To all of our DPBA members participating in the 2009 Possessory Interest Tax (PIT) appeals:
You most likely have recently received a notice of a PIT appeal hearing, coming up in October. As usual, it is unnecessary for you take any action and indeed, you can safely ignore this notice.
From this point on, this email explains a really complicated subject, where we stand on the 2009 appeals process, including feedback we've received so far from our representatives DePasquale, Kelley and Company (D K & Co). Then we explain what's ahead.
First, we need to step back one year. You may recall that for the 2008 PIT appeals, heard last year, the findings of fact were favorable in that there was a 30% reduction in the amount of the possessory interest tax assessed on individual boaters. The news was good as the Appeals Board's blanket adjustment translated into 30% lower tax bills starting in 2008 for ALL Dana Point boaters. However, the news was also not good, as our appeals themselves were otherwise summarily rejected. As discussed at a DPBA general meeting last summer by Sean Kelley, a principle with D K & Co, there was no appeal alternative left for boaters as a group, except via an expensive and doubtful legal challenge to the tax itself. D K & Co recommended against this course of action; the general membership agreed and this has been DPBA leadership's position since then.
We need to add that DPBA has never maintained that the PIT tax itself was illegal. What we've maintained from the beginning is that Dana Point boaters are being DOUBLE TAXED. This double tax resulted from changes in the structure of contracts between The County and its marina operators. These changes went into effect in 2005 and since then the PIT tax bill has no longer been paid out of the aggregated slip and dry storage rents. To do this would somehow be illegal in the opinion of outgoing County Tax Collector Chriss Street. Frankly DPBA has always found this to be a very strange ruling, especially in light of the fact that this was what was done each year before 2005. It seems to us like a gross waste of taxpayers' money to send out 3000 tax bills every year for what had been before handled by a simple journal entry. But sadly bad government did prevail, and per Street's policy, Dana Point boaters have been found responsible for directly paying PIT bills beginning in tax year 2005. The trouble is, our slip and dry storage rents have not been reduced accordingly. Rents were actually increased in 2005, 2006, 2007 and 2008. Hence we are paying the same tax twice!
Of course there's more background to this story. In 2008 Street "discovered" that the tax had not been paid for the past three years. Why it took him 3 years to make this discovery is another question we'll skip, at least for now. But anyway, Street directed his staff to recapture the "lost" revenue (lost only in sense the revenue had not been posted from the Tidelands Trust into the County's general fund) and this triggered him to send out a total of approximately 9,000 "back" tax bills (3 years, 3000 boats) mailed individually to every Dana Point boater of record for tax years 2005, 2006 and 2007.
Due to boater outrage and DPBA insistence, the Orange County Board of Supervisors saw the obvious injustice in this maneuver (also the dubious legal standing of a process which created backdated tax bills) and paid out $836K to cover those 3 back years. So then Street sent out 9000 "adjusted" tax bills to negate his demand for payment. It's obvious that preparing and mailing approximately 18,000 tax bills cost County taxpayers plenty. But at this point at least we boaters were square on PIT through the 2007 tax year.
Then, for the 2008 tax year, D K & Co represented several hundred Dana Point boaters in appealing their 2008 tax bills. We boaters were granted a 60% reduction in our 2008 assessments and our appeal process triggered the 30% assessment reduction already discussed. This brings us back around (finally) to our discussion of the 2009 tax year appeals where this email started off.
So where do we go from here?
1. Right now D K & Co is investigating to determine the standing of the October appeal calendar and treatment of the 2009 appeals filed in behalf of DPBA members. If all is in order, as D K & Co suspects it is, then the appeal process is effectively over for us as a group.
Regardless of where this matter stands, Dana Point boaters should plan to pay their 2010 PIT bills by the date they come due in September.
2. DPBA is continuing to work on this issue by seeking adjustment in slip and dry storage rates. As you may recall from previous Boater Blasts, DPBA has met with the County CEO and has been able to get a special task force formed which is meeting on slip rates. DPBA members and leaders are participating of course and the next meeting is scheduled on August 11th. Note that PIT is just one of the 800 pound gorillas in the center of the room.
We should add the Chriss Street leaves office later this year. It may of course be possible (one can hope!) that the opportunity to save the taxpayer money being wasted each year by sending out 3,000 tax bills will not be overlooked by Street's successor.
3. DPBA is also seeking reimbursement from the County for Dana Point boaters' double PIT payments for tax years 2008, 2009 and 2010. So far the response we've gotten is that this would be "illegal" payout from the Tidelands Trust. We think otherwise and will continue to pursue this.
Here's where you can help! Please go to the contacts list on the DPBA website (
Click Here) and reach out to each of the County Government individuals listed. Please tell them that PIT is not wrong in itself. What's wrong is that it is being paid twice by Dana Point boaters. This double tax needs to cease and the double taxes already paid need to be refunded!
That's it for now,
Rodger Beard
President
The Dana Point Boaters Association
