Close Window | Print


July 8, 2008


By Shaun Bishop



Clerk's error led to huge debt for San Mateo County



A scheduling error by a clerk for the San Mateo County tax assessment appeals board set off a chain of events that will cost the county millions of dollars in tax money owed to Genentech, officials said Tuesday.


County officials disclosed what triggered an eventual $20 million court ruling against them on the same day the Board of Supervisors met in closed session to discuss what to do about the problem.


Supervisors took no action, but the county will reach out to Genentech in an effort to negotiate some sort of settlement, County Counsel Michael Murphy said.

"I'm hopeful that we can find a way to resolve this judgment and payment in a way that has the least impact on schools and on our communities," Supervisor Rich Gordon said.


In April, a Superior Court judge determined the county had failed to act in a timely fashion on the South San Francisco-based company's appeals of its property tax evaluations dating back to 1994. The county appeals board made that decision final June 27.


The ruling could be a big blow for school districts, cities and special districts that rely on property tax revenue, as well as the county.


The crucial mistake came during the scheduling of dozens of appeals filed by Genentech against taxes levied on its numerous properties in the county, officials said.


The appeals clerk properly scheduled about 80 hearings on company appeals using an old paper-based records system, but missed 16 of the appeals, Gordon said.

By the time the county realized in late 2005 that the 16 appeals hadn't been scheduled for hearings, it was too late, Murphy said. That triggered a provision in state law that says the property is worth whatever the company wrote on its appeal, Murphy said.


Genentech had valued its property at about half of what the county assessor said it was worth, he said, but didn't have facts to back that up.


"We just think (the statute) works very unfairly under these circumstances, and we would hope Genentech might understand that," Murphy said.


The employee who made the error left the county before the problem came to light, Gordon said.


Since then, the appeals board has installed a computerized scheduling system, and the clerk keeps the board's chairman abreast of the hearing schedules, Gordon said.


"The previous paper trail system, it candidly didn't have various checks and balances built into it," Gordon said. "Everything is subject to human error, but when you can make things a little bit more routine it sometimes helps."


Murphy said the county is still trying to determine the exact amount it owes, as $20 million is a rough estimate. He said he hopes to meet with Genentech officials and discuss whether the amount of debt or date of repayment can be changed.


Genentech spokeswoman Caroline Pecquet declined to say whether the company would negotiate with the county on the refund because of the ongoing litigation.

She noted that Genentech is following the law.


"San Mateo County is our corporate home, and we're committed to ensuring our presence has a positive impact on the community," she said. "We simply want to pay the amount of tax that's legally owed."