Attorney General Russell Johnson has confirmed his
office, in conjunction with the Tennessee Bureau of
Investigation, is investigating allegations Doyle Arp
gave developer Mike Ross a “developer’s discount” on
appraised property in the Rarity Bay development. This
allegedly occurred in 2005 when Arp was the county’s
property assessor; he is currently the county mayor.
an investigation going on that issue, and on other
issues that have come up as a result of it, by our
office, being assisted by the TBI,” Johnson said. “But
it’s a fairly involved process with the information
we’re getting. So it’s not anything I would expect a
resolution on any time soon.”
said his office is also looking into other possible
irregularities at Rarity Bay properties where there are
allegations the company inflated the values of its lots
on the deeds and/or possibly some forgery of documents
and changing values of lots on deeds. “That’s giving us
concern,” Johnson said, adding the investigation into
the allegations of forged documents was a direct result
of the original investigation.
of the allegations against Arp, Johnson said, “The
question is if he treated similar property differently”
to give a friend a leg up or in exchange for money or
favors “which would clearly be illegal.” He also noted
the case is not as clear cut as some may think, citing
three lots in Rarity Bay that he discovered had a
sandbar which prevented the owners from having a dock,
which in turn devalued those lots by 20
percent. Johnson also noted that investigators have not
even spoken to Arp yet to get his side of the story. He
added that since Arp is so well known to him, other
investigators would conduct the interviews with him.
cautioned that the investigation is very complicated and
involves he and the TBI having to look at almost every
lot and pulling those deeds in order to judge if an
assessment is unreasonable, a task made even more
difficult by the very nature of appraising property.
is not an exact science,” Johnson said, using the
example of a divorcing couple with each having an
appraisal of their house only to discover two appraisers
find something different using the same information.
event, Johnson is bound by the law, which reads that the
property assessor is the final decision maker when
determining an appraisal.
the property assessor and he is the one ultimately
charged with making the assessment,” Johnson said. He
noted that while appraiser Jane Smith was “the person on
the ground doing inspections,” even if Arp went back and
changed it “he was her boss” and the final decision was
within his discretion.
said he had traveled to Nashville to meet with the TBI
to discuss the matter and determine a strategy on how to
proceed. He said a lot hinged on what can be proven - if
Ross asked Arp to lower the assessments, if Arp’s son
being an employee of Ross’ influenced Arp’s appraisals,
or if money changed hands - all things that are
difficult if not impossible to prove. Johnson said
unless one of the parties confessed such a thing or
there was a witness or some documentation found, even
though it might not look good there is little to
to be a paper trial, or some sort of proverbial smoking
gun — we haven’t found it yet,” Johnson said, adding it
was still very early on in the investigation.
appears to be very little that can be done in the way of
penalties. “He [Arp] is no longer the property assessor
so you can’t use the statute that provides for a hearing
before the board of equalization where they could assess
a civil fine or they could even withhold his pay as
property assessor,” Johnson explained.
Johnson noted the alleged
incident happened in 2005 and any charges would be an
E-felony and since E-felonies carry a one-year statute
of limitations, it is too late to charge Arp or anyone
else. Johnson said he was getting a lot of phone calls,
including calls from county commissioners, about what
his office was going to do about the situation. “We’ve
got to follow the law,” he said. “Official misconduct
can only be charged by a grand jury.”
from an unhappy property owner led to the original
controversy. Loudon County Property Assessor Chuck
Jenkins said his office began looking into the situation
after Frank Renkel, a Florida man who owns a lot in
Rarity Bay, contacted his office questioning why his
land was assessed at $800,000 when other lots in the
upscale subdivision - lots located on the same peninsula
and some featuring more water frontage - were assessed
at only $500,000 in 2005.
to Jenkins, after researching the lots in question, he
discovered approximately 178 lots were owned by Ross or
companies associated with Ross. Jenkins said Ross’
lowered appraisals totaled more than $11.6-million.
said records in his office show the majority of the
lots, still owned by Ross’ Tellico Lake Properties,
which had not already been sold to an individual owner,
had been appraised at $800,000 in April 2005 but those
appraisals were reduced to $500,000 weeks later. He also
said any such reappraisals should have been conducted by
the usual process and should have the proper
documentation to justify the change, none of which is on
file in his office. According to Jenkins, the changes
were made in May of 2005 after the original appraisals
were already completed. Jenkins said the way the changes
were done in a single day and the lack of proper
documentation made these transactions appear irregular.
said the reappraisals were done on a case-by-case basis
and many were requested by individual property owners.
He also said he took into consideration the level of
completion of the subdivision including whether or not
the roads were paved at the time of the assessment.
Jenkins said that while there were still some unpaved
roads in the subdivision, the majority of the
infrastructure was complete at the time of the
assessment and should not have affected the appraisals
to such an extent.
said he contacted the state comptroller’s office for
advice on how to proceed and he was advised that his
only recourse was to fix the incorrect appraisals his
office had found for 2008 or wait for the 2009
reappraisal year. He said he decided to re-appraise the
properties to recoup as much of the amount as possible.
to Jenkins’ calculations, approximately $11.6-million in
total appraised value was cut from the 178 lots in
Rarity Bay. These cuts saved property owners — including
Ross — more than $132,000 in property taxes that cannot
be recovered, Jenkins said. The office has been able to
straighten out the appraisals and now has them corrected
for the 2008 tax bills, Jenkins added.