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<br />6.1F <br />Page 1 . <br /> <br />REPORT <br /> <br /> <br />January 12, 2009 <br /> <br />SUBJECT <br />Property Tax Administration Fee Dispute Tolling Agreement with County <br /> <br />RECOMMENDATION <br />Approve an agreement with the County of San Mateo to extend the statute of limitations <br />for the City to file suit against the County to recover excess property tax administration <br />fees. <br /> <br />BACKGROUND <br />In the 2003-04 and the 2004-05 fiscal years, the State Legislature diverted certain sales <br />tax and vehicle license fee revenues from cities, and passed legislation intended to <br />_enable the cities to recover these fees from counties. Subsequently, in Fiscal Year <br />2006-07, the County of San Mateo implemented a new method for charging each city its <br />respective Property Tax Administration Fee (PTAF) which deprived cities of the <br />opportunity to recover funds diverted by the State legislation. <br /> <br />Similar deductions are being made by most counties in the State. There are currently <br />lawsuits proceeding against the County of Los Angeles and the County of Fresno <br />challenging this practice. Lawsuits against other counties are likely to be filed. <br /> <br />This tolling agreement WfjUlCfQiVEfltn~.-city l!i1itftne-County time to wait and see how the <br />other lawsuits around the state are resolved - in particular, to see whether there is a <br />decision by a court of appeal. In this way, the City and the County could avoid costly <br />litigation. - <br /> <br />Special counsel to Peninsula cities, including Redwood City, has negotiated a tolling <br />agreement with the County of San Mateo to suspend the City's claims against the <br />County to recover the lost PT AF funds. The County implemented the PT AF in the <br />2006-07 fiscal year. The amount of the County's deduction from Redwood City In that <br />fiscal year was approximately $51,000. The City will continue to incur a substantially <br />similar PTAF loss in each succeeding fiscal year thereafter. - <br /> <br />This tolling agreement between the County of San Mateo and the City will freeze the <br />City's claims as they exist at the time of the execution of the agreement until July 1, <br />2012 or until one party terminates it with 45 days' notice. By July 1, 2012, it is expected <br />that there will be direction from the courts on this issue. Meanwhile. the City can <br /> <br />1 <br />