Loudon County is pulling hundreds of lots from a delinquent
tax sale scheduled for next week, because they could create
a liability of more than $500,000 per year for the county if
they do not sell.
But the Tellico Village Property Owners Association filed a
motion in Chancery Court Thursday disputing the county's
right to cancel the sale.
The move by the county affected more than 400 lots at
Tellico Village, Rarity Bay and Tennessee National that were
scheduled for the tax sale, and that represented about
$35,000 in back taxes due since 2009.
According to County Trustee Chip Miller, an order from
Chancellor Frank Williams pulling the lots was delivered to
Clerk and Master Fred Chaney on Wednesday, at the direction
of the county mayor's office.
TVPOA spokesman John Cherry said a sale of the lots would
benefit the TVPOA and Loudon County citizens in connection
with potential taxes and assessments on some 350 Tellico
Village lots. "If the lots are not included in the Oct. 20
tax sale, they will remain in legal limbo for two more
years, during which neither county taxpayers nor the TVPOA
will benefit," Cherry said.
The TVPOA motion disputed whether or not the county mayor
had the authority to order the lots pulled from the sale.
"The sole basis for Plaintiff's request to remove the
Tellico Village Property was a directive from the Loudon
County Mayor," the motion said. "However, Plaintiff cited no
legal authority that would allow for the relief requested."
If the lots did not sell and became property of the county,
state law requires the county to continue to pay the
property owner's association monthly dues. At Tellico
Village, where the majority of delinquent lots are located,
monthly dues are $106.75 per month per lot. "They're almost
impossible to sell because they have substantial tax liens
against them," said Cherry. "As a result, taxpayers can't
benefit from taxes collected on those lots that might be
sold in the tax sale, and the POA can't receive assessments
that would be due on those properties."
There is a five-year deadline within which the county must
take action on the lots. The county is in the last year of
that five-year window for lots that have been delinquent
since 2009, Miller said.
Miller said he is not sure if the county would have to take
on liability for back POA fees, which might increase the
total liability three-fold. Another batch of about 350 lots
delinquent since 2012 and 2013 are prepared to join the
others in coming years.
"We've kicked this can down the road the last couple of
years. I think this could be our last kick," said County
Commissioner and budget committee member Van Shaver. Shaver
said the county has been working with its attorneys and
local legislators for several years to find a solution to
the problem.
State Rep. Jimmy Matlock, R-Lenoir City, has been working on
the issue for more than a year. Last year, along with Sen.
Randy McNally, R-Oak Ridge, he was able to pass legislation
that takes a step toward solving the problem for Loudon and
several other counties.
According to Matlock's office, HB54 authorizes certain tax
entities, such as a county, to enter into negotiations with
certain non-governmental entities, such as an HOA, to make a
deal allowing an undeveloped or unimproved property being
sold at a tax sale to be transferred to the HOA for the
purpose of settling the HOA fees.
"Passage of HB54 is a compromise on a solution regarding a
rapidly growing problem with HOA fees and tax-delinquent
properties in Tennessee that began shortly after the
economic downturn in 2008," said Matlock's aide, Theo Vallas.
The 350 properties have total assessments of some $400,000;
however, the TVPOA has never insisted that Loudon County pay
all assessments upon conclusion of the tax sale, but seeks
to work out a process fair to everyone involved, Cherry
said.
If the county doesn't reach a deal with the POA's before the
five-year window is up, it will have to sell the lots and
accept the costs of POA dues.
Most of the lots were owned by Capital Source and Capital
Source Paradiso — a Maryland bank and the bank of record to
now-defunct National Recreation Properties Inc. — and
assorted big-block owners including James and Gloria
Blalock, Bob Reed Builders Inc., and O&G Royal LLC/Property.