A Gift of Public Funds… to Rich People with Boats

So Moorlach, why wasn’t this action by you and your colleagues not unconstitutional?

Dana Point HarborFolded into the Orange County Budget Resolution for 2008 was the following as item #5: Authorize Auditor-Controller to pay 2003 through 2006 Possessory Interest Tax for Dana Point Harbor boat slip licensees of approximately $850,000 from Fund 108.  This item is related to a matter that was covered in the Los Angeles Times on April 28, 2007 by Christian Berthelsen  regarding the County Assessor’s discovery that Dana Point Boat Slip owners had not been billed for their tax liabilities for their boat slips. Berthelsen reports that Webster Guillory, the county assessor, said the slip assessments just fell through the cracks. When the county took over the leases, the new contracts stated that boaters would now be responsible for paying their own possessory interest taxes. But county officials in charge of the marina neglected to mention that to the assessor’s office until two years later. During that time, he didn’t even know he was supposed to be assessing the slips, he said, and that he undertook the work as soon as he was made aware of it in November.

“In this case, I did not get timely information, so now that I have it I’m just responding to it,” Guillory said. He added there was no way the county treasurer’s office could have known the taxes were going unpaid in previous years, because he hadn’t issued the assessments for them.

Among those people receiving the late notification of taxes due was Supervisor Pat Bates, who indicated at the time the budget was approved that she had paid her slip fees.  But as always, nothing is ever that simple.  In reviewing the Board actions on this matter I found the following in the Board Member Comments from the May 1st meeting.Supervisor Pat Bates

Supervisor Bates – Oral Re:  Recent notice of assessments to boat owners in Dana Point.  (1) Direct staff to identify the systems and/or communications failed and allowed 4 years of taxes to go unpaid when harbor operations changed from leasehold to operating agreements (2) Direct Staff to identify the legal basis of authority for retroactive assessments (3) Directed staff to identify the remedies available to boaters who received notices.  A funny thing happened when I went to review the video from that meeting.  Supervisor Bates did not make ANY comments at that time of the meeting on this or any other subject.

Then I found this in Supervisor Bates’ District Newsletter:

At our May 1st Board of Supervisors meeting, I requested the CEO investigate the Dana Point Harbor possessory interest tax issues and report back on a number of questions.

Boaters with an interest in the use of a boat slip and/or dry storage at Dana Point Harbor had been assessed a property tax known as a “Possessory Interest.”  The County Assessor is required to assess private interests in the use of public property such as the boat slips and dry storage at Dana Point Harbor.  In the transition away from master lessors operating the Harbor, it was not recognized that the boat slips and dry storage would be subject to possessory interest assessments, and they subsequently escaped assessment. 

“Escape assessments” were levied earlier this year by the County Assessor for possessory interests in the boat slips and/or dry storage for 2003 through 2007 (actually 2006) tax years.  Because licensees at Dana Point Harbor were not notified of the possessory interest assessments during those tax years, my Board colleagues and I directed the County to pay the taxes that resulted from the four escape assessment years.  Thus, boaters will not be required to make payment for escape assessments on possessory interests for the 2003 through 2007 (actually 2006) tax years.

I have been unable to find any discussion by the Board of Supervisors at either of the Budget Hearing meetings held on June 12th and 13th.  During the June 26th meeting none of the Board Members other than Bates addressed the matter.  Supervisor Bates commented that she had paid the taxes that she had been billed for and that she opposed the process of separately billing boat owners for the taxes in the future.

The taxes we are talking about range from $70 to $250 a year for each of the four years that had not been billed.  These taxes were billed for within the statutory time required by law and the boat owners were notified in their agreements that they would be separately billed for the taxes. That’s right; the maximum amount these owners of luxury yachts owed was $1,000 in back taxes. Apparently, that is just too much of a burden for some of them.

So here comes Moorlach, Norby, and the rest of the Board of Supervisors to the rescue, slipping an obscure payment of taxes into the budget approval motion, with no open discussion of what was being done by anyone on the Board.  I’m glad that Pat Bates paid her taxes, but I have to wonder how many campaign donors to the Supervisors got their taxes paid by the Orange County taxpayers“gift of public funds?”

Supervisor John MoorlachIt’s kind of funny that this happened so recently.  I seem to recall Supervisor’s Moorlach and Norby talking about the unconstitutionality of such “gifts” just last week when he talked about his request for the Board to repeal the retroactive portion of Deputy Sheriff’s pension increase from 2001. 

What isn’t funny though is the fact that Moorlach has no problem giving a gift of public funds to rich people with boats in Dana Point Harbor. You’ve got to question Supervisor Moorlach’s “principles” in light of his hypocrisy regarding this gift of public funds to pay taxes that rich people knew they were liable for, and can well afford .

I guess we can call this another exciting episode of “Lifestyles of the Rich and Connected in Orange County.”

Hey Moorlach, got ethics?

I doubt it!

Well, the Board caved and begins today to pursue Mooralch’s Folly. What a waste of money. Someone please stop the insanity. At least the Board will get to revisit this on September 18th.

