Companies Claim Property Tax Refunds

Written by Neil Farrell

Neil has been a journalist covering the Estero Bay Area for over 27 years. He’s won numerous journalism awards in several different categories over his career.

November 17, 2023

Three local companies have filed claims against San Luis Obispo County, charging that they were overcharged for their property taxes by SLO County dating back to the 2018-19, with one claim for a whopping $1.11 million.

County Supervisors rejected each of the claims after Auditor-Controller, Treasurer, Tax Collector and Public Administrator, Jim Hamilton recommended they reject the claims.

In separate claims, the Golden State Water Co., PL Landing Corp., and Pacific Gas & Electric (PG&E) all demanded  refunds from the same tax year.

“The basis for this claim,” Hamilton said, “is that the statutory tax rate applied by the County to unitary and operating non-unitary property pursuant to California Revenue and Taxation Code §100(b) is unconstitutional because it exceeds the rate paid by all other property owners in the county.”

GSW, which operates municipal water systems in Los Osos and the SLO Country Club area, “alleges that the tax rate which was charged by the County is in violation of Article XIII, section 19 of the California Constitution,” Hamilton said, “and contrary to the Supreme Court of California’s holding in ITT World Communications, Inc. v. City and County of San Francisco (1985) 37 Cal.3d 859.”

All three companies cite court cases in their claims.

Hamilton said he consulted with the County Counsel’s Office about the claims and they decided to recommend rejections, “because the unitary tax rate (the rate applied to Golden State Water Company) is a statutorily set tax rate and our County is legally obligated to apply it pursuant to Revenue and Taxation Code §100(b). The California Constitution and binding authority from the California Supreme Court and California Court of Appeal prohibits the Auditor-Controller from “declar[ing] a statute unenforceable, or refus[ing] to enforce a statute, on the basis of it being unconstitutional, unless an appellate court has made a determination that such statute is unconstitutional.” 

According to the Tax Justice Network (see: taxjustice.net/2019/11/21/unitary-tax-explained-infographic): “Simply, put a unitary approach requires multinational corporations to contribute tax based on where they employ workers and do business, not where they rent letter-boxes and hide ledgers. That means making sure corporations pay their fair share locally for the wealth created locally by people’s work.”

And, “Under a unitary tax approach, governments treat a multinational corporation as a group made up of all its local branches, instead of treating each local branch as an individual entity separated from the global chain. The profits that the multinational corporation declares as a group are then apportioned to each country where it operates based on how much of its real economic activity took place in that country.”

Hamilton, seeming to acknowledge the claims from the ITT case, said “Here, the California Court of Appeal recently found, in County of Santa Clara v. Superior Court (2023) 87 Cal.App.5th 347, that §100(b) does not violate Article XIII, section 19 of the Constitution, and is not contrary to the holding in ITT World Communications. 

“Thus, the Auditor-Controller cannot and should not refuse to enforce the statute based on a claim of unconstitutionality by Golden State Water Company.”

GSW was only demanding a refund of  $6,229.48, plus attorney fees and interest. 

Another claim filed by PC Landing Corp., which owns and operates an undersea cable landing facility in Grover Beach (one of three in SLO County), asked for $1,576.35 and it too was rejected for the same reasons. Ironically, a typo in the claim — making reference to “Alameda County” instead of “San Luis Obispo County” — may be an indication of how these filings are being done.

“Note that the reference to Alameda County,” Hamilton said, “is almost certainly a clerical error and the safe course is to treat the claim as referring to the tax rate applied by SLO County.” 

Often with these types of lawsuits, lawyers will take a filing used in another jurisdiction and rework it to fit a new target, in this case, a filing made in Alameda County and reworked to file here. 

The biggest of these three claims was from PG&E, which is by far the largest property tax payer in all of SLO County. 

The claim explains the circumstances surrounding the dispute over taxes charged in the 2018-19 tax year, when PG&E paid over $29.56 million in property taxes — the biggest share of which was for the Diablo Canyon Nuclear Power Plant. 

PG&E paid its taxes in two installments of over $14 million each.

PG&E demanded a refund of $1,113,310, which they didn’t get.

Should the companies wish to pursue the matter further, they would have to sue in SLO County Superior Court.

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