Simply put, the county said no. The Orange County Tax Collector’s Office has decided that one of the Mutual corporations that make up Seal Beach Leisure World has to pay its share of the penalty for being late with its property tax payment.
Now Mutual 5 is asking the Golden Rain Foundation to reimburse their share of the property tax penalty. The Foundation provides management services to Leisure World’s 16 non-profit mutual benefit corporations. Mutual 5 is one of Leisure World’s 13 Mutuals that were socked with a penalty in May when the Foundation sent the second property tax payment after the deadline.
As first reported in a story that the Sun broke in May, the Orange County Treasurer-Tax Collector’s Office imposed a penalty of $272, 984.32. That figure represents 10 percent of the second installment.
Leisure World is such a large community that it covers two Seal Beach City Council Districts. The residents of Leisure World represents roughly one third of the city’s population.
David Noble, one of Mutual 5’s directors, said they had received a final denial from the Tax Collector’s Office to waive the Mutual’s share of the penalty.
Seeking reimbursement
Now Mutual 5, and at least one other Mutual, wants the Golden Rain Foundation to make up the penalty.
“We’re claiming reimbursement from GRF,” Noble said.
Noble said Mutual 5 is asking for both its share of the property tax penalty—more than $27,000—and $4,200 in legal fees.
Noble said the Foundation has admitted that the Foundation’s errors caused the penalty.
Noble said the Foundation had not responded to Mutual 5’s request for reimbursement, except to say that the Foundation has contacted its insurance companies. Noble said the Mutual 5 letter claiming reimbursement said payment was not dependent on the Foundation getting reimbursed by its insurance providers.
Noble said other Leisure World Mutuals were lining up behind Mutual 12 to also get their money back.
However, Mutual 12 President Sandra Tappen told the Sun she did not want to say anything because this was an insurance issue.
Golden Rain Foundation contacts insurance carriers
Leisure World Administrator Dan Schaeffer read a prepared statement to the Sun during a Saturday, Nov. 19 phone call.
“The Foundation, through our Board of Directors and legal counsel, is exploring all available options to remedy the tax penalty,” Schaeffer said.
“This includes, among other things, pursuing benefits under any and all available policies of insurance,” he said.
“Each such insurance carrier has been contacted and asked to open a claim for coverage,” he said.
“The Foundation intends to continue to work with the Mutuals to address the financial impact the tax penalty had or may have on our community,” Schaeffer said.
“The Foundation is hopeful that this matter will be resolved within the near future,” Schaeffer said.
Some Leisure World residents have blamed Schaeffer for the property tax penalty.
There have been demonstrations outside the main gate calling on the Foundation to fire Schaeffer.
Schaeffer was recently placed on administrative leave, but was then reinstated. The reason he was placed on leave is not known.
Chronology of a dealinquency
In Orange County, the second installment payment of property taxes are due in February.
The second installment is considered delinquent if the payment is made after 5 p.m. on April 10 of each year.
This year, April 10 fell on a Sunday, so the tax payment was due by 5 p.m. Monday, April 11.
In Leisure World, 13 of the 16 Mutuals that make up the retirement community were supposed to pay their taxes by that date.
According to Bruce Smith, who was president of the Golden Rain Foundation at the time, the checks for the 13 Mutuals were printed out and ready for signatures by the chief financial officers of each Mutual on Friday, April 8.
However, the checks were actually signed on Monday, April 11. The checks did not arrive on time.
The Sun first reported the Leisure World tax delinquency story on Thursday, May 12.
The Golden Rain Foundation asked the Tax Collector’s Office to waive the penalty, arguing that the payments had been paid on time in the past.
On Friday, May 13, Ray Silver, chief of staff for the Tax Collector’s Office, told the Sun that Leisure World would be penalized $272,948.32.
“We have to treat everybody the same,” Silver said at the time.
The Tax Collector’s Office sent a letter officially notifying the Foundation of the tax penalty that same day.
