TO: Board of Supervisors
FROM: Tracy A. Schulze - Auditor-Controller
REPORT BY: Brandon Morford - Property Tax Manager
SUBJECT: Authorization for the Auditor-Controller to deny State assessed unitary property tax refund claim for Tax Year 2022-23.
RECOMMENDATION
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Deny two (2) State assessed unitary property tax refund claims for return of 2022-23 taxes paid on Assessor’s Parcel Nos. 799-000-162-000 and 799-000-218-000 in accordance with Revenue and Taxation Code section 100 and Sections 5096 and 5097 (Utility company). (No Fiscal Impact)
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BACKGROUND
The Auditor-Controller’s Office has received property tax refund claims from unitary property owner (Pacific Bell and AT&T Mobility LLC) for paid 2022-23 property taxes. The property owners’ claims state the unitary property tax rate exceeds the rate allowed by the California Constitution and request refunds of $159,379 for taxes paid by Pacific Bell on Assessor’s Parcel No. 799-000-162-000 and $82,395 for taxes paid by A&T Mobility LLC on Assessor’s Parcel No. 799-000-218-000 for a total of $241,774 plus interest.
The claimants have challenged the State requirements and claim they are entitled to a partial refund on the grounds the taxes were erroneously or illegally collected, or illegally assessed or levied and gave the following reasons:
a. The property tax rate applied to Claimant's property value by Revenue and Taxation Code section 100 violates the uniformity clause (Cal. Const. art XIII, sec. 1).
b. The property tax rate applied to Claimant's property value by Revenue and Taxation Code section 100 violates the Equal Protection Clause of the United State Constitution (Section 1 of the Fourteenth Amendment to the United States Constitution.
c. The property tax rate applied to Claimant's property value by Revenue and Taxation Code section 100 is not "comparable" to the tax rate applied to other similarly situation properties, in violation of Cal. Const. art. XIII, sec. 1 and sec. 19 as discussed in Pacific Bell Telephone Company v. County of Placer 111 Cal. App. 5th 634 (2025).
d. Claimant's property is not "assessed in the county, city, and district in which it is situated" as required by Cal. Const. art XIII, sec. 14.
e. The property tax rate applied to compute Claimant's property taxes was in excess of the rate applied in the same year to property in the county assessed by the assessor of County, in violation of Article XIII, section 19 of the California Constitution and IIT World Communications v. City and County of San Francisco, 37 Cal. 3d 859 (1985).
The Auditor-Controller’s Office has followed all the requirements of the Revenue and Taxation Code Section 100 directing the establishment and calculation of the unitary tax rate for tax year 2022-23. The unitary tax rate process has been previously audited by the State Controller’s Office and deemed calculated in compliance with State law. Similar unitary claims have recently been litigated by the claimants in Napa, Ventura, Riverside, Placer, Merced and Santa Clara Counties, resulting in published court opinions rejecting their allegations as grounds for a refund and upholding state law as constitutional. (Pacific Bell Telephone Co. v. County of Ventura, 114 Cal.App.5th 755 (2025); Pacific Bell Telephone Co. v. County of Riverside, 114 Cal.App.5th 717 (2025); Pacific Bell Telephone Co. v. County of Napa, 112 Cal.App.5th 952 (2025); Pacific Bell Telephone Co. v. County of Placer, 111 Cal.App.5th 634 (2025); Pacific Bell Telephone Co. v. County of Merced, 109 Call.App.5th 844 (2025); County of Santa Clara v. Superior Court, 87 Cal.App.5th 347 (2023).)
In consultation with the County Counsel, the Auditor-Controller’s Office has reviewed the claim and audited County practices for unitary taxation. Napa County follows the requirements of Revenue and Taxation Code section 100 for the calculation of unitary tax rate. Therefore, the Auditor-Controller has determined that no refund is allowable to the property owners and requests the Board to authorize the Auditor-Controller’s Office to deny the claim. This is the seventh year of this request.
Requested Action: Authorize the Auditor-Controller to deny the two claims.
FISCAL IMPACT
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Is there a Fiscal Impact? |
No |
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Is it Mandatory or Discretionary? |
Discretionary |
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Discretionary Justification: |
The Board has discretion of accepting or rejecting the claims. |
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Is the general fund affected? |
No |
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Future fiscal impact: |
No future impact at this time. However, if the courts ultimately decide in favor of the refund request, the County would have to process the tax refunds accordingly. |
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Consequences if not approved: |
The County would not be in compliance with Revenue and Taxation Code 100. |
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Additional Information |
Strategic Initiative: Elevate County Service and Workforce Excellence. |
ENVIRONMENTAL IMPACT
ENVIRONMENTAL DETERMINATION: The proposed action is not a project as defined by 14 California Code of Regulations 15378 (State CEQA Guidelines) and therefore CEQA is not applicable.