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MICHAEL G. COLANTUONO, State Bar No. 143551

MColantuono@CLLAw.us

Exempt from Filing Fees Government Code 6103

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DAVID J. RUDERMAN, State BarNo. 245989

DRuderman@CLLAW.US

JON R. DI CRISTINA, State Bar No. 282278

JdiCristina@CLLAWUS

FILED

COLANTUONO & LEVIN, PC 11364 Pleasant Valley Road 5 Penn Valley, California 95946-9000 Telephone: (530) 432-7357 6 Facsimile: (530) 432-7356
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Attorneys for Petitioners CITY OF CARMEL-BY-THE-SEA, et al.

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SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF MONTEREY

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CITY OF CARMEL-BY-THE-SEA; CITY OF DEL REY OAKS; CITY OF GONZALES; 13 CITY OF GREENFIELD; CITY OF KING CITY; CITY OF MARINA; CITY OF 14 SALINAS; CITY OF SAND CITY; CITY OF SEASIDE; and CITY OF SOLEDAD, Petitioners,
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CASE NO. ~-, g .;;_. Unlimited Jurisdiction

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PETITION FOR WRIT OF MANDATE AND RELATED RELIEF

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COUNTY OF MONTEREY; OFFICE OF THE AUDITOR-CONTROLLER FOR THE COUNTY OF MONTEREY; MICHAEL J. MILLER, in his official capacity as AUDITORCONTROLLER FOR THE COUNTY OF MONTEREY; and DOES 1-10, inclusive, Respondents.

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PETITION FOR WRIT OF MANDATE

117139.3

JURISDICTION AND VENUE

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1. section 1085.

This Court has jurisdiction over this matter under Code of Civil Procedure

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2.

Venue is proper in this Court as all Petitioners are cities located within the County of

Monterey and the acts and events giving rise to the claims occurred in the County of Monterey. However, this lawsuit is subject to transfer of venue to a neutral county under Code of Civil Procedure section 394, subdivision (a), and Petitioners may seek such transfer within a reasonable time.

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PARTIES

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3.

Petitioner CITY OF CARMEL-BY-THE-SEA is and at all times mentioned herein

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was a general law city organized under the laws of the State of California and located in the County of Monterey, California. 4. Petitioner CITY OF DEL REY OAKS is and at all times mentioned herein was a

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general law city organized under the laws of the State of California and located in the County of Monterey, California. 5. Petitioner CITY OF GONZALES is and at all times mentioned herein was a general

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law city organized under the laws of the State of California and located in the County of Monterey, California. 6. Petitioner CITY OF GREENFIELD is and at all times mentioned herein was a

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general law city organized under the laws of the State of California and located in the County of Monterey, California.

7.

Petitioner CITY OF KING CITY is and at all times mentioned herein was a charter

city organized under the laws of the State of California and located in the County of Monterey, California. 8. Petitioner CITY OF MARINA is and at all times mentioned herein was a charter city

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organized under the laws of the State of California and located in the County of Monterey, California.

PETITION FOR WRIT OF MANDATE

117l39.3

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Petitioner CITY OF SALINAS is and at all times mentioned herein was a charter

city organized under the laws of the State of California and located in the County of Monterey,

California.
10. Petitioner CITY OF SAND CITY is and at all times mentioned herein was a charter

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city organized under the laws of the State of California and located in the County of Monterey, California.
11.

Petitioner CITY OF SEASIDE is and at all times mentioned herein was a general

law city organized under the laws of the State of California and located in the County of Monterey, California. 12. Petitioner CITY OF SOLEDAD is and at all times mentioned herein was a general

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law organized under the laws of the State of California and located in the County of Monterey, California. 13. The Petitioners identified in paragraphs 3 through 12 above, inclusive, are

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collectively referred to herein, unless otherwise specified, as "Petitioners." 14. Respondent COUNTY OF MONTEREY is and at all times mentioned herein was a

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political subdivision of the State of California. 15. Respondent OFFICE OF THE AUDITOR-CONTROLLER FOR THE COUNTY

