School board sets aside money for potential tax refunds

School board sets aside money for potential tax refunds

Michele Ellson

Alameda’s Board of Education is setting aside $5.8 million to cover refunds the district may have to pay on its Measure H parcel tax.

The board voted 5-0 on Tuesday to repurpose an existing reserve fund it created in 2008 as state funding lurched over a cliff to cover the potential refunds. If needed, the money could cover close to 80 percent of what the district could have to pay out.

“Right now it seems to me – 80 percent seems like a prudent number. And right now we have it to set aside, so it’s not as painful,” Trustee Mike McMahon said.

A state appeals court panel has twice ruled that state law didn’t give the district the authority to charge different tax rates on different types of property, as it did under Measure H. The district could be on the hook for as much as $7.4 million it collected from commercial property owners between 2008 and 2011, though it is asking the state Supreme Court to review the case.

An official with the Alameda County Office of Education wrote the district in January saying the district’s budget would have to show Alameda Unified has the funds to cover any refunds they may be required to pay; the official, district business and advisory services executive director Jeffrey B. Potter, said he expected the district to use its existing reserves for repayment purposes.

“This is a beginning insurance policy for us,” Chief Business Officer Robert Shemwell said. “It’s shoring up so those dollars would not be used for something else while we have this judgment hanging over our heads.”

The district is not facing a legal challenge over its current parcel tax, Measure A, though the West Contra Costa Unified School District is being sued over a similarly structured tax. One of the same plaintiffs in the Measure H case, Ed Hirshberg, sued to try to invalidate the tax after votes approved it, though he lost that case and chose not to appeal.

Under the Measure H tax, the district charged about 30,000 residential property owners – including homeowners and owners of apartment buildings - $120 per parcel, while nearly 800 commercial and industrial parcels were assessed 15 cents per square foot with a cap of $9,500 (a handful of others with 2,000 square feet or less paid the $120 flat rate). All told, the district collected $13.6 million, including about $7.5 million on commercial property.

The board voted 4-1 to ask the California Supreme Court to review the case, and the court has a minimum of 60 days to decide whether to grant the request. If they chose not to hear the case, the Court of Appeal’s decision will stand. The appeals court has asked the trial court judge who handled that case to determine whether refunds are due.

Even if he prevails, the lead plaintiff in the case – George Borikas – won’t be entitled to a refund on taxes he paid on his properties: The district charged him the same $120 per parcel rate that homeowners paid, an amount the appeals court said the district was entitled to charge. But some commercial property owners could be in line for tens of thousands of dollars in refunds, tax data show.

Legacy Partners, which owns much of the Marina Village development, paid $366,035.74 under Measure H in 2009-2010 alone, tax data show; if the court determines refunds are to be paid, the company would be due more than $360,000 of the roughly $2.4 million that could be refunded for that year, its Measure H tax bill reduced to $5,640.

Harsch Investment Realty, which owned Alameda South Shore Center until 2011, would receive a $52,700.42 refund check for 2009-2010, while Alameda Waterfront Investors, which owns a half-dozen properties in the Harbor Bay Business Park, would be due $56,280 for that year.

At least three other property owners would be in line for refunds of $25,000 or more for 2009-2010, tax data show. Wind River, now owned by chip giant Intel, which could see a refund of $37,520 for that year, based on the data. Another $15,723.02 would be due on properties owned or co-owned by Hirshberg, the other plaintiff in the suit.

Separately, the board signed off on a new contract for Alameda’s teachers that could see their pay increase by 5 percent over the next three years. The contract includes a 2.5 percent retroactive raise for this year and a 0.75 percent raise for 2013-2014 plus a 1.25 percent bump; teachers could see another 1.75 percent raise in 2014-2015 as long as the district has the funds to cover it.

Trustee Mike McMahon cast the sole vote against the contract, saying he thinks it’s “fiscally irresponsible” for a school district to give employees permanent raises after receiving state funding cuts. McMahon, who voted against new contracts for Vital and for non-teaching employees, said he’s concerned approval of the new contract will make it harder to win approval of a new parcel tax when Measure A lapses and that the district will ultimately be forced to ask teachers to take pay cuts as a result.

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