  7 comments for “A Gift of Public Funds… to Rich People with Boats

  1. Andrew Davey
    July 31, 2007 at 12:05 pm

    Ha! So it’s OK for the Supes to reward their benefactors (and in Pat Bates’ case: HERSELF) with tax breaks on their boat slips, but NOT for our hardworking law enforcement officers to get the retirement benefits that they rightfully earned. What bizarro planet do John Moorlach and Chris Norby live on?!

  2. July 31, 2007 at 12:15 pm

    FYI, Bates paid her boat slip taxes, just one of her neighbors.

  3. July 31, 2007 at 12:34 pm

    I’m glad that Pat Bates paid her taxes, but I have to wonder how many campaign donors to the Supervisors got their taxes paid by the Orange County taxpayers“gift of public funds?”

    I think I hear the black helicopters coming for you, Chris.

  4. July 31, 2007 at 12:44 pm

    How was that a gift of public funds, Chris?

    And how is the socioeconomic status of the boat owners relevant to anything?

  5. July 31, 2007 at 12:58 pm

    Public funds were used to pay properly assessed and billed possessory property taxes. How is that NOT a gift of public funds?

    The people mooring their boats in the harbor were informed in their contracts that they would need to pay the taxes separately. They were indeed billed for those taxes late, but within the statutory deadlines. They owed the taxes, they were billed for the taxes, and the taxpayers of OC paid thpse taxes for them.

    And the tax bills were for the most part less than a total of $1,000 per individual boat owner.

    This was a gift. plain and simple. Actually it is even more clear of a gift than a negotiated retroactive increase of pension benefits.

  6. Evening Coffee
    July 31, 2007 at 3:26 pm

    So OC Harbors, Beaches and Parks Commissioner Matt Cunningham doesn’t believe this is a gift of public funds? Perhaps he should be worried about the future status of his bogus appointment to this important position, considering his mendacity regarding negotiated retroactive increase of pension benefits. Something, as usual, he knows nothing about.

  7. August 30, 2007 at 1:11 pm

    I personally found the title of this blog, “A Gift of Public Funds – To Rich People With Boats” to be highly inaccurate regarding the facts of the matter. Also a cheap shot to the mostly middle class working people within the boating community that the Democratic Party is supposed to represent.

    Here, for those really interested, are the facts of matter:

    1. The Dana Point Harbor is owned by the State of California and operated in trust and benefit to the citizens of the County of Orange. But not a dime in public funds goes into the harbor. Indeed, the harbor will be cash flow positive to the tune of 10 million dollars this year.

    Dana Point Harbor has been cash flow positive every year since it opened in 1971. The County of Orange MAKES MONEY on Dana Point Harbor. A LOT OF MONEY. They make this money largely from boaters. Commercial rents, the other source of income, are minor in comparison.

    2. Dana Point Boaters have paid the subject tax (what is called Possessory Interest Tax) each year since these taxes were enacted.

    The tax has been and is still being is paid this way, within monthly rental payments to the County which typically run several hundred dollars for a small boat. These payments have been rising dramatically each year, to the point that the smaller boaters who make up 90% of the boat population in Dana Point Harbor are at risk of being forced out of boating.

    3. Like clock-work, The County got this tax money each year until 4 years ago. But due to an County initiated change in the way that the Harbor is now being operated “on paper” (better said, the way that three private marina operating companies are being paid now) the Dana Point Harbor Department (a County of Orange department) now receives the rents directly rather than via a pass-through process. In some sections of the Harbor it has done this for the past four years. Others only one year. All three marinas are now switched over.

    4. One fact that that has been completely overlooked. As a function of this paperwork change the County was able to create and staff a brand new County Department, The Dana Point Harbor Department. They hired a Director, Assistant Director, several managers and executive assistants, in addition to the outsourced marine operating company staff which continued to function as before. The County has since assumed occupancy of an entire building in the Harbor, replacing a sailing club which previously paid rent for the use of this facility.

    5. The Dana Point Harbor Department refuses to pass along the taxes collected within boaters monthly rent payments into the County general fund. Their usual excuse is “government can’t pay taxes to government”. Actually, their contract with the State of California forbids this.

    But please understand! The County has still got all the money, less of course the percentage they pay the main companies.


    6. The Dana Point Harbor Department refuses to reduce the amount of monthly rent it charges boaters. Just the opposite. They have increased rents every single year to the very limit of the legal limit.


    8. This wasn’t legal for various technical reasons and the BOS well knew this. They also knew it was unethical and that they would have go to court where they would lose.

    So here’s my punch line: The BOS didn’t “give” boaters (rich or otherwise) any gift. THEY DIDN’T GIVE THEM A DARN THING.

    What the County gave up was trying to BACK TAX the water that the boats in Dana Point Harbor float on… for a second time.

    They still intend to tax boaters twice going forward and this of course continues to be unethical. But that hasn’t stopped the County of Orange yet . Why hasn’t it stopped them? They think that with notice before the fact they an do this technically within the law. That’s enough for them because uninformed blogs like this one help them to hoodwink the general public.

    Get it? If not contact us and we’ll be happy to discuss.

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