"[The annexation is] basically stopped where it is right now until the court makes a final determination," said Daniel Roberts, the attorney for Orange County Local Agency Formation Commission (LAFCO), which placed Sunset under Huntington's sphere of influence in 2009 to remove unincorporated islands in the county.
The Citizen's Assn. of Sunset Beach, a nonprofit formed in July to oppose the annexation, filed a lawsuit in December seeking an injunction that would direct LAFCO to reject the annexation or require an election on taxes.
The association also wants Huntington Beach to revise its application to acquire Sunset or to hold an election on taxes.
Huntington's attorney in the case, Holly O. Whatley, wrote in her argument that the decision to annex Sunset Beach and the imposition of taxes are unrelated matters, and that the dispute over taxes should not delay the annexation.
If a court later finds that the city was wrong to impose new taxes on Sunset Beach, the city can simply refund those taxes, according to Whatley.
Whatley also argued that LAFCO had the discretion to order an election regarding taxes in Sunset Beach and did not, and the court does not have the power to interfere with legislative decisions.
The state constitution, she wrote, has a rule of "pay first, litigate later" that bars injunctions that would block the collection of taxes.
Attorney John McCarron, representing Sunset Beach, argued that the issues of annexation and taxation are not separate.
"The imposition of Huntington Beach taxes on residents of Sunset Beach arises only as a result of the annexation," he wrote in his response. "The issues of annexation and taxation are thus inextricably linked."
At first, Huntington declared that because Sunset was being annexed as an island, it would not be forced to pay new taxes, but it later announced that it had reexamined the laws and determined that it had to charge Sunset the same taxes as the rest of Huntington.