Jul 4, 2008

County aims to soften debt blow

Supes plan closed-door meet; Genentech talks an option

By Will Oremus / Daily News Staff Writer

The San Mateo County Board of Supervisors on Thursday scheduled a closed-door session to tackle a staggering $20 million debt that came to light earlier this week.

The board added the issue to its Tuesday agenda after learning the county must reimburse South San Francisco biotech firm Genentech a portion of its property taxes dating to 1994. The ruling by the San Mateo County Superior Court was punishment for a scheduling error in the county's assessment appeals process.

The closed session is the first step as the county scrambles for ways to cushion the blow, which threatens to cut millions from local school districts and other agencies. Sources say options include negotiating with Genentech, spreading the payments over multiple years, or even asking the state for help.

"This couldn't have come at a worse time, with the state budget crisis and the cutbacks we're experiencing," said Supervisor Mark Church. "I really don't know how we're going to handle it, with all the pressing needs that the county has right now."

Church is among those who would like to see Genentech step in and help.

He noted that the court's decision wasn't based on the merits of the company's case, which claimed that the county had long been overtaxing its land. Rather, Genentech won automatically because the county's assessment appeals board failed to hear its case within the required time frame.

"They're being rewarded for a technicality," Church said. "It's plain wrong."

He added, "If I'm the CEO of Genentech, I've got to be saying to myself, 'We stand for something bigger than this.' Genentech has been a good community partner and corporate citizen in the past, and I am hoping they will be reasonable and not take advantage of this technicality."

Genentech spokeswoman Caroline Pecquet said the company was simply following the legal process to resolve disputes over property values. "Like any other taxpayer, we simply want to pay the amount of tax we believe is legally owed."

County Counsel Michael Murphy said the county will "look at all the options on how to deal with this," including perhaps negotiating with Genentech.

"I think we need to come up with a more rational system of dealing with all of these assessments on a year-to-year basis," Murphy said. He added that the system by which a major taxpayer like Genentech continually appeals the county's property tax assessments "isn't in anybody's best interest."

As for the possibility of Genentech negotiating with the county, Pecquet said, "We are in the process of reviewing the Assessment Appeals Board's decision. Given that there is ongoing litigation, we are not going to discuss specific details at this time."

Officials so far are mum on who was at fault for the mistake, noting that it could spur confidential personnel actions. Church said his understanding is that it was "probably a combination of a poor calendaring system and human error."



E-mail Will Oremus at woremus@dailynewsgroup.com.