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HomeMy WebLinkAboutItem 2b: Introduce Ordinance 2271 - Payment of Taxes, Assessments, Fees, Interest & Penalties as Condition of Judicial ReviewTO: Honorable Mayor and City Council FROM: Stephen P. Deitsch, City Attorney 4� ' BACKGROUND MEMORANDUM Office of the City Clerk Date: March 16, 2010 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 SUMMARY 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 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 NAT4-X -2- Mayor of the City of Arcadia