HomeMy WebLinkAboutItem No. 5AGENDA COVER SHEET
MEETING OF
City Council Redevelopment gency E-1 Other
DEPARTMENT:
CONSENT:
E-1 APPEAL
BUSINESS:
RESOLUTION: F7 ORDINANCES F7 PUBLIC HEARING
ATTACHMENTS:
E] Report emailed to Clerk
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FOLLOW UP DIRECTION:
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Submitted by: Date:
Approved by:
Department Head: Date:
Finance Director: Date:
City Manager: Dated
REPORT TO CITY COUNCIL
TO: HONORABLE MAYOR
AND MEMBERS OF THE CITY COUNCIL
FROM: GRANT YATES
CITY MANAGER
DATE: APRIL 9, 2013
SUBJECT: SETTLEMENT AND RELEASE AGREEMENT WITH COUNTY OF
RIVERSIDE
Recommendation
It is recommended that the City Council approve the Settlement and Release
Agreement with the County of Riverside and authorize the City Manager to execute the
Agreement.
Background
On November 19, 2012, in City of Alhambra v. County of Los Angeles, the California
Supreme Court held that the County of Los Angeles had overcharged cities in Los
Angeles County for property tax administration fees ( "PTAF ").
The County of Riverside used the same method as the County of Los Angeles to
calculate the PTAF thereby overcharging the City of Lake Elsinore and other cities in
Riverside County.
On March 8, 2013, the City of Lake Elsinore submitted a claim to the County of
Riverside seeking a refund of the overcharged PTAF.
Discussion
Following submittal of the claim, the County of Riverside, through County Counsel
Pamela Walls, submitted a proposal to settle the overcharges. The basic terms of the
settlement provide that the County will pay the City a total of $176,856.00 in three equal
annual installments. The County of Riverside has agreed to make the first installment in
April 2013.
AGENDA ITEM NO. 5
Page 1 of 12
Approval of Settlement and Release Agreement
April 9, 2013
Page 2
City staff has confirmed with the City's financial consultant, HDL, that this accurately
represents the amount of the PTAF overcharges for Fiscal Years 2009 -10, 2010 -11 and
2011 -12. The County has discontinued its practice leading to the overcharges in the
current fiscal year.
The attached Settlement and Release Agreement has been prepared and is attached
for the City Council's consideration and approval.
Fiscal Impact
The City will receive three annual payments of $58,952.00 beginning April 2013 for a
total payout of $176,856.00.
Prepared by: Barbara Leibold
City Attorney
Approved by: Grant Yates
City Manager
Attachments:
1. Settlement and Release Agreement
Page 2 of 12
SETTLEMENT AND RELEASE AGREEMENT
THIS SETTLEMENT AND RELEASE AGREEMENT ( "Agreement ") is entered into
as of April , 2013 (the "Effective Date "), by and among the County of Riverside, a
political subdivision of the State of California (referred to herein as "County "), and City of Lake
Elsinore (referred to herein as "City "). County and City are sometimes referred to individually
as "Party" and collectively as "Parties."
RECITALS
A. On March 11, 2013, City presented a governmental claim ( "Claim "), requesting
compensation for Property Tax Administrative Fees (PTAF) withheld by County, a copy of
which is attached hereto as "Exhibit A."
B. In December 2012, the Riverside County Auditor - Controller made allocations
consistent with the California Supreme Court's decision in the City ofAlhanzbra v. County of Los
Angeles case.
C. County disputes the amount that City claims that it is owed by the County with
respect to the PTAF allocations.
D. County and City now desire to fully and finally settle and resolve any and all
rights, claims, counterclaims, disputes, causes of action, demands for just compensation, and
alleged claims which currently exist, or may exist in the future, with respect to the PTAF
allocations.
E. In consideration of the settlement of this matter and a mutual release of all claims,
County and City have agreed upon terns and conditions for settlement as more fully set forth
herein.
