Tax relief unconstitutional?

Foreclosure rule debated

By FRITZ MAYER

MONTICELLO, NY — The owners of the Bella Lago condominiums in White Lake fell behind on their taxes and the county took possession. The owner has since paid back taxes, interest and penalties, including a payment of about $100,000, which represents about five percent of the assessed value of the buildings, and he will soon be regaining possession of the property.

Now, the owner would like the $100,000 penalty back, and the Sullivan County Legislature is considering passing a measure that would allow him to get it. It would also allow all others who were foreclosed on by the county to avoid that five percent penalty, just for this year.

At a public hearing at the government center on April 16, a lawyer for the Bella Lago told lawmakers that he had examined the repurchasing programs in surrounding counties, and only Sullivan charges an additional five percent fee on top of other penalties. The lawyer, Jeff Kaplan, said other counties “bend over backward to give property back to their owners.” He said his client would use the money to finish the project rather than have it go toward the penalty.

Another lawyer, Jacob Billig, also argued that the penalty should be dropped this year. He said he had two clients who would be adversely affected by the penalty in these tough economic times. He told lawmakers, “You have the ability to help. When you discussed this measure two weeks ago, in your gut you favored passage of this.” He also said the legislature had the legal right to drop the penalty if it so desired.

But county treasurer Ira Cohen directly disputed that point. He said that because the county has already taken title to the foreclosed properties before the repurchase program is utilized, the county technically owns the property. He said because the properties are technically owned by the county, officials are obligated to get the best possible price for the properties. Eliminating the penalties would amount to an improper gift to the former owner.

Cohen said that public officials are temporary trustees of public property and they have the power to sell the property, but that is not the same as the power to give it away. He said, therefore, that doing away with the penalty would be unconstitutional.

In response, Billig said if that logic were followed, then the entire repurchasing program would be unconstitutional because once the county took title to a property, it would not be able to sell it back to the owner for anything less than full market value, instead of just interest and penalties.

When Cohen addressed that issue, he said it was unfortunate that the matter would lead to a discussion of whether the entire repurchase program was unconstitutional, but that might very well be the case. Still, he said he supported the repurchase program.

Cohen added that there is also a financial element to the discussion coming at a time when the county is facing tough economic circumstances. Cohen said the county has already collected about $200,000 from the five percent penalty payments, and that figure may rise to as much as $500,000 for this year. He said, “How you can justify giving back, once paid, half a million dollars, I don’t know.”

County lawmakers are expected to vote on the measure on April 23.