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OF MONTEREY has and at all times mentioned herein had responsibility for the administration and oversight of the distribution of property taxes to the local government agencies within the County of Monterey entitled to a portion of such property tax proceeds, including Petitioners. 16. Respondent MICHAEL J. MILLER is the Auditor-Controller for the County of

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Monterey. In his capacity as the Auditor-Controller, he has responsibility for the oversight of the distribution of property taxes to the local government agencies within the County of Monterey entitled to a portion of such property tax proceeds, including Petitioners. Respondent Miller is sued herein in his official capacity. 17. Respondents COUNTY OF MONTEREY, OFFICE OF THE AUDITOR-

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CONTROLLER FOR THE COUNTY OF MONTEREY, and MICHAEL J. MILLER are collectively referred to herein, unless otherwise specified, as "Respondents."

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PETITION FOR WRIT OF MANDATE
117139.3

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The true names and capacities of the Respondents identified as DOES 1-1 0,

inclusive, are unknown to Petitioners, and Petitioners will amend this Petition to insert the true names and capacities of those fictitiously named Respondents when they are ascertained. Petitioners are informed and believe, and on that basis allege, that at all times relevant to this action each of the Respondents, including those fictitiously named, was the agent or employee of each of the other Respondent or Respondents, and while acting within the course and scope of such employment or agency, took part in the acts or omissions alleged in this Petition.

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GENERAL ALLEGATIONS

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Respondents, and each of them, are responsible for, among other duties,

administering the distribution of property tax revenues collected based on assessed property within Monterey County. As part of the administration of the property tax system, Respondents calculate and distribute to the various local government agencies within Monterey County each agency's share of the property tax revenue. 20. The fee a county may charge an agency within the county, including Petitioners, for

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administering the property tax system is commonly termed the "property tax administration fee" ("PTAF"). Each agency's annual PTAF is withheld by Respondents, and each ofthem, from the property tax distributions made by Respondents to Petitioners during any given fiscal year.
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Effective Ju1y 1, 2004, Revenue and Taxation Code section 97.68 reduced the

Bradley-Bums Sales and Use Tax rate paid to cities and counties by a quarter cent, which the State of California retains to repay State-issued economic recovery bonds. Section 97.68 ofthe Revenue and Taxation Code provides that, in lieu of the proceeds of the quarter-cent sales tax, cities and counties receive property taxes that otherwise would have been allocated to the county's Educational Revenue Augmentation Fund ("ERAF") for the benefit of schools and, ultimately, the State which bears constitutional responsibility to fund public education. This revenue swap, known commonly as the "Triple Flip," was adopted as a temporary measure to fund repayment of the economic recovery bonds.

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PETITION FOR WRJT OF MANDATE

117139.3

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Effective July 1, 2004, Revenue and Taxation Code section 97.70 reduced the amount

of vehicle license fees ("VLF") paid to cities and counties from 2 percent to 0.65 percent of a vehicle's assessed value. Section 97.70 of the Revenue and Taxation Code provides that each city and county shall receive in-lieu payments of property taxes equal to the lost VLF. This substitution is commonly known as "the VLF Swap." The VLF Swap is a permanent feature of the state-local finance relationship because it has no legislatively provided sunset date. 23. Under sections 97.68 and 97.70 ofthe Revenue and Taxation Code, Respondents have

a duty to annually allocate and distribute to the twelve cities within Monterey County, including Petitioners, the appropriate in-lieu payments from property tax revenues to equal the revenue each city loses as a result of the Triple Flip and the VLF Swap. 24. Revenue and Taxation Code section 97.75 mandates that counties may not charge for

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services provided under sections 97.68 and 97.70 of the Revenue and Taxation Code for the 20042005 and 2005-2006 fiscal years. Section 97.75 of the Revenue and Taxation Code further mandates that, though counties may charge for such services beginning in the
200~2007

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fiscal year, "the fee,

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charge, or other levy shall not exceed the actual cost of providing these services." 25. Petitioners are informed and believe, and on that basis allege, that beginning in or

