POA and county representatives faced off Monday morning in Chancery Court in Roane County.
POA General Manager Winston Blazer and board member Bob Coates were in attendance and were represented by attorney Jerry Martin.
Representing the county were Mayor Rollen “Buddy” Bradshaw and attorneys Albert Harb and Mike Haynes.
POA attorney Kevin Stevens and Loudon County attorney Bob Bowman both bowed out of representation in order to avoid conflicts in the suit. Along with the POA, Stevens represents the Loudon County Solid Waste Disposal Commission, and Bowman has represented the POA in the past.
Haynes, representing the county, asked Williams for a notice to quash the POA’s motion to intervene.
Williams ruled in the county’s favor for fear of potentially allowing any citizen to have a right to join in the lawsuit to force the county’s hand to sell a piece of property.
“I’m very pleased with the outcome of the ruling,” Bradshaw said after the hearing. “Chancellor Williams had some very valid points as well as our legal representation did. We’re not out to — we don’t want to put these in limbo forever, but at the same time I want to make sure that — I want to reach an agreement with the POA and to the point of we don’t put the taxpayers on the dime for potentially hundreds of thousands of dollars in POA dues.”
Bradshaw said he wished to continue talks with the POA regarding the delinquent lots.
“I’m not quite sure exactly what the next step would be,” Blazer said after the hearing.
Although the county and POA seemed to strike a conciliatory tone regarding negotiations over which agency would be responsible for the POA’s monthly assessments if hundreds of delinquent properties reverted back to the county in an upcoming tax sale, the county filed a motion in Chancery Court last week to remove the properties from the sale, which would effectively abdicate the county from paying the assessments for at least two more years.
After learning the county had filed a motion to keep the lots out of the sale, the POA, through its attorney Stevens, filed a motion last Thursday requesting that the court dismiss the county’s motion and keep the 350-400 properties in the sale, which was set for Monday.
“The sole basis for Plaintiff’s request to remove the Tellico Village Property was a citation to ‘(d)irectives from the Loudon County Mayor,’” according to the POA motion to dismiss. “However, Plaintiff cited no legal authority that would allow for the relief requested.”
John Cherry, POA public relations manager, said in a follow-up interview that the POA was operating under the impression that the organization was going to continue talks with the county.
“I don’t know if the term ‘break down’ is the best way to say it,” Cherry said about negotiations with the county. “Let me just say this: The general manager and the board over the last couple years on and off has had talks with the county, and then all the sudden we find out (Thursday) that the county filed a motion to pull the lots.”
In 2012, former Mayor Estelle Herron, faced with a similar dilemma and seemingly on her own initiative, authorized that properties in Tellico Village with unpaid delinquent taxes be removed from the public sale.
“We didn’t get deeply involved in it until that issue came up in 2012,” Cherry said. “Pulling of the lots kind of precipitated us really starting to look into the law, legislation, what we could do, what the repercussions were. That’s when we really started to delve into it and understand all facets of the issue.”
POA assessments on 400 lots would cost an estimated $512,400 per year based on the monthly assessment fee of $106.75 per lot. As of late last week, the three entities with the highest delinquent tax bills for Village property included CS Paradiso Holdings LLC, O&G Royal LLC and trustee Burt E. Eisenberg.
The mayor and Loudon County Commission met in a closed session Oct. 1 to discuss pending litigation before the county filed the motion to remove the lots from the sale. During the meeting, the board considered a settlement deal offered by the POA, Bradshaw said. Although no votes were taken in closed session, “none of the commissioners” agreed to go along with the POA’s plan, he said.
“You could look at people’s faces and know,” Bradshaw said. “There was never a vote or anything like that. From the discussion you could tell that was not going to go anywhere, that first number they came back with.”
Bradshaw would not reveal the settlement amount.
In an interview about a week after the closed session, Bradshaw said he was planning to “sit down” with POA officials and have a “candid conversation” about possible solutions. At the time, he said he thought the two sides were “close” in bringing about a resolution.
Bradshaw said he met with Blazer on Oct. 10, but the two were no closer to reaching an agreement. The county then moved forward with filing the motion.
“We ran out of time as far as the sale goes,” Bradshaw said on Friday. “And I think with a little time we can find something the both parties can agree on, but it’s not going to happen before Monday.”
Cherry said the POA and the county have had numerous phone discussions in recent days but no meetings took place in person this past week.
“Clearly nothing this week face to face,” Cherry said Friday.
According to a press release issued by the POA, many of the delinquencies date back to 2008, and if the properties are kept out of the sale, they will remain in “legal limbo” for two more years.
“They’re almost impossible to sell because they have substantial tax liens against them,” Cherry said in the release. “As a result, taxpayers can’t benefit from taxes collected on those lots that might be sold in the tax sale, and the POA can’t receive assessments that would be due on those properties.
“The county doesn’t want to take these properties through the tax sale because it apparently doesn’t want to accept the legal responsibilities of ownership on lots that don’t sell,” Cherry added.
A couple pieces of legislation in Nashville have attempted to address the problem of insolvent properties coming under the ownership of municipalities. Senate Bill 990, sponsored by state Sen. Randy McNally, R-Oak Ridge, created an alternative method for purchasing lots that are subject to contractual obligations like assessment fees. An amendment to the bill would have allowed private entities to purchase the property from the municipalities “for the amount necessary to satisfy the back taxes, costs, and fees applicable to the delinquent property sale.” If the private organization did not buy back the property, it waived its right to assessments.
The bill was removed from a subcommittee docket in March 2013.
Senate Bill 54, which went into effect in April, retooled language in the previous legislation, allowing for “a tax entity, when acquiring undeveloped or unimproved property at a tax sale, to transfer such property to a non-governmental entity for the purpose of satisfying in full any fees assessed by the non-governmental entity, as approved and negotiated by both entities.”
A judgment or lien will not be issued against a tax entity regarding assessment payments or fees from the date of the property transfer’s approval and during negotiation periods, according to the amendment.
The POA contended in the release that the organization has “never insisted” the county pay the total assessments all at once after the public sale, but has sought “to work out a process fair to everyone involved.”
“The county pulled these lots from the tax sale to avoid the legal requirements that come with property ownership,” Blazer said in the release. “These are contractual requirements that run with the land, so this issue has larger consequences.”
The POA could not put a total value on the assessments dating back to 2008 because some properties are classified differently, Cherry said in the interview.
“The thing is because some of the lots are in one category or another as far as previous ownership and current ownership, there could be a situation where assessments in arrears come into play,” he said. “But there’s others where they don’t, so each lot has to be considered on its own merit, so that’s why we look at it as going forward from the point of the new owner taking control of the lot going forward. That’s what the assessment is.”
According to the press release, the two sides have met numerous times the last couple years to attempt to negotiate a resolution.
Cherry said lots at Tennessee National and Rarity Bay are also affected by the county’s motion to remove the properties from the sale.
“Tellico Village residents pay $7.3 million in property taxes, about a quarter of the Loudon County budget,” Cherry said in the release. “What we’re seeking for them, and for all Loudon County taxpayers, is fairness.”