Lawsuit Filed

FOR IMMEDIATE RELEASE

Contact: Andrew K. Rauch, InRem Law, Inc.

Phone: (619) 723-0423 · Email: inremlaw@icloud.com

In One Imperial Neighborhood, the City Wants $4 Million on a $1.6 Million Debt. In Another, It's Been Writing Checks to the Developers Who Never Paid.

A lawsuit says Imperial ran the same playbook in two separate tax districts — and that a repeal measure homeowners put on the November ballot never actually made it there

IMPERIAL, Calif. — September 11, 2026 — A lawsuit pending in Imperial County Superior Court accuses the City of Imperial of letting developer-insiders walk away from millions in unpaid taxes in two separate special tax districts, then sending the bill to the people who came after them.

The case, Novalk, LLC and Lia Sanchez v. City of Imperial (Case No. ECU004587), was brought by a property owner who bought land at a public county auction in 2020 and by Lia Sanchez, a Mayfield Ranch homeowner and registered voter.

The two districts tell two different stories. Both are in the same lawsuit, and both, the complaint says, follow the same pattern.

DISTRICT ONE: MAYFIELD (CFD 2004-2)

Where the City wants $4 million on a $1.6 million debt — and where the ballot measure disappeared

This is the residential neighborhood. There are 185 lots, and 87 of them are homes owned by families who bought in good faith and have been paying all along.

The tax they're paying

In these "Mello-Roos" districts, a special tax rides along on your property tax bill to pay off bonds that funded streets, sewers and other improvements. Someone has to vote to approve it. According to the lawsuit, in 2005 a single landowner cast the only vote — putting the tax on all 185 lots it owned. Days later it transferred every parcel to an affiliated company.

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Those companies then stopped paying. By 2011, court papers say, all 98 developer-owned lots were delinquent by more than $5,000 each — the exact trigger that, under promises the City made to its own bond investors, required a delinquency notice within 45 days and a foreclosure suit within 90 days.

The lawsuit says the City did nothing for seven years.

What it costs a Mayfield Ranch family

Court papers lay out the math:

• A homeowner pays roughly $2,100 a year.

• The City's own tax administrator quoted one homeowner about $26,000 to pay it off early.

• Across the neighborhood, that comes to more than $2.2 million.

• The actual remaining debt to bondholders is about $1.6 million.

That's roughly $600,000 more than the debt — from homeowners alone, before the City collects a dollar from anyone else. And the tax is scheduled to keep coming out of those households until 2037.

The lawsuit says it doesn't have to. Novalk, which bought 97 of the developer-abandoned lots at the County's 2020 public auction, has repeatedly offered to pay the unpaid principal — which, combined with what homeowners already pay each year, would retire the entire neighborhood debt now instead of in 2037. State law specifically lets a city waive penalties for a new owner who didn't cause the delinquency, and the district's own founding documents say the same.

According to the complaint, the City has never put that offer on a public agenda, never discussed it, and never voted on it.

The $4 million demand

Instead, the City's demand climbed from $2.5 million to more than $3.5 million. At a Sheriff's sale on November 5, 2025, the City set the minimum bid at $4,064,598.86 — against total outstanding bond debt for the entire district of $1,615,000, a figure the City itself reported to bond regulators.

Nobody bid.

The part that should concern every voter in Imperial

Homeowners did what citizens are supposed to do. They wrote a ballot measure.

Lia Sanchez, a homeowner and registered voter in Mayfield Ranch, sponsored the Imperial CFD 2004-2 Mello-Roos Tax Repeal and Redemption Act of 2026. Neighbors circulated it. More than 27 percent of registered voters in the affected area signed — far more than the law requires.

On April 15, 2026, the Imperial City Council passed Resolution No. 2026-14. The Council found the petition complied with California law, found it had enough valid signatures to qualify, and ordered the measure placed before voters at the November 3, 2026 election.

Then, the lawsuit alleges, the City never sent the County the map of eligible voters required to actually get the measure onto the ballot.

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The result: a measure the City Council itself certified and ordered to the ballot is now in danger of never reaching voters at all.

The California Constitution says the initiative power "shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge." The lawsuit asks a court to order the City and County to put the measure where the Council already said it belongs.

If a city can certify a citizens' measure and then let a paperwork deadline quietly kill it, the right to vote on local taxes becomes a right the city can switch off.

DISTRICT TWO: BRATTON (CFD 2004-3)

Where the City has paid out more than $780,000 to companies tied to the developers who didn't pay their taxes

This is a different district, a different parcel, and a different problem — but the lawsuit says the beneficiaries are cut from the same cloth.

Here the property is a single 11.82-acre parcel of partially graded, empty land. Novalk bought it at the same 2020 County auction.