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about fiscal year 200~2007 and continuing until December 2012, Respondents, and each of them, charged Petitioners fees in excess ofthose permitted by Revenue and Taxation Code section 97.75. In particular, Petitioners are informed and believe, and on that basis allege, that Respondents charged Petitioners more than the actual, incremental costs associated with Respondents' administration of the in-lieu payments for the VLF Swap and Triple Flip. Instead, Respondents charged Petitioners a share of PTAF based on the increased distribution of property tax proceeds due to the Triple Flip and the VLF Swap. Petitioners are informed and believe, and on that basis allege, that the PTAF actually charged to Petitioners and retained by Respondents, and each of them, greatly exceeds that permitted by Revenue and Taxation Code section 97.75 and that the net result ofthis illegal act has been to transfer PTAF charges from Respondent County of Monterey to the twelve cities within it, including Petitioners, as to which the amount in issue shall be proved at trial.

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PETITION FOR WRIT OF MANDATE
117139.3

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On November 19, 2012, the California Supreme Court entered its decision in City of

Alhambra v. County of Los Angeles (2012) 55 Cal.4th 707 (petition for rehearing denied and
remittitur issued Jan. 16,2013, No. S185457), which affirmed the decision ofthe Court of Appeal that Revenue and Taxation Code sections 95.3 and 97.75 prohibit Los Angeles County's method of calculating the amount of PTAF as related to the Triple Flip and VLF swap. Upon information and belief, Los Angeles County's method of calculating the amount ofPTAF is the same as Respondents' method of calculating the amount ofPTAF beginning in or about fiscal year 2006-2007 and continuing until December 2012, and for the reasons stated in City ofAlhambra v. County of Los

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Angeles, supra, 55 Cal.4th 707, Respondents' method of calculating the amount ofPTAF is contrary
to law. Indeed, upon information and belief, Respondents impliedly concede that their method of calculating the amount of PTAF to withhold violated law because Respondents have since corrected its PTAF withholding in response to the ruling in City ofAlhambra v. County of Los Angeles, supra, 55 Cal.4th 707. 27. Petitioners are informed and believe, and on that basis allege, that the amount of

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PTAF Respondents have wrongfully withheld from property tax revenue distributions to Petitioners is, collectively, approximately $1,900,000, not including prejudgment interest. 28. As to each individual City, each Petitioner has been harmed in an amount according

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to proof, but believed to be no less than the following:

a)
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As to Petitioner City of Carmel-by-the-Sea, $40,764.00; As to Petitioner City of Del Rey Oaks, $11,758.00; As to Petitioner City of Gonzales, $4 7,197 .00; As to Petitioner City of Greenfield, $100,287.00; As to Petitioner City of King City, $67 ,264.00; As to Petitioner City of Marina, $180,030.00; As to Petitioner City of Salinas, $1 ,017,820.00; As to Petitioner City of Sand City, $39,245.00; As to Petitioner City of Seaside, $253,064.00; and As to Petitioner City of Soledad, $ 139,628.00.

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PETITION FOR WRIT OF MANDATE
117139.3

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Petitioners are informed and believe, and on that basis allege, that Respondents do not

intend to refund the PTAF they have withheld in excess of that permitted by Revenue and Taxation Code section 97.7 5. 30. Petitioners have exhausted all available administrative remedies required to be

5 pursued by them. Although Petitioners do not concede that they were required to do so, Petitioners 6 have filed claims with Respondent County of Monterey for damages in the amount ofPTAF 7 wrongfully withheld by Respondent County of Monterey. To date, Respondent County of Monterey 8 has refused to pay or otherwise credit Petitioners for the PTAF wrongfully withheld. 9 10
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a)

Petitioner City of Carmel-by-the-Sea filed its claim on or about February 8, 2013;

b) c) d) e) f) g) h) i) j)

Petitioner City of Del Rey Oaks filed its claim on or about January 29, 2013; Petitioner City of Greenfield filed its claim on or about February 12, 2013; Petitioner City of Gonzales filed its claim on or about February 7, 2013; Petitioner City of King City filed its claim on or about January 8, 2013; Petitioner City of Marina filed its claim on or about January 14, 2013; Petitioner City of Salinas filed its claim on or about February 7, 2 013; Petitioner City of Sand City filed its claim on or about January 16, 2013; Petitioner City of Seaside filed its claim on or about February 8, 2013; and Petitioner City ofSo1edad filed its claim on or about February 7, 2013.