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NOW, THEREFORE, in consideration of the above Recitals, which are incorporated into
this Agreement, and of the mutual promises set forth herein, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, County and City
hereby agree as follows:
Payment. The County shall cause the sum of one hundred seventy -six thousand
eight hundred fifty -six dollars and zero cents ($176,856.00) to be paid to City in three (3) equal
annual installments, for PTAF allocations from Fiscal Year 2009 -2010, Fiscal Year 2010 -2011,
and Fiscal Year 2011 -2012, coin mencing April 2013.
2. No Admission of Liability. The Parties understand, acknowledge and agree that
this Agreement represents a compromise of disputed claims, facts and allegations and shall not
be treated by any Party thereto, as an admission of liability or fault of any other Party hereto for
any purpose whatsoever or as an admission as to claims for any purpose whatsoever or as an
admission as to claims of interest in any manner whatsoever.
3. Each Party to Bear Own Attorneys' Fees and Costs. The Parties expressly
understand, acknowledge and agree to bear their own costs and expenses to date, including
attorneys' fees, incurred in prosecuting and /or defending this matter, in resolving their disputes
herein and in preparing and negotiating this Agreement.
4. Parties Jointly Drafted the Agreement. The Parties understand, acknowledge and
agree that each of the Parties hereto has contributed to the drafting of this Agreement, and no
provision hereof shall be construed against any Party causing this Agreement to be drafted.
5. Mutual Release. The Parties hereby release, and fully and finally and forever
discharge each other, and each of their respective predecessors, successors, heirs, executors,
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administrators, assigns, agents, directors, officers, partners, employees, contractors,
representatives, lawyers, and all persons acting by, through, under, or in concert with them or
any of them of and from any and all manner of actions or causes of action, suits, debts, liens,
liabilities, claims, demands, and damages of any nature whatsoever, known or unknown, fixed or
contingent, existing or as the law may change, including, without limitation, to claims which any
Party now has against the other Party as alleged in or arising out of or which could have been
raised in, based upon, or related to the Claim, whether provided by law at the time of the
execution of this Agreement or which may in the future be provided by law and retroactively
applied to this matter.
6. Waiver of Civil Code Section 1542. The Parties hereby acknowledge that they
have been advised by their attorneys concerning, and are familiar with, the provisions of
California Civil Code section 1542, which provides as follows:
"A general release does not extend to claims which the creditor
does not know or suspect to exist in his or her favor at the time
of executing the release, which if known by him or her must
have materially affected his or her settlement with the debtor."
It is the intention of the Parties that the releases entered into as part of this Agreement
shall be effective as a bar to all actions, causes of action, obligations, costs, expenses, attorney's
fees, damages, losses, claims, liabilities, and demands of any character, nature and kind, known
or unknown, suspected or unsuspected, to be so barred; in furtherance of which intention the
Parties expressly waive any and all right and benefit conferred upon them by the provisions of
Section 1542 of the California Civil Code, except this waiver shall not act to waive any
representations, warranties, indemnities, actions, causes of action, obligations, costs, expenses,
attorney's fees, damages, losses, claims, liabilities, and demands of any character as a result of a
breach of this Agreement. The Parties hereby acknowledge that the foregoing waiver of the
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provisions of Section 1542 of the California Civil Code was bargained for separately. The
Parties expressly agree that the release provisions herein contained shall be given full force and
effect in accordance with each and all of their express terms and provisions, including but not
limited to those terms and provisions relating to unknown or unsuspected claims, demands, and
causes of action herein above specified. The Parties assume the risk of the foregoing and of the
subsequent discovery or understanding of any matter, fact, or law which if now known or
understood would in any respect have affected this Agreement.
Each Party acknowledges that it may have sustained damage, loss, costs or expenses
which are presently unknown and unsuspected, and such damages, loss, costs or expenses which
may have been sustained may give rise to additional damages, loss, costs or expenses in the
future. Each Party also acknowledges that changes in law may occur in the future which may
apply retroactively and may allow such Party to be entitled to further claims for damages, loss,
costs or expenses which are presently unknown and unsuspected. Nevertheless, each Party
hereby acknowledge that this Agreement has been negotiated and agreed upon in light of that
situation, and hereby expressly waive any and all rights which it may have under California Civil
Code Section 1542, or under any statute or common law or equitable principle of similar effect.
