Grass Valley, Nevada County mediating 10-year tax sharing dispute |

Grass Valley, Nevada County mediating 10-year tax sharing dispute

John Orona
Staff Writer

The Grass Valley City Council may have to defend against possible litigation coming from Nevada County regarding 10 years of disputed sales tax payments if no agreement can be made between the two parties.

During an Oct. 8 closed session of the Grass Valley City Council, the city reported back resolution efforts between the city and county following a one-day session of mediation. If no agreement is worked out, the parties will head back to mediation before litigation is pursued further.

“We’re talking,” Grass Valley City Attorney Michael Colantuono said of the potential to reach an agreement. “We’re working to resolve it and I’m confident we will.”

The dispute stems from a tax sharing agreement created when the city annexed the Glenbrook Basin, and the county underbilled the city by hundreds of thousands of dollars over the course of a decade, Colantuono said. One issue in dispute is exactly how much Grass Valley should pay because they were underbilled.

According to Nevada County Counsel Alison Barratt-Green, litigation is very unlikely.

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“We have always valued our relationship with the city and are working with the city to resolve any differences,” Barratt-Green said in an email. “Municipal finance can be complicated, so these issues often take time to resolve.”

Although the city’s closed session agenda described the agenda item as representing “significant exposure to litigation against the City,” neither attorney anticipated litigation.

According to Colantuono, the only avenue government agencies have to discuss these disputes in an attorney-client privileged setting is through a closed-door session, meaning either side could claim litigation risk exists in order to discuss matters in closed session even when no litigation is actually pending.

The city used a 2018 call between Barratt-Green and Colantuono in which she “indicated that the county may pursue litigation against the city if the dispute is not resolved,” in order to justify the closed session.

“The only basis the law allows the City Council or Board of Supervisors to discuss these kinds of disputes is if someone threatens a lawsuit and so often we threaten a lawsuit just so we can have an attorney-client privileged conversation with our counsel,” Colantuono said. “We’ve done that several times the last couple years. I believe the county has done the same.”

To contact Staff Writer John Orona, email or call 530-477-4229.

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