A San Mateo County Superior Court Judge issued a tentative ruling Monday that Menlo Park failed to make the necessary findings to continue collecting Utility Users Tax (UUT) from residents. The ruling opens the door for residents to seek refunds on taxes paid going back to 2020.
The tentative decision, issued on April 3, favored plaintiffs claiming that they were owed a refund on their UUT because the city did not make findings in 2016, 2018 or 2020 that the tax continued to be necessary for the city’s financial health.
Menlo Park’s UUT was approved by voters in 2006 and imposes a maximum 3.5% tax on gas, electrical and water usage and a maximum 2.5% tax on cable, telephone and wireless services. Since 2007, the UUT has been set at 1% with an annual cap of $12,000 that residents can pay for electric, gas and water utilities.
The class action lawsuit was brought by Menlo Park residents David Fogel, Kirill Pertsev and Kaitlin Darke, alleging that the City Council has failed to properly reauthorize the tax collection since 2014. The residents sought a refund for their UUT paid after Dec. 31, 2016.
The decision laid out the “ordinary and plain meaning” of several key words in Menlo Park’s statute that introduced this tax, finding that it was completely necessary for Menlo Park to present findings that the UUT was still necessary to the city’s finances.
“There was not even a staff report discussing the UUT for years after 2016, let alone a staff report sent to the City Council or any line item of the Council’s agenda from which the Court could make an implied finding,” the decision said.
The court’s tentative decision concludes that the UUT expired Dec. 31, 2016, as the Menlo Park City Council did not make the required findings and that a class of taxpayers is entitled to refunds on the UUT assessed since October 28, 2020.
A final decision will be issued by May 3.
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