7. Attorneys' Fees. In any action to enforce the terms of this Agreement, the
Prevailing Party shall be entitled to recover from the nonprevailing Party all reasonable
attorneys' fees, expert fees, and court costs.
8. Entire Agreement. This Agreement and the documents referenced herein
contain the entire agreement between the Parties. This Agreement shall not be modified in any
manner except by an instrument in writing executed by the Parties.
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9. Severability. If any term or provision of this Agreement shall, to any extent, be
held invalid or unenforceable, the remainder of this Agreement shall not be affected.
10. Waivers. A waiver of a breach or covenant or other provision in this Agreement
shall not be deemed a waiver of any other breach or covenant or provision in this Agreement;
and no waiver shall be valid unless in writing and executed by the waiving party. An extension
of time for performance of any obligation or act shall not be deemed an extension of the time for
performance of any other obligation or act.
11. Construction. The section headings and captions of this Agreement are, and the
arrangement of this instrument is, for the sole convenience of the Parties. The section headings,
captions, and arrangement of this instrument do not in any way affect, limit, amplify, or modify
the terms and provisions of this Agreement. The singular form shall include plural, and vice
versa. This Agreement shall not be construed as if it had been prepared by one of the Parties, but
rather as if all Parties have prepared it. Unless otherwise indicated, all references to sections are
to this Agreement. All exhibits referred to in this Agreement are attached to it and incorporated
in it by this reference.
12. Mer. er. All of the terms, provisions, representations, warranties, covenants, and
indemnity obligations of the Parties under this Agreement shall survive the execution and
delivery of this Agreement.
13. Counterparts. This Agreement may be executed in one or more counterparts.
Each counterpart shall be deemed an original and all, taken together, shall constitute one and the
same instrument.
14. No Oblieations to Third Parties. This Agreement is not intended to create any
third -party beneficiaries, and the execution and delivery of this Agreement shall not be deemed
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to confer any rights upon, nor obligate any of the Parties, to any person or entity other than the
Parties. Additionally, no third party may enforce the terms of this Agreement.
15. Successors. This Agreement shall inure to the benefit of and shall be binding
upon the Parties and their respective heirs, successors, and assigns.
16. Governing Law and Venue. This Agreement and any dispute arising hereunder
shall be governed by California law. Each Party consents to the exclusive jurisdiction of the
state and federal courts sitting in the County of Riverside, State of California, in any action on a
claim arising out of, under, or in connection with this Agreement or the transactions
contemplated by this Agreement. EACH PARTY HEREBY ACKNOWLEDGES THAT THE
FOREGOING VENUE PROVISIONS HAVE BEEN CHOSEN AS THE APPROPRIATE AND
CONVENIENT FORUM FOR ANY SUCH ACTION AND WAIVES ANY RIGHT TO
OBJECT TO JURISDICTION ON THE BASIS OF LACK OF PERSONAL JURISDICTION
OR FORUM NON CONVENIENS.
[REMAINDER OF PAGE INTENTIONALLY BLANK; SIGNATURES FOLLOW]
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IN WITNESS WHEREOF, the County and City have executed this Agreement to be
effective on and as of the Effective Date set forth in the preamble of this Agreement.
Date:
Date:
APPROVED AS TO FORM:
Date:
APPROVED AS TO FORM:
COUNTY OF RIVERSIDE
By:
County of Riverside
CITY OF LAKE ELSINORE
By:
Grant Yates
City Manager
OFFICE OF COUNTY COUNSEL
By:
L. ALEXANDRA FONG
Deputy County Counsel
Attorneys for County of Riverside
By:
Barbara Z. Leibold
Attorneys for City
LAP:ay
G:\ Property\ PWALLS \P7'AF \AGMTS \PTAF_SetlAgmt -lake Ekinore.doc
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EXHIBIT A
CLAIM
[TO BE ATTACHED]
Exhibit A
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2.
