COURT ACTION UPHOLDS MULTIMILLION-DOLLAR WINDFALL FOR LOS ANGELES UNIFIED - The money will come from a suit over increasing property taxes in redevelopment zones. The exact amount remains unknown.

By Howard Blume, Los Angeles Times

May 01, 2010 | A long-running legal battle over local property taxes has ended in a court decision that will mean a multimillion-dollar windfall for the Los Angeles Unified School District. But estimates of the amount vary dramatically — from about $20 million in the near term to $1.14 billion in years to come.

"It's very significant," said John Walsh, assistant general counsel for L.A. Unified. "It's a source of revenue and we can use it for schools."

He estimated a gain of $600 million to $1.14 billion over the next 40 years and "multimillions" in reimbursements going back to about 1994.

An opposing attorney with Los Angeles County declined to estimate future revenues but said reimbursements to the district should go back just three years.

"Is it going to be somewhat costly for the county? Certainly, in a time when every nickel counts," said Thomas Tyrrell, principal deputy county counsel.

The legal case centered on how to divide the increasing property taxes in redevelopment zones. Cities and counties create these zones to revive areas defined as blighted. The proceeds of rising property taxes are divided according to a complex formula. L.A. Unified argued that the county and other agencies were shortchanging schools.

A trial judge had sided with the county, but the state Court of Appeal favored L.A. Unified. That decision stood when the state Supreme Court declined this week to review the case.

The issue has a long history. In the late 1990s, then-school board member David Tokofsky championed it locally after he learned about the matter during a board meeting of the state school boards association. The district filed the case in 2007, the same year Tokofsky left office.

No funds are likely to arrive before the new budget year begins on July 1, Walsh said.

Tyrrell said that, under the court-determined formula, the state will claim about 43% of L.A. Unified's additional money. Including this year and past years, he estimated the county could owe about $20 million in reimbursements to the district.

Other entities, including the city of Los Angeles, will owe smaller amounts. Specific dollar figures must still be determined through negotiations or in court.

Tyrrell estimated that legal fees for the county alone amounted to about $1 million.

"I understand that schools are facing tremendous pressures, and so are we," Tyrrell said. "The consequences are that we're going to compete with one another when these issues come up. It's a zero-sum game."