HomeMy WebLinkAboutItem 3h: Adopt Ordinance No. 2271 Requiring Persons Filing Legal Action Challenging Taxes, Assessments or Fees to Pay Fees as Condition of Judicial ReviewDATE: June 15, 2010
TO: Mayor and City Council
FROM: Stephen P. Deitsch, City Attorney Stt%�
Prepared by: Lisa Mussenden, Chief Deputy City Clerk/Records Manager
SUBJECT: Adoption of Ordinance No. 2271 adding Section 1909 to Chapter 9 of
Article I of the Arcadia Municipal Code requiring persons filing legal action
against the City challenging liability for taxes, assessments or fees to pay
all said taxes, assessments, fees, interest and penalties as a condition
precedent to seeking judicial review.
Recommended Action: Adopt
SUMMARY
BACKGROUND
CONCUR:
Donald Penman
City Manager
STAFF REPORT
Attachment — Ordinance No. 2271 and Staff Report dated March 16, 2010
Office of the City Attorney
At its meeting of March 16, 2010, the City Council introduced Ordinance No. 2271 to
explicitly include the "pay first, litigate later" language suggested in the City of Anaheim
v. Superior Court case. This Ordinance will ensure full collection of back taxes,
assessments and fees, plus any interest and /or penalties that may be due on amounts
owing, prior to and as a condition to the debtor seeking judicial review of liability
regarding payment of such taxes, assessments and fees. A complete copy of the
March 16, 2010 staff report is attached for your information.
When the City Council introduced Ordinance No. 2271 at its March 16, 2010 meeting,
due to an oversight, it was not thereafter brought forward for adoption. Therefore it is
recommended that this Ordinance be adopted at this time.
ORDINANCE NO. 2271
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
ARCADIA, CALIFORNIA ADDING SECTION 1909 TO
CHAPTER 9 OF ARTICLE I OF THE ARCADIA MUNICIPAL
CODE REQUIRING PERSONS FILING LEGAL ACTION
AGAINST THE CITY CHALLENGING LIABILITY FOR TAXES,
ASSESSMENTS OR FEES TO PAY ALL SAID - TAXES,
ASSESSMENTS, FEES, INTEREST AND PENALTIES AS A
CONDITION PRECEDENT TO SEEKING JUDICIAL REVIEW.
THE CITY COUNCIL OF THE CITY OF ARCADIA, CALIFORNIA, DOES ORDAIN
AS FOLLOWS:
SECTION 1. Section 1909 is hereby added to Chapter 9 of Article 1 of the Arcadia
Municipal Code and shall read as follows:
"CHAPTER 9
CLAIMS AGAINST THE CITY
1909. No Enjoining Collection of Taxes or Fees /Payment Required as Condition to
Filing Suit.
Notwithstanding any other provision of this Code, no injunction, writ of mandate or
other legal or equitable process shall issue in any suit, action or proceeding in any court
against the City or an officer thereof, to prevent or enjoin the collection of taxes,
assessments, or fees (whether established by ordinance, resolution or other action of the
City Council) which are sought to be collected from any person by the City pursuant to this
Code; and payment of all said taxes, assessments, fees, plus any interest and penalties,
shall be required as a condition precedent to seeking judicial review of any tax,
assessment or fee liability."
SECTION 2. Severability. If any section, subsection, subdivision, paragraph,
sentence, clause or phrase of this ordinance or any part thereof is for any reason held to
unconstitutional, such decision shall not affect the validity of the remaining portion of this
ordinance or any part thereof. The City Council of the City of Arcadia hereby declares that
it would have passed each section, subsection, subdivision, paragraph, sentence, clause
or phrase thereof, irrespective of the fact that any one or more section, subsection,
subdivision, paragraph, sentence, clause or phrases be declared unconstitutional.
SECTION 3. The City Clerk shall certify to the adoption of this Ordinance and shall
cause a copy to be published in the newspaper published and circulated in the City of
Arcadia within fifteen (15) days of its adoption.
Passed, approved and adopted this day of , 2010.
ATTEST:
City Clerk
APPROVED AS TO FORM:
Stephen P. Deitsch
City Attorney
-
Mayor of the City of Arcadia
SUMMARY
BACKGROUND
MEMORANDUM
Office of the City Clerk
Date: March 16, 2010
TO: Honorable Mayor and City Council cc
FROM: Stephen P. Deitsch, City Attorney d 47
SUBJECT: Ordinance No. 2271 adding Section 1909 to Chapter 9 of Article I of
the Arcadia Municipal Code requiring persons filing legal action
against the City challenging liability for taxes, assessments or fees
to pay all said taxes, assessments, fees, interest and penalties as a
condition precedent to seeking judicial review
Recommended Action: Introduce
The purpose of this Ordinance is to explicitly include "pay first, litigate later"
language suggested in the City of Anaheim v. Superior Court case (described
below). This will ensure full collection of back taxes, assessments and fees, plus
any interest and /or penalties that may be due on amounts owing, prior to and as
a condition to the debtor seeking judicial review of liability regarding payment of
such taxes, assessments and fees. This Ordinance is proposed for inclusion
within that portion of the Code pertaining generally to "claims against the City ".
The intent is that this provision will apply broadly to any taxes, assessments and
fees charged by the City, not just to a single type of tax like in Anaheim case.
This will ensure that essential public services dependent on these funds are not
unnecessarily interrupted.
The City of Arcadia has established various taxes, assessments and fees that
are payable by persons according to the terms of the applicable ordinance,
resolution or other action that enacted them, Typically, these ordinances and
resolutions provide that failure to timely pay will result in interest or penalties
being charged to the person owing the debt. Under certain circumstances, a
person may legally challenge the City's authority to collect a tax, assessment or
fee in a court of competent jurisdiction. The proposed amendment to the
Municipal Code will allow the City to collect all taxes, assessments, fees, plus
any interest and /or penalties from persons alleged to owe these monies as a
condition to filing any legal challenge in Court.
The California Court of Appeal, in the recent case of City of Anaheim v. Superior
Court (Priceline.com) (November 24, 2009) held that if a taxpayer seeks judicial
review of a City's determination that the taxpayer owes a local tax, the taxpayer
is not required to pay all tax, interest and penalties prior to pursuing judicial
review, unless a city's municipal code explicitly includes a "pay first, litigate later"
provision. Although the Anaheim case arose in the context of transient
occupancy tax (hotel tax), the logic of this case can be applied to most, if not all,
local taxes, assessments and fees.
Separate and apart from the proposed Ordinance, staff and the City Attorney
have earlier brought forward to the City Council for approval another ordinance
that imposes this pay now, litigate later requirement with respect to transient
occupancy taxes specifically.
FISCAL IMPACT
The proposed amendment to the Arcadia Municipal Code will have a positive
fiscal impact to the City by ensuring that there will be no unnecessary delay in
the collection of taxes, assessments, fees, plus any interest and /or penalties.
ENVIRONMENTAL ANALYSIS
No environmental review is required because the proposed amendment is not a
project governed by the California Environmental Quality Act.
RECOMMENDATION
That the City Council introduce Ordinance No. 2271 adding Section 1909 to
Chapter 9 of Article I of the Arcadia Municipal Code requiring persons filing legal
action against the City challenging liability for taxes, assessments or fees to pay
all said taxes, assessments, fees, interest and penalties prior to and as a
condition to seeking judicial review.
CONCUR:
Donald Penman
City Manager
Attachment: Ordinance No. 2271