Friday, Jul. 15, 2011

Los Banos Realtor claims city licensing fees illegal, requests refund

Brett: Tax being used to recoup lost revenue

Geneva Brett, a local Realtor who is also a real estate broker, is seeking an opinion from city officials on the appropriateness of charging business license fees for both categories.

She is requesting the city refund Realtors' license fees dating back to 2009.

Brett created a 102-page document outlining her argument against what she calls "an unlawful, illegal license tax."

On July 1 she delivered copies of the document to the city manager, city attorney, police chief and all five council members.

Brett, citing the state's Business and Professions Code, said by state law Realtors must work under the supervision of real estate brokers. She said the broker pays the city the license fee for regulatory purposes. She said the city is not regulating Realtors, but rather engaging in taxation to recoup declining and lost revenue.

An increase in business license fees for nearly all professions operating in Los Banos was approved in 2005, but the new fees were not collected until 2009. Brett believes the two embezzlements and steep drops in property and sales tax revenue that occurred during those four years led to the city enacting the new rate structure.

"The timeliness of the city's 'administrative review' of the business license fees creates the appearance that the city's intent ... was to find creative ways to raise revenue," Brett stated in the document.

Councilman Joe Sousa said he does not agree with Brett's assumption.

"I think that's her opinion, and it doesn't make it a fact," he said. "Some people think if the city raises anything, it's because of the embezzlement. The embezzlement is the scapegoat for everything. This has nothing to do with any embezzlement."

Sousa said he believes Los Banos charging a license fee for brokers, Realtors and real estate agents is not any different from what other municipalities do in California. Brett said she agrees that other municipalities charge both categories, but she said it's against the California Constitution.

City Attorney William Vaughn said he will issue a written opinion responding to Brett's claims in about two weeks.

"My initial impression is that other cities have different variations of charging these fees. I do not believe it is unlawful," Vaughn said.

Brett also wants the city to refund money to insurance offices because the city's municipal code exempts them from business license taxing, and she's asking for two secondhand dealers to be refunded $1,163 in fees because of a prior statement by city officials that the category they fall under was not clearly defined in the fee schedule.

Mayor Mike Villalta said he has not formed an opinion on the issue yet. However, he said real estate brokers may have some parallels to another profession.

"From the little information I do have, brokers may be like hair dressers. Hair dressers rent space, they are their own business," Villalta said.

Villalta defended coin dealer Troy Thoreson last year when his coin shop was charged a business fee for a pawn shop because he buys used gold. Thoreson was given his money back. Villalta said if Brett's claims turns out to be correct, he will fight for her to receive her money back with as much vigor as he did while advocating for Thoreson's refund.

Brett said if Vaughn issues an opinion against her side, she will try to start a lawsuit.

"I'm going to contact insurance agencies, brokers and secondhand dealers to see if they want to go in with me," Brett said. "The city is acting inappropriately. The municipal ordinance was not to raise revenue."