As Friday’s deadline to pay property taxes approaches, Orange County’s tax collector refuses to say – in contrast with counterparts in other counties – what kinds of economic hardship from the ongoing COVID-19 shutdowns will qualify for late fee waivers.
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Other counties have been offering broader relief for property taxpayers. San Bernardino County, for example, has said it will waive late fees for all owner-occupied homes and a large majority of small businesses. State law gives each county tax collector the power to waive late fees to people who show they can’t pay due to “reasons outside [the] taxpayer’s control.”
And the counties of San Francisco and San Mateo have postponed their property tax deadline altogether to May 4.
Orange County’s treasurer-tax collector, Shari Freidenrich, has taken a different approach.
She took a hard line last week, saying she would not grant any waivers for financial hardships due to COVID-19, including business and job shutdowns. Citing new legal advice over the weekend, she then reversed herself on Monday, saying she would grant them for “significant demonstrated economic hardship” on a case-by-case basis.
Freidenrich has repeatedly declined to say what kinds of economic hardship would qualify, and says taxpayers will have to wait until after Friday’s deadline to apply and find out if their circumstances – such as their business being shut down by the statewide health orders – will lead to a late fee waiver.
“We will be reviewing each penalty cancellation request on a case-by-case basis as previously indicated,” Freidenrich wrote this week in response to questions from Voice of OC.
Freidenrich didn’t return phone messages Wednesday asking if she can provide any clarity on what will and won’t qualify for economic hardship waivers.
State legislators have largely been silent publicly on Freidenrich’s lack of clarity. But they’re now calling on Freidenrich to use her authority to grant the maximum relief she can, and to be clearer with taxpayers about what she will and wont grant waivers for.
“Taxpayers who are unable to pay their property taxes by April 10th because of the
COVID-19 pandemic should be granted every form of relief available,” wrote Assemblywoman Cottie Petrie-Norris (D-Laguna Beach) in a letter Wednesday to Freidenrich, which was signed by six fellow legislators in both major political parties.
“Since these cases will be decided on a case-by-case basis, we do ask for further clarification and guidance for our taxpayers to help them understand how your office will handle cases related to financial hardship and the process for being able to qualify for these waivers,” they added.
“We will continue to urge constituents who can pay their property taxes on time to do so. As we all know, property taxes play a critical role in enabling our local governments and schools to function, particularly in this crisis.”
Orange County officials have been worried about a major loss of property tax revenues, though they acknowledge property tax payments have been coming in about normally to last year.
“We are right in line with where we expect that we would be,” Freidenrich said of property tax revenues, at a special meeting Tuesday of the county Board of Supervisors.
In a program Freidenrich has not publicly promoted in her news releases, people do have the option under state law of having up to five years to pay their property taxes.
Under the payment plan option, taxpayers pay 20 percent upfront and then have up to five years to pay the rest, with 1.5 percent in interest added each month. According to Freidenrich’s office, people interested in the five year plan can apply by calling the tax collector’s office at (714) 834-3411.
Behind Freidenrich’s more restrictive views are fears among OC officials that the county will take a financial hit from property owners who can pay their taxes will find a way out through a waiver.
However, she and other officials have pointed to no evidence that people would improperly take advantage of the waivers. And Freidenrich herself has said taxpayers have been there for the county, paying nearly all of the taxes they’ve owed in the last few years.
“We have been able to, through [taxpayers’] help, come up with a 99 percent collection rate for the last eight years. These taxpayers have come through for us. They have done a great job,” Freidenrich said at Tuesday’s meeting.
County supervisors thanked Freidenrich this week for her handling of the situation.
“I want to thank you and your office for being sensitive to that very real concern by our mutual constituents – you’re elected as well – in now trying to find a way for us to come through for them,” Supervisor Don Wagner told Freidenrich at Tuesay’s supervisors meeting.
“Thank you for that effort and for managing the finances as well as you have in this difficult time,” he added.
“Thank you for the work you’re doing, Shari. It’s so important to the county,” said Supervisor Lisa Bartlett.
She added that OC’s low share of property taxes compared with other counties, along with the requirement that the county frontload property tax money to other local governments, “puts us in a really precarious position financially if we don’t get the revenues coming in through the property taxes.”
One strategy Orange County has considered is waiting until after the Friday deadline to see what share of total property tax revenue went unpaid, and then use that to guide how strict or loose they are with deciding on late fee waivers.
OC’s position is more restrictive than other counties.
“I plan to grant waivers on penalties for property owners with qualified real property and qualified small businesses to help them through these extremely difficult economic times as far as the law allows, which is June 30,” said Ensen Mason, San Bernardino County’s tax collector, in a news release in late March.
“This emergency calls for government’s best efforts at all levels,” he added.
Orange County’s position also stands in contrast with the broad relief from property tax late fees called for state legislators and other counties.
“As you know, the Governor recently issued a ‘stay at home’ order to protect the health and wellbeing of all Californians. Individuals and business owners are dealing with an unprecedented disruption to their daily lives and many are already experiencing financial hardship,” wrote the chairs of the state Assembly committees on budget and taxation, in a March 20 letter to county tax collectors’ statewide association.
“Taxpayers who are unable to pay their property taxes by April 10th because of the COVID-19 pandemic should be granted every form of relief available.”
In their March 20 letter, the Assembly chairs said they planned to introduce emergency legislation to “retroactively waive interest and penalties for homeowners and other taxpayers adversely impacted by this pandemic.”
A coalition of local government associations then urged the state not to change the law, saying each county tax collector already has the authority to waive late penalties for people affected by COVID-19.
With that assurance that relief would be granted, state legislators then backed off efforts to change the law. But Freidenrich’s position against financial hardship relief, which was first brought to light by Voice of OC, then triggered internal concerns among legislators.
Nick Gerda covers county government for Voice of OC. You can contact him at ngerda@voiceofoc.org.