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Court rules for County & DWA in tax lawsuit

A federal district court ruled yesterday in favor of Riverside County and Desert Water Agency in a lawsuit filed by the Agua Caliente Band of Cahuilla Indians. The ruling will protect local residents from cost shifts and preserve local government’s ability to provide vital public services. The lawsuit aimed to prohibit the county from collecting taxes from individuals and businesses that lease reservation property.

 

Because DWA receives a portion of the county’s tax revenue, the agency joined the lawsuit in 2014 to prevent taxes from being disproportionately levied on some of its customers.

“The Agua Caliente’s lawsuit could have created some real financial burdens on many local families and businesses,” said DWA Board President, Jim Cioffi. “We joined this lawsuit to protect the best interest of those we serve. Needless to say, we’re pleased with the outcome.”

Agua Caliente’s lawsuit placed the county at risk of losing an estimated $29 million a year in tax revenue. Local agencies, including DWA, receive and rely on a portion of the county’s tax revenue to fund public services such as water service, schools, libraries, emergency services and law enforcement that directly benefit businesses and individuals on tribal land. The taxes that Riverside County collects on behalf of DWA pay for water infrastructure projects that benefit the entire community.

The Agua Caliente offered a variety of arguments as to why their leaseholders should be exempt from this tax, which provides revenue for critical public needs. The judge ruled in favor of Riverside County and DWA and noted that these services directly benefit those living and doing business on reservation property.

The Agua Caliente will have to decide whether to pursue an appeal to the Ninth Circuit Court of Appeals. In a separate action, Agua Caliente sued Desert Water Agency and Coachella Valley Water District in 2013 to establish a reserved right to local groundwater, which is currently shared by all members of the public, including the tribe. The Ninth Circuit Court of Appeals ruled in favor of the tribe in the first phase of the case and the water agencies are now asking for review by the United States Supreme Court.

For more information, please visit our Taxation Lawsuit page.