By JOHN HOWELL
The nearly $500,000 paid in taxes and interest by the Small
Business Administration last week on the former Rocky Point park
property is not a windfall because it’s a bill that is owed the
city, says Kenneth Mallette. Further, the city tax collector sees
the payment as establishing a precedent for the federal agency to
continue paying taxes, even though transfer of the land to a
developer may not be completed for several years.
“Do we have an obligation [to pay the taxes]? That’s one of the
questions that’s outstanding,” responded SBA district manager Mark
Hayward when asked last Friday whether the agency would continue
paying taxes.
Hayward said the SBA chose not to litigate the issue of taxes
at this time because the agency wants to work with the city and
see the former park “developed in a proper fashion.”
Taxes is not the only issue that could delay conveyance of the
124-acre parcel to Vanderbilt Capital LLC of South Carolina.
According to court documents, Vanderbilt is affiliated with Toll
Brothers, a publicly traded company and one of the country’s
largest developers of luxury housing. Vanderbilt is looking to
build a maximum of 350 units of housing on the waterfront site.
The residents of Rocky Beach, whose homes are on leased land
that is a part of the park, have filed an objection to the
purchase and sales agreement the SBA has with Vanderbilt. The
agreement gives the homeowners first refusal to acquire Rocky
Beach within 180 days. It also sets an $11,250,000 price for the
property.
Pegee Malcolm of the Rocky Beach Association said Friday the
group objects to the process set forth by the agreement as the
180-day period starts in late May when the document was filed with
Federal District Court, although the court has yet to approve it.
Both Malcolm and Hayward expect the court will consider the matter
in the next 10 days.
In addition, said Hayward, the residents are contesting the
price of the property.
“They can’t say it is arbitrary,” says Hayward, observing that
the SBA received four valuations on the land prior to setting the
$11,250,000 amount. Based on Vanderbilt’s high bid of $25 million,
the second half of the property is valued at $13,750,000.
Hayward also took issue with statements made last week by
Council President Joseph Solomon after the SBA had stepped forward
to pay the taxes. This spring Solomon pressed to have the park
property included in the city tax sale, and last Wednesday he said
because the SBA is not the sole owner of the land, it was only
fair to city taxpayers that they pay their share.
“The agency owns the property as a receiver for Moneta
[Capital],” Hayward said.
The SBA is looking to recover an undisclosed amount from Moneta
and its principal Arnold Kilberg for loans made on the park and
other ventures including one in the Virgin Islands. Hayward said
the $25 million is only a portion of what the SBA loaned Moneta.
Mallette said he was reluctant to put the property up for a tax
sale because it was not a clear cut case and pushing the issue
could have resulted in a lengthy legal battle with the chance of
the city losing if not getting the taxes for years.
Who does own Rocky Point, Mallette was asked.
“We have the billing owner as the SBA and sent it [the tax
bill] to them as receiver,” he answered. Making it no clearer, he
later added, “They are acting as the receiver and not the owner.
This is not a clear title issue because of them being a receiver.”
In Mallette’s judgment, that makes little difference now
because of the tax payments made last week. The SBA paid off the
2003 taxes owed – $235,826.93 – plus $25,940.95 in interest
expenses charged at 12 percent of the balance due. The SBA also
paid the first two quarters of the current tax bill, $236,781.02,
meaning no further taxes are due until the third quarterly payment
on Jan. 15, 2005.
“We have a firm footing for the collection of taxes. They set
the precedent to continue to have to pay taxes,” he said.
Hayward disagrees. He said the payment was made because “it was
in the best interest to go forward and not litigate it.”
As for any future tax payments by the SBA, he said that is a
separate issue and would be determined at the appropriate
time.
