise to anyone.

7/11/2012 07:41:00 PM  
Anonymous Lies and Damn lies. said...

So many lies and misrepresentations as Colin McCarthy is so "FULL OF IT". Sadly he now wants to bring his lies to another level as a council person. What is really sad is these comments by him in the DP were meant to correct Stevens. MaCarthy should look in the mirror with the lies in his own piece.

I will just address one of the many misrepresentations in Colin's recent article in the town's LOL newspaper.

In the discussion on prevailing wages he asks " Why should we pay more for the same services that Huntington Beach, Irvine and Newport Beach get for less?"

Now the FACTS without Colin's lies.

Newport and Huntington Beach according to the a 2012 update study by the ABC(not a union friendly group) have no exemption to prevailing wages in their charters.

Charter Cities Taking Advantage of
Prevailing Wage Exemptions?
2012 1st EDITION

Huntington Beach
Prevailing Wage Policy The city requires compliance with the state’s prevailing wage law.
Full/partial/no exemption = No exemption

Newport Beach
Prevailing Wage Policy The city requires compliance with the state’s prevailing wage law.
Full/partial/no exemption = No exemption
Notes City of Newport Beach Request for Proposal RFP No. 5-12.

The recent ruling by the state court covers only cities that exempt themselves in their charter.

Costa Mesa has the provision in their charter so they will exempt themselves but the implications by MacCarthy are just false about Newport and Huntington. You would think as a lawyer and council candidate he would want to stay away from lies that make him look bad.

7/11/2012 09:57:00 PM  
Anonymous Dr. Onan said...

"...but the implications by McCarthy are just false about Newport and Huntington. You would think as a lawyer and council candidate he would want to stay away from lies that make him look bad.."

There's a reason they call him COLON.

7/11/2012 10:52:00 PM  
Anonymous Great Fire Department said...

Here is a link to the Fire Proposal. This looks like an AWESOME effort by our Fire Department. The Fire Department stepped up months ago.
2nd Tier 2 @ 50 down from 3 @ 50.
Based on 3 years instead of the highest 1 yr. This really helps in the in the spiking. There's more too. I would like to see the employer share (us tax payers) less.
This has been on the table since March.
Why hasn't this been accepted?

7/11/2012 10:55:00 PM  
Anonymous Marshall Krupp said...

This is disturbing news, particularly in light of the fact that the City was aware or should have been aware of the passage of AB 1484 (2012) and the altering of the redevelopment dissolution laws adopted in 2011 relating to all of California's redevelopment agencies. Most redevelopment agencies throughout California were on pins and needles waiting the outcome of AB 1484 because they knew that its implementation could adversely affect their balanced budgets for Fiscal Year 2012-2013, particularly with the onerous penalties. Many cities took the conservative view and reserved funds for the potential negative consequences of AB 1484. Unfortunately, it appears that the current City Council of the City of Costa Mesa did not even focus on the magnitude of these consequences as a part of its balance budget adoption process and now it is coming back to haunt them. Even if the City disputes the amounts owed to the County, they knew that this was coming and should have reserved funds so that he Fiscal Year 2012-2013 budget would not be unbalanced in the event that they failed in being successful in their dispute. From the outside, it looks like that this is another matter that will go to the legal system to be resolved. These kinds of approaches and strategies are simply too expensive for the City in these times of financial crises. And, here is the worst part of all of this. If the City does not make the required payments, the California Department of Finance will withhold sales and use taxes up to the amounts owed plus penalties. Moreover, if the Department of Finance does not order sales or use tax offsets, the County Auditor Controller can offset property tax of the City. No Charter would have ever protected the City from the consequences of AB 1484. Only the prudent decision-making of the City would have protected the City from the penalties, costs of litigation, and possible depletion of sales or property tax revenue.

Marshall Krupp, Candidate for Costa Mesa City Council

7/12/2012 08:20:00 AM  
Anonymous Mike M said...

So who will they blame this on in their next Daily Pilot column?

7/12/2012 09:11:00 AM  
Anonymous Rigged City said...

The city should have known! Who is accountable for this error in not planning / budgeting for this? Or is this how you run a city, "like a business"?

If anyone, the CEO should be accountable! Will he be placed on admin leave for obviously someone's professional failure?

Costa Mesa continues to be a joke...2 steps backwards instead of forward!

7/12/2012 09:23:00 AM  

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