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FIRST CAUSE OF ACTION

Writ of Mandate (Code Civ. Proc., I 085)

(Against all Respondents)
31. 32. Petitioners reallege paragraphs 1 through 30 above as though fully set forth herein. Respondents, and each of them, are under a clear, present duty under Revenue and

Taxation Code section 97.75 to charge Petitioners no more than their proportionate share of the actual, incremental costs to administer the Triple Flip and VLF Swap as distinguished from the costs to operate the property tax system that existed prior to the legislation of these two fiscal devices and 6
PETITION FOR WRJT OF MANDATE
117139_3

that would exist in the absence of those two devices as explained in City ofAlhambra v. County of
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Los Angeles, supra, 55 Ca1.4th 707.

33. Respondents, and each of them, have failed to perform that duty and, in fact, as more

specifically alleged above, have wrongfully charged PTAF to Petitioners in excess of the amounts permitted by Revenue and Taxation Code section 97.75. 34. Petitioners have been harmed by Respondents' failure to comply with their duty in

that Petitioners have had their property tax distributions reduced by more than the law permits. 35. Petitioners are informed and believe, and on that basis allege, that Respondents, and

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each of them, do not intend to refund PTAF withheld from Petitioners in excess ofthat permitted by Revenue and Taxation Code section 97.75. Therefore, unless otherwise directed by this Court, Respondents' violation of Revenue and Taxation Code section 97.75 will continue to harm Petitioners by denying Petitioners the property tax distributions to which they are entitled. 36. Petitioners have no plain, speedy, and adequate remedy in the ordinary course of law,

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other than the relief sought in this Petition. Petitioners are beneficially interested in the issuance of a Writ of Mandate as it is the only method available to obtain judicial review of Respondents' actions in violation oftheir duty under Revenue and Taxation Code section 97.75. 37. Accordingly, Petitioners are entitled to issuance of a Writ of Mandate as specified

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more fully in the prayer below. 38. Additionally, Petitioners are entitled to payment of the PTAF withheld in excess of

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the amount authorized by Revenue and Taxation Code section 97.75 as more fully detailed in paragraph 28 above.

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SECOND CAUSE OF ACTION Damages Under Code of Civil Procedure Section I095
(Against all Respondents) 39. Petitioners reallege paragraphs I through 38 above as though fully set forth herein.

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PETITION FOR WRIT OF MANDATE
117139.3

40.
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Respondents, and each of them, have withheld PTAF from Petitioners' property tax

distributions in excess of the amount authorized by Revenue and Taxation Code section 97.75 and in violation of City ofAlhambra v. County of Los Angeles, supra, 55 Cal. 4th 707. 41. Under Code of Civil Procedure section 1095, Petitioners are entitled to recover the

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amounts wrongfully withheld by Respondents, and each of them, in an amount according to proof, but believed to be no less than the amount specified for Petitioners in paragraph 28 above. 42. Under Civil Code section 3287, Petitioners are entitled to recover prejudgment interest

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on the amounts wrongfully withheld in an amount according to proof pursuant to the legal rate.

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THIRD CAUSE OF ACTION

Declaratory Relief (Against all Respondents) 43. 44. Petitioners reallege paragraphs I through 42 above as though fully set forth herein.

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An actual and present controversy has arisen and now exists between Petitioners, on the

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one hand, and Respondents, on the other. Petitioners contend that the formula Respondents used to calculate the PTAF for Petitioners is contrary to the limitations of Revenue and Taxation Code section 97.75. Respondents, on the other hand, contend that the formula they used to calculate PTAF is correct and that they were entitled to charge Petitioners fees in excess of the actual, incremental costs associated with administering the in-lieu payments for the VLF Swap and the Triple Flip. 45. Petitioners have no plain, speedy, and adequate remedy at law in that, in the absence of

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this Court's declarative and injunctive relief, Petitioners will not receive the property tax distributions to which they are entitled under the law. 46. Respondents' refusal to comply with Revenue and Taxation Code section 97.75

imposes and has created a present hardship on Petitioners in that Petitioners have not received the property tax distributions to which they are entitled, as Respondents have withheld more in PTAF than permitted under the law. The amount Petitioners have been harmed to date is detailed in paragraph 28 above.

