HomeMy WebLinkAboutAgenda - 09-15-2009 - 4eORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: September 15, 2009
Action Agenda
Item No. ~ ~
SUBJECT• Property Tax Releases
DEPARTMENT: Assessor's Office PUBLIC HEARING: (Y/N) No
ATTACHMENT(S): INFORMATION CONTACT:
Resolution John Smith, 245-2101
Spreadsheet
Legal Opinion Letter
PURPOSE: To consider adoption of a resolution to release property values related to eight (8)
requests for property tax release.
BACKGROUND: The Assessor's Office is requesting approval to release property values
related to eight (8) requests for property tax release (see explanations on attached
spreadsheet). North Carolina General Statute 105-381(b), "Action of Governing Body" provides
"upon receiving a taxpayer's written statement of defense and request for release or refund, the
governing body of the Taxing Unit shall within 90 days after receipt of such a request determine
whether the taxpayer has a valid defense to the tax imposed or any part thereof and shall either
release or refund that portion of the amount that is determined to be in excess of the correct
liability or notify the taxpayer in writing that no release or refund will be made". North Carolina
law allows the Board to approve property tax releases for the current and four previous fiscal
years.
Four (4) of the bills listed for releases are present use value deferred tax bills to Norman Walker.
The properties were initially disqualified from the present use program in 2008 after transfer to
non-qualifying entities. However, after legal review it has been determined the properties
should have been disqualified as of 2004 when the subdivision, Mill Creek Phase A, was first
approved and the legal status of these four properties changed. Thus, deferred tax bills for
2001, 2002, 2003, and 2004 have been created according to statute. In addition, as described in
the attached letter from legal counsel the additional discovery for years 2005, 2006, 2007, 2008,
and 2009 has been created thus providing the Board with legal basis for this release. (See
attached letter from former County Attorney.)
FINANCIAL IMPACT: Approval of these changes will result in a net reduction in revenue of
$15,380.40 to the County, municipalities, and special districts for FY 2009/2010. The approval
of these releases will bring the total net reduction for FY 2009/2010 to $15,380.40. The Tax
Assessor recognized that releases and Property Tax Commission decisions can impact the
budget and accounted for these in the annual budget projections.
RECOMMENDATION(S): The Interim Manager recommends the Board approve the attached
resolution approving eight (8) property tax release requests in accordance with N.C. General
Statute 105-381.
'R ~. 5 ~ a 0 Chi - n co ~
NORTH CAROLINA
ORANGE COUNTY
RELEASE RESOLUTION (Approval)
Whereas, North Carolina General Statutes 105-381 and/or 330.2(B) allows for the release of
taxes when the Board of County Commissioners determines that a taxpayer applying for the release has a
valid defense to the tax imposed; and
Whereas, the properties listed in each of the attached "Request for Property Tax Release" has
been taxed and the tax has not been collected: and
Whereas, as to each of the properties listed in the Request for Property Tax Release, the taxpayer
has timely applied in writing for a release of the tax imposed and has presented a valid defense to the tax
imposed as indicated on the Request for Property Tax Release.
NOW, THEREFORE, IT IS RESOLVED BY THE BOARD OF COUNTY
COMMISSIONERS OF ORANGE COUNTY THAT the recommended property tax release(s) are
approved.
Upon motion duly made and seconded, the foregoing resolution was passed by the following
votes:
Ayes: Commissioners
Noes:
I, Donna Baker, Clerk to the Board of Commissioners for the County of Orange, North Carolina,
DO HEREBY CERTIFY that the foregoing has been carefully copied from the recorded minutes of the
Board of Commissioners for said County at a regular meeting of said Board held on
said record having been made in the Minute Book of the minutes of said Board,
and is a true copy of so much of said proceedings of said Board as relates in any way to the passage of the
resolution described in said proceedings.
WITNESS my hand and the corporate seal of said County, this day of
2009.
Clerk to the Board of Commissioners
RELEASE (GS 105-381)
__
September 15, 2009
(Taxable) Value Rate Financial Property
Name Map Ref Tract # Old Value New Value Difference Code Impact Description Reason for Adjustment
Norman Walker 3.2..61 370194 18,014 0 -18,014 03 -649.13 Land Release is for 2008 deferred bill which
includes years 2004 through 2007. To
correct error in year of disqualification from
the Present Use Value program.
Norman Walker 3.2..62 370195 94,903 0 -94,903 03 -3,967.68 Land Release is for 2008 deferred bill which
includes years 2004 through 2007. To
correct error in year of disqualification from
the Present Use Value program.
Norman Walker 3.2..59 370192 24,377 0 -24,377 03 -874.07 Land Release is for 2008 deferred bill which
includes years 2004 through 2007. To
correct error in year of disqualification from
the Present Use Value program.
Norman Walker 3.2..60 372439 122,396 0 -122,396 03 -4,616.33 Land Release is for 2008 deferred bill which
includes years 2004 through 2007. To
correct error in year of disqualification from
the Present Use Value program.
Wendell R Grigg Acct 22019 23,381 0 -23,381 21 -516.95 Business Release is for 2008 Clerical Error
Due to a clerical error, a 1980 account was
incorrectly reactivated. This business has
not operated in Orange County for several
years.
Pearl Cole & Helen Davis 7.113.C.25 752698 58,750 0 -58,750 04 -4,232.62 Land Release is for 2004 through 2008
Illegal Tax. This tract of land is an inactivated
parcel. Area has beeen remapped.
