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County approves massive settlement with Incline, Crystal Bay property owners, school district threatens to sue

By Bob Conrad

Washoe County schools will be on the hook for about $20 million as a result of a nearly two-decade-long battle between Washoe County and Incline Village property owners.

Incline and Crystal Bay residents sued Washoe County in 2003 for what they alleged were unconstitutional property tax assessments, ultimately prevailing with a $56 million settlement. That includes interest on taxes they have paid.

Property owners sued, appealed and sued again, before reaching the settlement. Incline Village General Improvement District, Washoe County School District, North Lake Tahoe Fire Protection District and the State of Nevada each owe a portion of the settlement.

According to the county, “The parties negotiated new timelines for the key components of the settlement by agreeing the County could make the first refunds to taxpayers in July 2021, and allowing the County an interest holiday from July 1, 2021 extending to July 1, 2023, during which time interest will not accrue and the refunds will be made, and after which time interest would again accrue. The parties’ agreement was approved by the Board at its August 4, 2020 meeting. That agreement was subsequently tentatively approved by the District Court.”

Herbert Kaplan, deputy district attorney, said the case goes so far back no current employees, elected officials or commissioners were involved at the time the lawsuit was first filed.

Washoe County Commissioner Vaughn Hartung
Washoe County Commissioner Vaughn Hartung

“Washoe County and the other tax entities benefited from the use of the property tax funds provided to them, which the courts have determined to be overpayments,” he said.

Commissioner Vaughn Hartung said a previous county assessor’s decision — made with good intention — ultimately led to the protracted litigation.

“I don’t see that it was malicious in any way, shape or form at the time, even though it was an error,” he said. “I’m sorry. This was not a failing of the county commission. The courts made a decision, and we are now mandated to fulfill that obligation.”

Approving the settlement today could save the county from an even higher settlement if the county continued the legal fight, and lost.

“It appears to me the law favors the plaintiff, because there’s really no cost — save attorney fees and court costs — for them to appeal and to appeal and to appeal,” Hartung added. “Yet, us as a governmental agency, if it’s appealed and overturned, the meter continues to run so those interest payments accrue year after year after year, correct?”

Kaplan said yes, “That’s correct.”

School district threatens to sue county

Hartung asked Kaplan if the other jurisdictions helped the county fight the lawsuits.

Kaplan said to his knowledge, they did not.

“I’m unaware of the school district being involved in this case,” he said.

County Commissioner Bob Lucey blamed “the sins of our forefathers” for the settlement.

“The county’s responsibility has always been to collect and disperse these tax revenues … and help fund all of our entities,” he said. “That is our responsibility, and what we are trying to do today is exactly that. It’s also our responsibility to continue to provide reasonable services.”

He noted, however, the county “will continue to work with the school district and have been a good partner with the school district.”

He cited providing county staff and resources to the district for the pandemic, High School at Wildcreek and other services by the county.

“If the Commission chooses to ignore [Nevada law and court rulings], the [School] District will have no choice but to seek judicial relief against the County in order to protect its limited valuable resources for its students, families, teachers, staff, and taxpayers.”

School Board Trustee Andrew Caudill urged commissioners, during public comment, to think of the students impacted by the settlement and vote against the settlement.

“The school district asked to be a part of the settlement process, which the county not only refused but basically ignored,” he said. “Think of the students.”

School district attorney Neil Rombardo called the county’s approval of the settlement unlawful and threatened to sue Washoe County if the settlement was approved.

“This is the County’s error in assessment, the County’s error in protracted litigation, and the County’s error in not working with the District,” he wrote in a submitted public comment. “If the Commission chooses to ignore [Nevada law and court rulings], the District will have no choice but to seek judicial relief against the County in order to protect its limited valuable resources for its students, families, teachers, staff, and taxpayers.”

Kaplan said the totals owed may be less than anticipated, depending on how many property owners file claims. Commissioners noted that continued legal fights could lead to an even higher settlement in the future should the county lose its case.

All commissioners voted in favor of the settlement.Commissioner Jeanne Herman said the amount could be higher, citing interest and penalties, “if we waited another 17 or 18 years to fix this.”

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