(CN) - A muddled and controversial deal to spend $2.3 billion for a gleaming new courthouse in Long Beach has attracted critics to its finances likes moths to a flame. Now the Los Angeles tax assessor is suing for millions of dollars in property taxes on the building that, if the suit is successful, would wind up being paid from an already beleaguered court budget.
The 31-courtroom building in Long Beach is the first ever in California to be built through a public-private partnership. Developer Long Beach Judicial Partners financed $490 million to build the courthouse and is leasing part of it back to the courts.
The Judicial Council, which votes on court projects and relies on staff from the Administrative Office of the Courts, said California would pay the developer $50 million a year for 35 years. The Legislative Analyst's Office said the total cost for the building over time would add up to $2.3 billion.
The new Long Beach courthouse had its grand opening last Fall accompanied by criticism from lawmakers and trial judges over its expense. Those objections were amplified by the admission from the Judicial Council that the "annual service fee" was coming out closer to $61 million, and by the Legislature's refusal to take the money out of the state's general fund.
That left existing court construction funds as the source of payment, resulting in four other planned courthouses for Fresno, Los Angeles, Nevada County and Sacramento being "delayed indefinitely."
But another of the deal's chickens is now coming home to roost.
The Los Angeles County Assessor filed a lawsuit earlier this month seeking the payment of property taxes on the building, estimated to be somewhere between $4 million and $5 million a year. In the agreement with the developer, the Administrative Office of the Courts promised to cover the taxes, if the developer was not exempted.
In the genesis of the deal four years ago, the administrative office tried to quietly speed the developer's tax exemption through the Legislature as a "trailer bill," a piece of legislation that trails the budget and becomes chit in the frenzied round of trading that accompanies passage of California's massive budget.
At the time, Los Angeles County Chief Executive Officer William Fujioka sent a letter to the Legislature calling the trailer bill "unconstitutional" and "ill-advised." His May 2010 letter eviscerates the policy being pursued by the Administrative Office of the Courts.
"Notwithstanding the assertion to the contrary by the AOC, this proposed legislation does raise a constitutional issue," Fujioka wrote. He added, "If approved, this AOC proposal will further degrade the integrity of the possessory interest component of the property tax system and set a precedent that will invite other interests to pursue similar exemptions."
Fujioka also blasted a bid request put out by the administrative office a year earlier, in which the administrative office promised to assume financial responsibility for any property taxes imposed by the county on that part of the building used by the courts.