The City of Chowchilla has filed a law suit with the Madera County Superior Court against Madera County over a tax-sharing agreement made 18 years ago, seeking to recover $4 million in "mistaken" payments.
According to attorney Matt Fletcher of McCormick Barstow of Fresno, representing the county, it was in the mid 1990s that the City of Chowchilla proposed legislation that would enable the city to annex county property that the then Chowchilla State Women's Prison sat on. The result was an "island annexation" of 1,280-acres for the purpose of increasing the population of Chowchilla, thus increasing the amount of money the city would receive from the state's allotment of gasoline tax used by cities and counties for road repair. In a June 24 letter to county representatives summarizing the situation, Fletcher said that under the tax sharing agreement, Chowchilla has been paying the county 52 ½ % of vehicle license fees attributable to the prison population, which it has done since 1997.
Fletcher further explained that Chowchilla City Administrator Mark Lewis has a different interpretation of the tax-sharing agreement.
"The city alleges that they "discovered" in or about September 2013 that the tax-sharing agreement did not require Chowchilla to pay such portions of its Vehicle License Fees," wrote Fletcher. "The city contends that it has been mistakenly paying such fees to the Madera County and by this action, seeks to recover 'mistaken' payments made to the county between 1997 and 2013 totaling approximately $4 million."
Fletcher said that contrary to the Chowchilla city administrator's newfound interpretation, the city council of Chowchilla previously approved an official resolution on Feb. 26, 2007, which expressly set forth the city's understanding of its obligations under the tax-sharing agreement, including its obligation to pay 52.5% of vehicle license fees to the county, that the city administrator now contends was 'mistaken.'
"The language and intent of the tax-sharing agreement is clear the vehicle license fees were to be shared - 52 ½ % to the county, 47 ½ % to the city," said Fletcher. "The city has paid this money to the County since 1997, and ratified this agreement via resolution in 2007. This lawsuit has no merit and the County of Madera will answer accordingly."
Lewis contends the Vehicle License Fees were never part of the agreement between the city and the county.
He says that in 2007, the city, under another administrator, continued the misunderstanding that the agrement included the license fees.
Lewis said the original agreement only addressed gas taxes and no amendments were ever made to the original agreement.
"The city was under the misconception that vehicle license fees were included in the original agreement ... and they were not," Lewis said. "But the county was convinced they were and convinced the city that they were ... We're just here to do the best we can for our small town. Technically, those fees (VCF) were not included in the original agreement. Words matter - an agreement is what it says - not what you want it to say or think it is."
The city is being represented by Meyers Nave, of Oakland, one of the largest law firms in California that represents cities.
Eric Fleming Madera County Chief Administrative Officer, calls the suit "creative" on the part of Chowchilla.
"I can appreciate Mr. Lewis' creative efforts to generate new revenues for Chowchilla but I don't appreciate that he is trying to do so by taking it from the county's limited existing revenues," said Fleming in a prepared statement. "He is simply trying to get us on a technicality and at the end of the day, the county will prevail and this suit will end up being a waste of taxpayer dollars. The only people that stand to benefit are the attorneys."
No hearing date has been set by the court at this time.