Lawsuit accuses city of improperly collecting utility tax

The city of Menlo Park taxes water, natural gas, electricity, cellphones, land-line phones and cable TV.

This story was originally printed in the Wednesday, Dec. 29, edition of the Daily Post. If you want to get all of the local news first, read the print edition of the Post.

Daily Post Staff Writer

A Menlo Park attorney is suing the city, claiming that its Utility User Tax is illegal.

Attorney James Pistorino is asking San Mateo County Superior Court to order the city to refund the tax going back five years to 2017.
The tax brought in $1.6 million in the fiscal year that ended on June 30, 2020.

Pistorino filed the lawsuit Tuesday on behalf of three Menlo Park residents — David Fogel, Kirill Pertsev and Caitlin Darke. He hopes the suit will become a class-action case, allowing others to get money if he prevails in court.

Menlo Park voters approved the tax, also referred to as a UUT, in November 2006, setting the maximum tax on electric, 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 Public Records Request with the city to see if council followed the proper steps to renew the tax every two years. Records from 2008, 2010, 2012 and 2014 were found and sent to Pistorino, the suit states. Based on his findings, Pistorino says the tax expired by Dec. 31, 2016.

Claim denied

The Post did not hear back from City Attorney Nira Doherty yesterday about the matter. But the Post obtained a copy of the denial the city sent of Pistorino’s initial claim, which he filed on Oct. 28. The city denied his claim on Dec. 10.

The city said it denied his claim because the matter occurred a year before he filed his claim, putting it outside of the statute of limitations.

Pistorino said in his Oct. 28 claim that he began investigating the UUT after a majority of the council told City Manager Starla Jerome-Robinson 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.