Leisure World Mutuals set to appeal tax penalty

Seal Beach Leisure World Mutual 5 may be the first of 13 mutuals to appeal the late penalty for the retirement community’s deliquent property tax payment.

By all accounts, the checks were unsigned the day they were due, though they were printed out three days before.

David Noble, one of eight directors of Mutual 5, said on Monday, June 13 that if Mutual 5 won its appeal, other Leisure World Mutuals could follow.

He said Mutual 5 would take the lead in appealing the penalty.

Noble said that he and Mutual 5 President Carl Bourhenne presented the idea to a recent meeting of the President’s Council and everyone seemed to support the proposal.

The President’s Council is made up of the presidents of each of the 16 Mutuals that make up Leisure World.

As previously reported in the Sun, the Orange County Treasurer Tax Collector’s Office has notified the Golden Rain Foundation that it has assessed a penalty of $272,948.32 for late payment of the second installment of Leisure World’s property taxes. The tax payments for 13 of the 16 Leisure World mutuals arrived after the due date.

For those of you wondering why that’s important, remember that slightly more than one third of Seal Beach’s population lives inside Leisure World’s walls. The retirement community covers two City Council districts.

Mutual 5 is home to the Leisure World Amphitheatre, Club house 5 and the Golden Rain Foundation administration building.

Noble said that sometime after lawyers representing Mutual 5 have prepared the paper work for the administrative appeal, the Mutual would know when the issue becomes an item on the Orange County Board of Supervisors’ agenda.

He said that after an administrative appeal, there is a fixed time to file a court appeal.

Noble said that the Golden Rain Foundation is not the taxpayer in this case and only the taxpayer can appeal the penalty.

He said that even though the Golden Rain Foundation sent the checks to pay the property taxes, Noble said he believed that it is up to the mutuals to file the appeals.

He said that all the checks were written on the checking accounts of the mutuals.

Waiver denied

As previously reported in the Sun, an accounting clerk apparently realized the checks were not signed on Monday, April 11.

Noble said that each mutual is an independent corporation. The Foundation does not own the taxable property in question.

“They (the Golden Rain Foundation) have already taken their action,” Noble said, referring to the Foundation’s efforts to convince the Tax Collector’s Office to waive the penalty.

Foundation officials had argued that the penalty should be waived because LW had always collectively paid its property taxes on time in prior years.

The Tax Collector’s Office sent a letter to the Foundation that said payment history was not a basis for waiving the penalty.

Noble, a lawyer, seemed confident that Mutual 5 could win the appeal.  He said that since the 16 mutuals had an agreement with the Golden Rain Foundation to perform management services for them, the late payment of the property taxes was in fact beyond control of the taxpayers. He also argued that the county’s letter denying the waiver was not final.  He called it “equivocal,” arguing that the letter ended with with an offer to answer any questions Foundation officials had.

Noble also argued that the denial was not on the correct form.

On Thursday, May 19, Foundation President Smith told the Sun that the Foundation would pay the $272,948.32  penalty out of reserves. At the time, Smith said the tax penalty would be paid “under protest” and that he would ask the Foundation board to support a legal challenge to the penalty.

On late Monday afternoon, June 13, Smith released the following statement to the press about the Foundation’s plans to deal with the tax penalty:

“We are unable to comment on the specific actions being taken, but you may know that the Foundation and impacted Mutuals have and/or are taking action through their respective attorneys to attempt to set aside the penalty currently imposed against the Foundation. Thank you.”