Former Loudon County Mayor Doyle Arp may have
violated state law when he reduced tax assessments on properties
owned by developer Mike Ross and then destroyed the records, but he
won't face prosecution, according to a special investigator assigned
to the case.In a letter to Tennessee Bureau
of Investigation Agent Jason Legg, West Tennessee District Attorney
Mike Dunavant said he has made a decision not to prosecute the
subjects of the investigation for reasons including lack of evidence
and the statute of limitations.
Arp, who declined to run for a second term as
county mayor in 2010, served as property assessor for several terms
before being elected county mayor in 2006.
In October 2008, 9th Judicial District Attorney
General Russell Johnson asked TBI to investigate whether Arp
improperly reduced tax assessments on Ross-owned properties.
Dunavant, who represents the 25th Judicial District counties of
Fayette, Hardeman, Lauderdale, McNairy and Tipton counties, was
asked to investigate the case in February.
Arp, Ross, Johnson and Dunavant could not be
reached for comment.
Although prosecution will not be forthcoming,
Dunavant's letter did not exonerate Arp for reducing the assessed
value of hundreds of lots owned by Mike Ross at Rarity Bay and
Rarity Pointe by as much as $11 million or for the destruction of
public records associated with the reductions.
Although the tax assessor is authorized to use his
judgment and sole discretion in arriving at property values, "it
would appear that Arp engaged in a once common and accepted practice
of 'developer discounting' for the benefit of Ross," Dunavant said.
"The practice is strongly discouraged by state
officials as discriminatory," he wrote.
According to Bobby Lee, an attorney with the state
comptroller's office, a series of judicial rulings in the 1980s
determined that the practice of assessing the property of a
developer at a lower rate than that of a private property owner is
illegal.
Ross formed his Rarity Communities development
company in the early 1990s, which spawned a series of Rarity
developments in East Tennessee.
"It is unclear from the investigation the exact
reason or justification for Arp's downward valuation of Ross' Rarity
Bay parcels during that time," the letter said.
Dunavant said he tried to interview Arp for the
investigation but was unable to do so.
The only possible offense would be "official
misconduct," a Class E felony, and prosecution of the offense would
require proof of how Arp benefitted from the improper actions,
Dunavant said.
"The only possible circumstantial evidence of
personal benefit to Mr. Arp is the employment of his son Rick by
Ross in early 2005," Dunavant said.
"But, there is no evidence that Rick Arp was hired
based upon any actions taken by his father in his official capacity
as Loudon County Property Assessor," the letter continues.
The statute of limitations on official misconduct
is two years, making Dunavant "time barred" from seeking prosecution
because the alleged activity occurred in May 2005. "Also, the
applicable statute of limitations may be tolled due to the active
concealment of the crime by the defendant, until its discovery," he
said.
The investigation uncovered that Arp ordered the
destruction of the modified tax records, an act described by
Dunavant as "contrary to office procedure and state law." Such an
offense has a one year statute of limitations, he said.
Dunavant also said he does not plan to prosecute
either Ross or his associate at Assurance Title, Tracy Riedl, for
altering closing documents. The investigation uncovered a number of
closing documents where the value of the price paid for the land was
"xx'd" out and a much higher value was substituted, he said.
"While it is unusual for these corrections to
occur with such frequency as to related properties and developers,
it is unclear whether the correction of the affidavit of value
constituted a false statement," Dunavant said.
Loudon County Commissioner Bob Franke, whose
district includes Rarity Pointe, said he was disappointed the
investigation took so long.
"After all this time, this is what they come up
with? Then they say the statute has run out. I'm disappointed,"
Franke said.