Attorney warns city that utility tax may be illegal and that residents are due a refund

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Daily Post Staff Writer

Local attorney James Pistorino on Thursday put Menlo Park City Council on notice that its Utility User Tax may be illegal and is calling for a refund of the tax since 2017.

Menlo Park voters approved the tax, also referred to as a UUT, in November 2006, setting the maximum tax on electric, natural gas and water usage to 3.5% and a maximum of 2.5% on cable, telephone
and wireless services.

But when it came time for the city to begin collecting the tax in 2007, the council opted to collect 1% per utility instead of the respective 3.5% and 2.5%.

The city’s code requires that every two years the council must vote that the tax is “necessary for the financial health of the city.”

On Sept. 2, Pistorino filed a California Public Records Request with the city asking for records of the council’s required findings of “necessity” since 2008. Records from 2008, 2010, 2012 and 2014
were found and sent to Pistorino, he says in his letter.

‘Illegally extracted’

Pistorino cites both the voter-approved measure and the municipal code and said “at the latest, the UUT expired on Dec. 31, 2016, and any taxes collected after that date have been illegally extracted.”

The tax brought in $1.6 million, according to the city’s Comprehensive Annual Financial Report for the fiscal year that ended on June 30, 2020.

On behalf of his clients, Menlo Park residents David Fogel, Kirill Pertsev and Caitlin Darke, and other “similarly situated residents,” Pistorino says that UUT taxes collected in the past three years should be refunded.

What led to suit?

Pistorino says in his letter addressed to City Clerk Judi Herren that he began investigating the UUT after a majority of the council told City Manager Starla Jerome-Robinson and her team to begin looking at collecting the utility tax at the maximum voter-approved rates in order to help fund ways to get people to take out their gas-burning appliances, such as furnaces and water heaters, and replace them with electric ones.