County Reluctantly Ups Legal Ante in Tax Fight With Irvine Co.

The Board of Supervisors Tuesday reluctantly approved spending another $435,000 to battle the Irvine Co. in a property tax dispute, pushing the county’s legal bill in the fight past $1 million.

Supervisors complained that the outside law firm hired by county Assessor Bradley L. Jacobs has refused to meet with them to discuss the legal action on the grounds that the firm represents Jacobs, not the supervisors.

Supervisor Bruce Nestande complained that the board was being asked to “just blindly vote” to spend money without knowing if the two sides were close to a a settlement or how much more money might be required.

And Supervisor Roger Stanton said the supervisors were “not getting direct advice or feedback from the firm whose bills we’re paying.”

Approval Delayed for Week

Board members said the county counsel, the lawyer for the county, had been frozen out of discussions between Jacobs’ office and the specially hired San Francisco firm of Pillsbury, Madison & Sutro, cutting the board off from a normal channel of communication.

The supervisors had delayed approval of the additional funds for a week to get a report from the county counsel. The report, which was confidential, said the county counsel had only “second-hand” information on the legal action, board members said.

Jacobs said his office has spent approximately $700,000 and expects to spend between $370,000 and $435,000 between now and August. Supervisors’ aides said the San Francisco firm is charging $170 per hour for its work.

“I am not at all happy” to be voting to spend the money, Nestande said, although Jacobs told the board in a letter that the county could get more than $15 million annually from the Irvine Co. if the county wins.

Valuation Nearly Tripled

In July of 1984, Jacobs put the value of the company’s landholdings in the county at more than $3 billion, nearly triple the previous valuation of $1.1 billion. The company’s property taxes went from $19 million to $51 million a year, and the Irvine Co. appealed to the Assessment Appeals Board, which has yet to hear the case.

The company paid the disputed $32 million from the first year’s assessment into an impound account, unavailable to the county or the company. It will pay an estimated $26 million more this fiscal year into the impound account, county Treasurer-Tax Collector Robert L. Citron said.

The increased assessment came little more than a year after developer Donald Bren, a major stockholder in the company, paid $500 million to buy an additional 51% of the company from five shareholders.

Jacobs argued that the sale represented a change in ownership, making a reassessment possible, and that the new amount reflected the market value of the company.

Irvine Co. attorneys said there was no change in ownership. But even if there had been, they argued, the assessment should be based solely on the sale price.

Negotiations Continuing

Jacobs told the supervisors Tuesday that he had briefed them on the case periodically in sessions closed to the public.

The assessor said negotiations between his office and the Irvine Co. had been going on “almost continuously” since the company filed its appeal.

Last September, the firm reached agreement with the county on the value of most of its developed properties, including Fashion Island in Newport Beach, leaving 1,636 of the original 2,100 parcels still in dispute.

“I would hope that we’re very close to the end of this, but I can’t guarantee it,” Jacobs said.

“It’s difficult to predict how these things are going to go. It really is. We would all like to get it over with.”