PETlTION FOR WRIT OF MANDATE

l 17139.3

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Petitioners desire and are entitled to a judicial declaration that Respondents' method of

calculating the PTAF Petitioners owe for services related to implementing the in-lieu payments for the VLF and Triple Flip swap is contrary to law and violates Revenue and Taxation Code section 97.75 under City ofAlhambra v. County of Los Angeles, supra, 55 Cal.4th 707. 48. Such declaratory relief is necessary and appropriate at this time, inasmuch as

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Petitioners anticipate that Respondents, and each of them, will not refund to Petitioners property tax distribution fees withheld in excess of the limitations imposed by Revenue and Taxation Code section 97.75 under City ofAlhambra v. County ofLos Angeles, supra, 55 Cal.4th 707. 49. Therefore, Petitioners pray for declaratory relief as more particularly described in the

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prayer below.

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PRAYER FOR RELIEF WHEREFORE, Petitioners pray for relief as more fully set forth below: 1. As to the First Cause of Action, the Court issue a peremptory writ of mandate

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directing Respondents, and each ofthem, to: a) Recalculate Petitioners' PTAF for the fiscal years 2006-2007, 2007-2008,

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2008-2009,2009-2010,2010-2011, and 2011-2012 by determining Petitioners' proportionate share of the actual, incremental costs to Respondents to implement the VLF Swap and Triple Flip in-lieu payments excluding costs Respondents have incurred and will incur to operate the basic property tax system that the County bore prior to the adoption of Revenue and Taxation Code sections 97.68 and 97.70 and that the County would bear if those Code sections had never been adopted; and
b)

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Refund to Petitioners the difference between the PTAF actually charged and

the corrected PTAF based on the calculation in subsection (a) above with prejudgment interest according to the legal rate. 2. As to the Second Cause of Action, damages in an amount according to proof for

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Petitioners, plus prejudgment interest under Civil Code section 3287 according to the legal rate. 3. As to the Third Cause of Action, the Court to enter declaratory judgment as follows:

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PETITION FOR WRIT OF MANDATE
117139.3

a)
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A declaration that the method used by Respondents to calculate the PTAF for

Petitioners for the fiscal years 2006-2007, 2007-2008, 2008-2009, 2009-2010, 20 I 0-2011, and 2011-2012 was contrary to the limitation imposed by Revenue and Taxation Code section 97.75 under City ofAlhambra v. County of Los Angeles, supra, 55 Cal.4th 707;
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A declaration that Respondents may not charge fees to Petitioners to

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administer the VLF Swap and Triple Flip in-lieu payments in excess of Petitioners' proportionate share of the actual, incremental costs to Respondents to implement the VLF Swap and Triple Flip inlieu payments, excluding costs Respondents have incurred and will incur to operate the basic property tax system that existed prior to the adoption of Revenue and Taxation Code sections 97.68 and 97.70 and that Respondents would incur if those Code sections had never been adopted; and,

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c)

A declaration that Petitioners are entitled to credit for PTAF withheld by

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Respondents in amounts in excess ofPetitioners' proportionate share of the actual, incremental costs

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to Respondents to implement the VLF Swap and Triple Flip in-lieu payments, excluding costs .....l;;o~ 2 () I 4 Respondents have incurred to operate the property tax system that existed prior to the adoption of

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Revenue and Taxation Code section 97.68 and 97.70 and that County would bear if those Code sections had never been adopted.

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As to all causes of action, attorney fees and cost of suit under Code of Civil

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Procedure section I 021.5 and other applicable law. 5. award. As to all causes of action, such other and further relief as the Court may determine to

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DATED: October 9, 2013

COLANTUONO & LEVIN, PC

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MICHAEL G. COLANTUONO DAVID J. RUDERMAN JON R. DI CRISTINA Attorneys for Petitioners CITY OF CARMEL-BY-THE-SEA. et al.

PETITION FOR WRIT OF MANDATE

117139.3