The developers who didn't pay

According to the complaint, the developer entities that held this land — Rilington Imperial, LLC and Paseo Del Sol Dos, LLC, and later Cedar Finance Corp. and Gazette Ranch, Inc. — failed to pay $396,320.50 in special taxes. The unpaid balance grew from roughly $68,000 in 2008 to nearly $1 million by 2016 while, the lawsuit says, the City again declined to enforce.

The money going out the door

Back in 2005 the City signed an agreement to reimburse those developers about $3.6 million for public improvements. Court papers say the City's own records show that contract was paid in full by about 2007.

Yet between July 2018 and August 2025, the complaint alleges, the City approved six more payments totaling more than $780,000 to Imperial Bratton, L.P. and Infinity International Enterprises, LLC — companies claiming to be successors to the developers who never paid:

Date Amount

July 18, 2018 $450,000

April 9, 2020 $102,338.69

July 6, 2022 $100,000

January 3, 2024 $40,000

September 18, 2024 $50,000

August 6, 2025 $40,000

More than $332,000 of that was paid after March 2020 — after Novalk had already bought the property and while, the lawsuit says, the City was demanding that Novalk cover the very delinquencies those payees' predecessors had created.

The complaint alleges the City is still holding roughly $800,000 more it intends to pay the same parties. It also says the 2005 agreement gave the City the right to withhold payment from anyone delinquent on their district taxes — a right the lawsuit says the

City never used.

The number that is hardest to explain

Each year the City decides how much special tax it actually needs from each type of property. For vacant, undeveloped land in this district, the City could have levied roughly $131,800 for 2024/2025.

It levied $0.00.

It did the same thing again for 2026/2027 — setting the facilities tax rate on undeveloped land at zero, while charging and collecting a separate services tax on the very same parcel in the very same document.

In other words, the lawsuit says, the City determined on the record that it needs nothing from this parcel — and in those same years demanded more than $1,300,000 from Novalk on it, and twice sent it to a Sheriff's sale. At the sale on September 12, 2025, the minimum bid exceeded $1.3 million, consisting principally of penalties and interest.

Nobody bid on that one either.

The common thread

Two districts. Two sets of developer-insiders who voted in taxes and then didn't pay them. Two stretches of years in which, the lawsuit says, the City declined to enforce its own written promises. And in both, the bill landed on people who had nothing to do with it — 87 homeowning families in Mayfield Ranch, and the buyer who paid the County in full at a public auction.

What the lawsuit asks for

The twelve-count complaint asks the court to:

• Order the City to put the qualified initiative on the ballot (Mayfield)

• Order the City to follow the state procedure it ignored when homeowners petitioned to change the tax (Mayfield)

• Order the City to at least consider the penalty waiver state law allows

• Confirm who owns the land bought at public auction (both districts)

• Stop the continued payments to the developers' successors and get the money already paid returned to the public (Bratton)

• Rule that the City cannot charge more than the debt actually requires (both districts)

Statement

Andrew K. Rauch, counsel for plaintiffs:

"Look at the two districts side by side. In Mayfield the City wants four million dollars on a one-point-six million dollar debt. In Bratton it told the state it needs nothing from this parcel and then demanded one-point-three million for it — while cutting checks to the people who never paid. We have offered to pay off the Mayfield debt in full, today. The City won't even put the offer on an agenda."

"The neighbors in the District signed petitions to reduce unnecessary taxes. The Council voted and said we qualified for the November ballot. Then the paperwork just never went in. We're not asking anyone to agree with us — we're asking to be allowed to vote."

BY THE NUMBERS

Mayfield — CFD 2004-2

City's minimum bid demand, Nov. 5, 2025 Sheriff's sale

$4,064,598.86

Bond debt outstanding for the entire district

$1,615,000

Homes in the district paying the tax

Typical homeowner's annual special tax

~$2,100

Quoted early payoff for one homeowner

~$26,000

Year the tax is scheduled to run until

2037

Registered voters in the area who signed the repeal petition

More than 27%

Date the City Council certified it for the November ballot

April 15, 2026

Bratton — CFD 2004-3

Special taxes the developers failed to pay

$396,320.50

Paid to the developers' successors, 2018–2025

$780,000+

Of that, paid after Novalk bought the land

$332,338.69

Additional public money the City is holding for them

~$800,000

Facilities tax the City levied on this parcel for 2024/25

$0.00

Amount the City demanded from Novalk on the same parcel

$1,300,000+

City's minimum bid, Sept. 12, 2025 Sheriff's sale

$1,300,000+

How to follow the case

The First Amended Complaint is a public record on file with the Imperial County Superior Court, Case No. ECU004587. Copies are available from counsel on request.

Residents of Improvement Area No. 1 of CFD 2004-2 (Mayfield Ranch) with questions about their own property tax bill may contact InRem Law, Inc. at (619) 723-0423.

The statements in this release describe allegations made in a complaint filed with the Imperial County Superior Court. Allegations in a complaint are claims, not findings. They have not been proven, the defendants have not yet responded, and no court has ruled on them. The City of Imperial and the other defendants are entitled to contest every allegation described here.

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