Loudon DA examines property assessments
Hugh G. Willett knoxnews.com

Mike Ross                                   Doyle Arp

Loudon County District Attorney General Russell Johnson said his office has opened an investigation into whether there was criminal activity involved in the rollback of 2005 tax appraisals on lots in the Rarity Bay residential development.

Records show that appraisals on at least 178 lots owned by developers at the upscale waterfront community on Tellico Lake were reduced in May 2005, just weeks after the official appraisal process had been concluded.

Loudon County assessor Chuck Jenkins said he discovered the 2005 appraisal reductions earlier this year. The reductions, some by as much as 50 percent of the previously assessed value, were authorized by former Loudon County assessor Doyle Arp, who became county mayor in 2006.

Arp has said the adjustments were a part of the 2005 appraisal process and were made after he received complaints about the assessed value of some lots in Rarity Bay. He could not be reached for comment about the district attorney office investigation.

Jenkins, who ran unopposed for the assessor's job in last week's election, said the reductions were only made to lots owned by developers, including Rarity Bay creator Mike Ross, and that identical, often adjacent lots owned by private individuals were not given such reductions.

Ross declined comment on Johnson's probe, but has said he doesn't recall requesting any assessment reductions and pointed out that he pays close attention to appraisals and tax assessments. Arp, who says the reductions were the result of requests from private land owners, said Ross never asked for the adjustments.

After seeking guidance from the state comptroller's office, Jenkins determined that the reductions on the appraisals were not justified and has been restoring the assessments in question to their proper values. The issue of whether or not to seek criminal charges is up to the local district attorney, said Robert Lee, general counsel to the state comptrollers office, division of property assessment.

Johnson met with Lee Aug. 8 in Nashville to discuss allegations made by Jenkins. The Tennessee Bureau of Investigation is assisting in the probe and will be interviewing individuals involved over the coming weeks, Johnson said.

One of the important factors Johnson said he has discovered is that as assessor, Arp had the authority to make adjustments and corrections to the 2005 appraisals as he deemed necessary.

The adjustments also were made within the legal time frame for the 2005 assessment. The yearly deadline for finalizing assessments is May 20. Arp authorized the adjustments to be entered into the system on May 4, Johnson said.

In order for criminal charges to be filed, it must be proven that some sort of "quid pro quo" existed between a developer and the assessors office, Lee has said.

Jenkins said he finds it hard to understand how the adjustments were made as a result of requests from private land owners when there are no such requests on record. The adjustments in question were only made to lots owned by developers, not private land owners as Arp contends, Jenkins said.

The absence and possible destruction of records associated with the adjustments to the appraisals also carries with it the possibility of criminal charges, Johnson said. Even if records were lost or destroyed, such a decision might not be a criminal act, he said.

According to state law, the assessor has the authority to create the standards for how and which assessment records are stored, which means Arp may have had the legal authority to keep or destroy records as he saw fit, Johnson added.

Johnson said that he has requested help from the state's division of property assessment in Knoxville in examining the assessment records from Rarity Bay. He also may look for irregularities in appraisals at other developments in Loudon County.