A final settlement has been reached in a legal challenge presented by the City of Cerritos – leading a consortium of 47 local agencies ­– against the County of Los Angeles regarding the charging of property tax administration fees.

Cerritos filed suit on behalf of the consortium back in the summer of 2008. Last November, the California Supreme Court ruled that Los Angeles County wrongly withheld millions in property tax administration fees.

In March 2013 and in anticipation of this ruling, Los Angeles County distributed approximately $32.2 million to the agencies, including a payment of $823,005 to the City of Cerritos. The payment was for amounts related to administrative fees charged from fiscal years 2006-2007 through 2011-2012. Under the terms of the settlement, the County of Los Angeles will provide the City of Cerritos with an additional payment of $18,252. Los Angeles County will also reimburse Cerritos for legal fees in the amount of $230,000 which the City will remit proportionately to the other agencies that participated in the lawsuit.

The issue involved the calculation methodology for fees levied by the County of Los Angeles in the collection and distribution of property tax revenue. In 2004, the California legislature adopted SB 1096 to implement a Vehicle License Fee (VLF) swap, diverting VLF from cities and counties in exchange for additional property tax. The bill also implemented a transaction known as the “triple-flip,” which reduced local sales tax receipts, increased local property tax and backfilled state funds to the schools. These measures were intended to balance the state budget with no negative effect on cities. However, the cities alleged that Los Angeles County’s administrative charges were based upon erroneous calculations of transfers resulting from the VLF swap and the triple-flip, resulting in overcharges to cities and redevelopment agencies.

“The City of Cerritos is pleased that a just and fair settlement has been reached for the benefit and compensation of all cities involved,” remarked Cerritos Mayor Bruce W. Barrows.