H
Attachment to City of Lake Elsinore Claim For Damages
(Riverside County Code Chapter 4.04)
Claimant:
Mailing Address:
When did damage or injury occur?
City of Lake Elsinore
City of Lake Elsinore City Hall
130 S. Main Street
Lake Elsinore, CA 92530
Attn: Grant Yates, City Manager
Telephone: (951) 674 -3124
Beginning on or about Fiscal Year 2006/2007 and
continuing.
Where did damage or injury occur? Riverside County.
Describe in detail how damage or injury occurred.
This Claim is being filed with the County for the recovery of fees which have been
improperly charged to the City of Lake Elsinore by the County for the administration of the
property tax system. It is filed only for purposes of stating the amount and nature of the Claim
and by doing so, the City does not waive its exception from the Government Claims Act
provided by Government Code section 905(1).
During fiscal years 2006/2007 to 2012/2013, the County of Riverside has charged the
City property tax administration fees in an amount in excess of that permitted by Revenue and
Taxation Code section 97.75. Specifically, the Office of the Riverside County Auditor -
Controller has included in its calculation of the City's property tax administration charges the ad
valorem property taxes the City received in lieu of the local Bradley Burns Sales and Use Tax
and the Vehicle License Fee pursuant to Rev. & Tax Code sections 97.68 (the "VLF Swap ") and
97.70 (aka, the "Triple Flip "). Section 97.75 provides that no fee shall be charged for this
service for fiscal year 2005/2006, and that thereafter no amount should be charged for
administrative services for the Triple Flip and VLF Swap in excess of the actual cost of
providing the services. By including the Triple Flip and VLF Swap funds in its calculation of the
City's administrative cost share instead of calculation the actual incremental service costs to
administer the Triple Flip and VLF Swap, the County has overcharged the City and violated
applicable state law. The City is informed and believes that the Office of the Riverside County
Auditor - Controller, currently held by Paul Angulo, is responsible for the overcharges.
The City estimates that the overcharges (including accumulated interest) to the City to be
as follows:
Attachment to City of Lake Elsinore lelt to County re claim.doe
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Fiscal Year
Overcharges
Accumulated Interest at 7%
through 1/20/2013
Fiscal Year 2006/2007
$34,708.00
$ 17,379.35
Fiscal Year 2007/2008
$58,186.00
$23,422.88
Fiscal Year 2008/2009
$71,368.00
$22,180.89
Fiscal Year 2009/2010
$52,216.00
$12,876.06
Fiscal Year 2010 /2011
$55,462.00
$8,036.44
Fiscal Year 2011/2012
$64,178.00
$4,492.46
The total overcharges to date, commencing with fiscal year 2006/2007 are $341,118.00.
Accumulated Interest at 7% through 1/20/2013 is $88,388.08 for a total claim of $429,506.08.
The City believes that until the Riverside County Auditor - Controller compiles with the mandate
of Section 91.75, the City will continue to suffer future, annual damages in a similar amount.
This claim is being filed without prejudice as to whether or not a claim is required. Any
action to recover such funds, penalties, and interest would be an unlimited civil cue in an amount
to be determined.
6. Police or paramedics? Not Applicable.
7. Physician/Hospital? Not Applicable.
8• Why do you claim the County is responsible? See Item 5
9. Names of County Employees (and their
Department) involved in injury or damage: See Item 5
10. Witnesses to damage or injury: See Item 5
H. List Damages Incurred: Based on the information presently available to the City, it
is believed that the overcharges are approximately
$34,708.00 for fiscal year 2006/2007; $58,186.00 for fiscal
year 2007/2008; $71,368.00 for fiscal year 2008/2009;
$52,216.00 for fiscal year 2009/2010; $55,462.00 for fiscal
year 2010/2011; and $64,178.00 for fiscal year 2011/2012.
Accumulated interest on the refund due (at 7 %) is
$88,388.08 through January 20, 2013.
Attachment to City of lake Elsinore lets to County re claimAoc
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