HISID agrees to lot purchase

Wednesday, July 31, 2013

HOLIDAY ISLAND -- In a special board meeting Monday, the Holiday Island Board of Commissioners passed a resolution to adopt a contract to sell a lot at 96 Summit Drive.

The agreed purchase price is $7,500, and a new contract will have to be drawn up, as the one under consideration expired earlier this month.

Board members and District Manager Dennis Kelly held a discussion among themselves and with the district's attorney, Tom Morris, via phone, to clear up any remaining questions about the legality of the sale.

Commissioner Greg Davis told fellow board members he has requested an Attorney General opinion about whether a property owner can quit-claim a lot back to the district without its permission.

He said he had read somewhere in the district's by-laws that a property owner has to petition the commissioners to take the lot back, but he did not have the text with him. He said he would bring it back to the board.

Davis said it's a "technical, legal thing" that he doesn't want the district to get into a lawsuit over for "something as insignificant as us trying to sell a lot."

Morris said he is not aware of any such requirement.

"Anyone can file a quit claim -- they do that all the time," he said, and added that people can do so without the district knowing about it ahead of time. He said property owners will often quit-claim their lots to avoid foreclosure proceedings against them, which are more expensive.

Commissioners had questions about whether selling a foreclosed or quit-claimed lot for a profit would make the district liable for taxes on other such lots in its possession that remain unsold. Those number in the hundreds, currently, and the district is in a dispute with the county assessor over whether it must pay county taxes on them.

The difficulty arose because under past practice, when the district had an agreement with the developer to turn foreclosed and quit-claim lots over to him to resell, the district did pay any taxes due first.

But when hundreds of lots came back after marketing firm National Recreational Properties, Inc., went bankrupt, the district balked at paying back taxes, which in some cases go back years. The county insists the district is not exempt from such taxes.

The board also asked whether the district can sell a lot for a profit without setting a precedent that would make it liable for the taxes due on all the other quit-claimed and foreclosed lots in its name.

"It's clear in Arkansas law that the district can sell any piece of property for any amount it deems appropriate," Morris said. He also contended no precedent is set about the other unsold lots. Back taxes do have to be paid on any lots sold, as the seller is liable for taxes.

Morris referenced a 1994 Attorney General opinion in the matter of Pulaski County v. Carriage Creek Property Owners Improvement District. The AG confirmed the decision of a trial court to reverse a ruling by the county court that the POID was liable for taxes. The trial court found the POID was holding the lot for sale to recover delinquent taxes and penalties and was not renting it out or otherwise making an income from it.

Chairman Ken Ames said the district has not filed an appeal with the county yet, but that Tax Assessor Jo Ann Harris was "mulling over" the situation.

Taxes due on the lot on Summit are $122, said Ames after the meeting.

The vote was four in favor, with Davis not voting. He said after the meeting that he had abstained.

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  • OK, $7500 less $122 back taxes, any AOB outstanding, any other fees. Could that mean this means test is satisfied: 'holding the lot for sale to recover delinquent taxes and penalties and was not renting it out or otherwise making an income from it.' Or is a profit being made above 'delinquent taxes/penalties'?

    -- Posted by CommonSense22 on Mon, Aug 19, 2013, at 11:30 PM
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