The California Supreme Court threw a wrench into the Santa Clara County Open Space Authority's plans when it ruled that $56 million in taxes were illegally collected.
In 2001, the county's Open Space Authority established the assessment on property. The money was to be used to purchase open space, much of which is located in South County. But justices Monday said the assessment violated Proposition 218, "The Right to Vote on Taxes Act," passed by voters in 1996.
Prop 218 limited the ability of local governments to impose real property assessments. Five years later, the Open Space Authority imposed the county-wide tax.
Immediately, the taxpayer's association filed a lawsuit charging that the tax was illegal because it did not meet Prop 218's "special benefit" distinction.
"It has been a long haul, seven years," said Doug McNea, president of the Silicon Valley Taxpayer's Association. "From the very beginning, we have felt that it was an illegal tax, as was proven out by the state in ruling that the tax was in violation, an improper use of prop 218."
Now, McNea added the association will be waiting to see what happens with the tax dollars collected.
"It sounds like (the Open Space Authority) is going to offer some resistance, and unfortunately this will have to be sorted out in the courts," he said. "From here on out, the issue is what's to become of the taxes illegally collected."
Patrick Congdon, general manager of the Open Space Authority, said the agency still has a little more than $4 million coming in from a benefit assessment district that was approved in 1994, and cities including Morgan Hill and Gilroy can receive money from this fund to benefit their urban open space and park programs.
"I encourage them to bring forward their programs in those categories for approval," he said. "They would have also been eligible to receive some of the $56 million, but now that may not be available. I'm not sure what is going to happen, we'll just have to wait and see what happens in the courts."
Congdon said Tuesday that organization was not totally surprised by the ruling.
"You have to think about how you are going to deal with something like that, how we going to deal with that decision," he said. "The Court of Appeals will be making a decision on what happens to the money ... Our counsel has no idea how long that will take, whether a few months or up to a year. We've already had some people commenting that the money should be given back and that should happen right away."
McNea said Tuesday that he is "very happy with the ruling."
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