HI Board receives report on prospects for foreclosures

Current Holiday Island Board of Commissioners Chairman Bruce Larson, left, congratulates and recognizes former Chairman Ken Mills on his service as a past commissioner. Mills served three consecutive terms, from 2000 to 2009. Larson noted the many major accomplishments of the district over the nine years, and especially said he appreciated Mills' hand in "policies and procedures for the financial security of Holiday Island." Kathryn Lucariello / CCN [Order this photo]

HOLIDAY ISLAND -- The Holiday Island Board of Commissioners heard some welcome news Monday when the district's attorney, Tom Morris, answered questions about possible mass property foreclosures.

Foreclosures have been a concern to the district because of hundreds of properties owned by National Recreational Properties, Inc. (NRPI).

In 2008, NRPI did not make its assessment payments on hundreds of lots. In response to the income shortfall, the district severely curtailed its 2009 budget. NRPI's financier, Capital Source, came through with the payment in early 2009, paying the district $229,000, including penalties and interest.

Although District Manager Kevin Crosson said he is hopeful the company will come through again rather than lose its investment, he and the board worked out a 2010 budget with no increases.

Still, the district has been concerned about the impacts of foreclosure on that many lots.

Morris recapped the district's procedure of foreclosure, which is to first write a letter to the delinquent property owner, then to turn it over to him to send a warning letter and a demand for a fee, then to file foreclosure action at one time on any delinquent lots. Finally, the lots are auctioned from the courthouse steps.

Anyone who buys the lot must pay back taxes and assessments at that point. But the original property owner has a two-year right of redemption. If they choose to buy their property back, they would reimburse the current owner for taxes and assessments.

"Last year we collected about $40,000 on delinquent lots before the foreclosure sale," Morris said. "There were more last year than the year before, probably due to the economy."

He said seven lots were purchased at the foreclosure sale.

Lots that are not redeemed or sold are turned back to the developer, who pays back taxes on them. He does not pay assessments on them.

But developer Tom Dees has been speaking about retirement recently.

There is some good news, Morris said.

"If the developer decides not to take lots back after foreclosure, the suburban improvement district can hold the lots without paying county taxes."

The district can also market the lots without paying taxes on them, he said. If the district should develop the property, it would have to pay taxes on it, he added.

If the district does not foreclose on the lots and the developer does not take them back, they would go to the state and be held for four to five years, Morris said, then sold at a state land auction. The district would get no assessments on them while in state possession.

"New buyers would have to pay back taxes," he said. Each lot would also have to have a quiet title action, which costs about $1,000 per lot.

In other business, the board:

* Approved renewing the engineering contract with Mathis, Carter & Associates of Eureka Springs.

* Approved the 2010 work plan goals and objectives, with two changes from the rough draft.

* Approved Res. 201, commending Ken Mills for his last nine years of service as a commissioner.

* Heard Morris recap the Freedom of Information Act and the Capps boundary line settlement.

* Heard the district manager's report, with emphasis on 2009 accomplishments.

The next board meetings scheduled are a work session on Wednesday, Feb. 17 and a business meeting on Monday, Feb. 22, both at 9 a.m. at the district office.