City of Fillmore

The lawsuit brought against the City of Fillmore over sales tax revenue has been dismissed. The cities of Livermore and Industry filed suit against Fillmore after a contract was signed with Owens & Minor, one of the nation’s largest distributors of medical and hospital equipment.

The agreement allowed for a sales office to be established in Fillmore, with all California sales originating from that office. Fillmore agreed to give 85 percent of the tax money it collects under the agreement to an Illinois broker who arranged the deal, and the broker must give at least half of that portion back to Owens & Minor. Fillmore collects a 15 percent share of the local portion of the state sales taxes. The arrangement brings approximately $800,000 a year to the city in sales tax revenue. The 20-year contract was signed in 2007 and will be honored.

In June 2009, Gov. Arnold Schwarzenegger signed a law whereas no other city can make such a contract in California.

Livermore and City of Industry brought twelve causes of action against Fillmore charging fraud, RICO violations, Unjust Enrichment, Conversion, Business and Professions Code Violation, Conspiracy/Aiding and Abetting Conspiracy, and Federal civil rights violation, to name a few.

Judge Michael L. Stern (Los Angeles Superior Court) stated in his ruling, “The evidence submitted by plaintiffs for their argument is tenuous.” And, “…there is no showing of any malfeasance or bad intent.” Judge Stern’s ruling also entitles Fillmore to an award of attorneys’ fees.

“This was a tremendous victory for the City of Fillmore,” stated Fillmore City Attorney Ted Schneider. “We have stood strongly by the proposition that the city has acted at all times within the law and that the city’s economic development practices are legal and proper, and will result in immense benefit to the citizens of Fillmore.” Schneider went on to say that the lawsuit filed by the Cities of Livermore and Industry was “baseless”.

Fillmore Mayor Patti Walker said, “The ruling of the court only confirms the city's position on the agreements. This is a tremendous victory in more ways than one. Our next battle is August 27 before the BOE where I hope for a similar outcome.”

Walker is referring to an administrative appeal at the Board of Equalization with respect to the allocation of sales tax to Fillmore for a specific retailer operating a sales office within the City. A BOE appeals conference will take place Thursday, August 27, 2009.

Councilwoman Gayle Washburn had this to say, “As you know, this issue is being fought on two fronts; the State Board of Equalization and LA County Superior Court. While the most recent (Superior Court) ruling is encouraging, the matter is still pending clarification on some items. The State Board of Equalization hearing is not scheduled until August 27th. The Council has been advised by the City Attorney to refrain from comment until the issues are resolved.”

Councilman Steve Conaway expressed his pleasure at the outcome, “I'm pleased with the courts ruling. The ruling supports what the council and the city has said all along. It should be noted that the State of California and the County of Ventura is receiving its full allotment of tax revenue generated from these agreements. Building a healthy Fillmore includes our fiscal health also. Every city strives to permit businesses which generate sales tax revenue, especially in these difficult times. The revenue Fillmore has received has helped build financial reserves, it pays for park construction and the new pool, it's also used for Public Safety. This agreement is a win-win for the County of Ventura and the City of Fillmore.”

Councilwoman Laurie Hernandez stated, “This is good news for the City. When the City entered into these agreements they were legal, and with all the state issues coming down the road it will be revenues needed.”
Councilman Jamey Brooks did not respond to the Gazette’s email request for comment.