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City of Santa Barbara Accused of Illegal Taxation Over Utility Surcharge

Letter sent on behalf of the owner of Hotel Santa Barbara demands that the city stop collecting the fees and refund ratepayers

A Manhattan Beach firm has accused the City of Santa Barbara of illegal taxation in a letter that most likely will lead to a lawsuit.

The city’s franchise agreement with Southern California Edison was approved in 2004 by the City Council and increased the utility’s compensation to the city by 1 percent, which it would fund by implementing a 1 percent rate surcharge onto customer bills, according to documents.

The letter was sent on behalf of Rolland Jacks and Rove Enterprises Inc., which owns Hotel Santa Barbara. The surcharge is a utility user tax that requires approval by voters under Proposition 218, the attorneys argue. They demand that the city stop collecting the fees and distribute refunds to ratepayers, which they estimate to be less than $10,000 for their clients but millions of dollars for all taxpayers.

Former 35th District Assemblyman Pedro Nava is listed as counsel on the letter in addition to the named partners.

The Huskinson, Brown & Heidenreich law firm has a lot of experience in taxpayer class-action suits and previously sued the City of Ventura over a fee charged for 9-1-1 communications.

The Ventura City Council approved a seemingly identical arrangement with Southern California Edison in 2009, in which the 1 percent increase in the city’s compensation was passed on to ratepayers, according to the Ventura County Star.

Attorney Paul Heidenreich said the city has 30 days to respond, and if the issue isn’t resolved, his firm will file a lawsuit. His firm hasn’t filed a claim against Ventura or many other cities with similar surcharges.

“Actually, I wish I had time to get to all of them at the same time,” he said.

He said his firm didn’t get involved until now — six years after implementation of the surcharge — because it doesn’t pursue such claims without a client and was just recently contacted by one.

Santa Barbara city attorney Stephen Wiley didn’t respond to Noozhawk’s requests for comment. The city received the letter last week and has not yet responded.

Noozhawk staff writer Giana Magnoli can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

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