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February 24, 2013

The Public Eye: Sutter's Fort part of county-vs.-state tax dispute

More than 60 years after Sutter's Fort became part of the California parks system, you would think the city and county of Sacramento would know who the owner is.

More than 60 years after Sutter's Fort became part of the California parks system, you would think the city and county of Sacramento would know who the owner is.

Guess again.

Sacramento County assessment rolls originally listed the city as owner of the historic midtown property, a mistake that wasn't corrected until a couple of years ago.

The mistake didn't cost any money until voters approved a statewide initiative allowing special districts to tax other governments. Then, the city wrongly paid taxes on the property for 10 years.

The county has refunded some of that money, and for the last three years has been locked in a battle with the California Department of Parks and Recreation over payment of back taxes.

The county went so far as to send the state a notice saying it was going to sell Sutter's Fort at a delinquent tax sale. The county backed off after learning state property can't be sold that way.

The Department of Parks and Recreation has been the focus of scandal in the last year following revelations that parks officials were hiding millions of dollars in surplus funds at the same time they were moving to close parks because of a reported cash shortage.

Now the department is arguing that it is not responsible for most of the delinquent taxes for Sutter's Fort.

While governments aren't typically responsible for property taxes, they do have to pay levies from special districts since the passage of Proposition 218 in 1996.

Two districts – the Midtown Sacramento Property Business Improvement District and the Sacramento Area Flood Control Agency – receive taxes from Sutter's Fort. The county collects the taxes on their behalf.

Leilani Yang, an attorney for the Department of Parks and Recreation, said the department has been willing to pay the flood control district levy, but not the business improvement tax. The state did not get to vote on the business improvement district and already receives the services it provides, she said.

The district disagreed with the argument but agreed to a compromise: It would waive the back taxes if the parks department started paying the taxes this year. The state paid the district about $30,000 this year.

The county at one point said the state owed $100,000 in back taxes, but has reduced the amount to $18,000, in large part because of the settlement with the midtown district.

The state parks department also has disputed late fees assessed by the county. The state said it shouldn't have to pay the fees because the county didn't properly bill the state for the taxes.

The county recently agreed to waive the fees and is awaiting payment of the back taxes.

"When the bill was corrected in 2011, our office did not do what it was supposed to and notify the state," said Cynthia Gibbs, the county's assistant tax collector.

The city of Sacramento informed county officials in 2010 that the city was mistakenly listed as the owner of Sutter's Fort, said Leyne Milstein, the city's finance director.

Before then, she said, tax bills were paid by a variety of city departments; the mistake was discovered after the city decided to have all tax bills processed through her office, Milstein said.

She said she did not know which office was previously responsible for the Sutter's Fort bill, nor why the city paid it for 10 years.

The county refunded the city $26,500, for four years of payments, the most that could be refunded under state law, Gibbs said.

Gibbs could not explain why the county originally listed Sutter's Fort as city property, nor could county Assessor Kathleen Kelleher, whose office originally made the mistake many years ago.

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