02/03/1998 Meeting Minutes - Laserfiche WebLink

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Council Minutes of 2/3/98 Law Director Gareau was absent. The following is his written report: "City of Rocky River v. James Burns, et al. On Tuesday, January 27, 1998, a meeting was held at City Hall to discuss the case of City of Rocky River v. James Burns, et al. This is the lawsuit which was filed by the City of Rocky River against former Director of Finance burns and the City of North Olmsted to recover $31,550.39, allegedly owed by the City of North Olmsted as its proportionate share of the deficit in operating costs incurred by Rocky River Municipal Court in 1996. The Mayors and Directors of Law of both North Olmsted and Rocky River were in attendance at this meeting. With respect to the pending case, it was agreed that the lawsuit should be settled by North Olmsted paying to Rocky River the principal sum of money with Rocky River has claimed is due it. The Director of Law supports this resolution of the case. The position that the former Director of Finance took in the matter, while well-intentioned and supported by what competent accountants would consider to be sound, normal accounting practices, was not supported by current State law relating to the apportionment of deficit costs incurred in municipal court operations. Current State law on this subject only provides for the apportionment of deficit operating costs among the municipal corporations which use the court; it does not provide for a carryover of surplus operating costs from other years to erase deficits. HoteVMotel Tax Issue. On Wednesday, January 28, 1998, a meeting was held downtown in the offices of the Cuyahoga County Auditor concerning the County's claim that the City of North Olmsted was overpaid $330,700.19 in hoteUmotel tax revenues during the period of July 5, 1990, through June 2, 1997. Present at this meeting and representing the City of North Olmsted were the Director of Law, the Assistant Director of Law, and the Director of Finance. Present at the meeting and representing the County were Chief Deputy Auditor Joe O'Malley and Chief Assistant Patrick Murphy. Also present were two representatives from the Convention Bureau. At the meeting, a tentative settlement was reached. The Law Department had raised an issue relating to the 6-year Statute of Limitations governing recovery of such revenues, and the County conceded the issue, agreeing that the City would not have to repay revenues erroneously paid to the City from July 5, 1990, to November 29, 1991. The hoteUmotel tax revenues paid by the County to the City during this period totaled $60,083.26. Thus, it was agreed that the principal amount to be repaid by the City of North Olmsted would be $270,616.93. In addition, the County agreed that the City could repay the sum, without interest, over a six year period in 24 equal quarterly payments, commencing on April 1, 1998. In the opinion of the Law Department, this is a good settlement. The statutes governing hoteUmotel tax revenues were reviewed by the Law Department, and the County did, in fact, erroneously continue to pay the City a share of the hotel/motel tax revenues which it collected pursuant to State law even after the City enacted legislation and began collecting its own. local hoteUmotel tax revenues in 1990. Under State law, municipal corporations which collect their own local hoteUmotel taxes are not entitled to share in the hoteUmotel tax revenues collected by the County. The settlement reached recognizes that, given the 6-year Statute of Limitations governing recovery of tax revenue monies erroneously paid out, the City should only be required to repay those money received during the past 6 years. In addition, the settlement permits the City to repay the money over a long period of time 3 ~..... _ I