Constance S Mebane 3.31A..20 302422 88,044 44,002 -44,002 03 -462.26 Residence Release is for 2008 Clerical Error
Homestead exclusion was inadvertently
removed. Owner still ualifies for tax relief.
W
Richard C Cherry Acct 297117 13,148 8,280 -4,868 03 -61.36 Boat Motor Release is for 2008 Illegal Tax
Boat and motor should have been valued
as one item but were instead valued as
two separate items rendering a higher value
-390,691 -15,380.40
5
LAW OFFICES
COLEMAN, GLEDHILL, HARGRAVE •& PEEK
A PROFESSIONAL CORPORATION
l29 E. TRYON STREET"
P. O. DRAWER 1529
HILLSBOROUGH, NORTH CAROLINA 27278 JUl 2, 2 0 0 9
919.732-2196 y
FAX 919-732.7997
www.cghp•law.com
Mr. John Smith
Orange County Tax Assessor
Post Office Box 8181
Hillsborough, North Carolina 27278
FROM THE DESK OF
GEO)~1 REY E. GLEDHILL
E-MAIL: ggledTiill@cghp-law.com
RE: Mi11 Creek II, Section Two - Phase A properties
PIN: 9836-44-3431 (Parcel 04), 9836-43-8539 (Parcel
05), 9836-42-5807 (Parcel 06), 9836-41-1932 (Parcel
0 7 ).
Dear John:
All real property in the State of North Carolina is subject
to taxation unless it is excluded or exempted from taxation.
N.C. Gen. Stat. § 105-274.
(a) The value of real and personal property owned by a
nonprofit homeowners' association shall be included in the
appraisals of property owned by members of the association
and shall not be assessed against the association if:
(1) All property owned by the association is held
for the use, benefit, and en-ioyment of all
members of the association equally;
(2) Each member of the association has an
irrevocable right to use and enjoy, on an equal
basis, all property owned by the association,
subject to any restrictions imposed by the
instruments conveying. the right or the rules,
regulations, or bylaws of the association; and
(3} Each irrevocable right to use and enjoy ail
property owned by the association is
~purtenant to taxable real property owned by a
member of the association.
The assessor may allocate the value of the association's
property among the property of the association's members on
any fair and reasonable basis.
(b) As used in. this section, "nonprofit homeowners'
association" means a homeowners' association as defined in
528{c) of the Internal Revenue Code. (1979, c. 686, s. 1;
1987, c. 130.)
F:\Lisa\letters\JOhn Smith ltr re Walker Mill Creek prop.doc
Mr. John Smith
Page 2
July 2, 2009
N.C. Gen. Stat. § 105-277.8. (Emphasis added.)
{c) (£ffective for taxes imposed for taxable years
beginning before July 1, 2008} Deferred Taxes. - Land
meeting the conditions for classification under G.S.
105-277.3 must be taxed on the basis of the value of the
land for its present use. The difference between the taxes
due on the present-use basis and the taxes that would have
been payable in the absence of this classification,
together with any interest, penalties, or costs that may
accrue thereon, are a lien on the real property of the
taxpayer as provided in G.S. 105-355(a). The difference in
taxes must be carried forward in the records of the taxing
unit or units as deferred taxes. The taxes become due and
payable when the land fails to meet any condition or
requirement for classification. Failure to have an
application approved is ground for disqualification. The
tax for the fiscal year that opens in the calendar year in
which deferred taxes become due is computed as if the land
had not been classified for that year, and taxes for the
preceding three fiscal years that have been deferred are
immediately payable, together with interest as provided in
G.S. 105-360 for unpaid taxes. Interest accrues on the
deferred taxes due as if they had been payable on the dates
on which they originally became due. If only a part of the
qualifying tract of land fails to meet a condition or
requirement for classification, the assessor must determine
the amount of deferred taxes applicable to that part and
that amount becomes payable with interest as provided
above. Upon the payment of any taxes deferred in accordance
with this section for the three years immediately preceding
a disqualification, all liens arising under this subsection
are extinguished. The deferred taxes for any given year may
be paid in that year without the qualifying tract of land
becoming ineligible for deferred status.
N.C. Gen. Stat. § 105-277.4(c). (Emphasis added.)
The above referenced parcels were "created" by the
recording on September 20, 2004 of the Final Plat, Section Two -
Phase A, Mill Creek II. This Final Plat was recorded in the
Orange County Registry as Map 1 of 2 and Map 2 of 2 at Plat Book
96, Pages 16 and 17. Map 1 of 2 of the recorded plat (Plat Book
96, Page 16, Orange County Registry) contains a note designated
Parcels 04 and O5, both of which parcels are shown on that page,
"to be deeded to [a] Homeowners Association as permanent open
space." There is no designation on either page 1 or page 2 of
the plat as to the use of or limitation of use of Parcel 06 and
Parcel 07, both of which parcels are shown on the plat recorded
F:\Lisa\letters\John Smith ltr re Walker Mill Creek prop.doc
Mr. John Smith
Page 3
July 2, 2009
at Book 96, Page 17, Orange County Registry. Also recorded on
September 20, 2004, at Book 3561, Page 480 of the Orange County
Registry, is a Declaration of Development Restrictions and
Requirements. That Declaration, at the OTHER RESTRICTIONS
section, states: "Buffers and Open Space as indicated on the
Final Plat." (Emphasis added.) At the "CERTIFICATES OF
DEDICATION AND MAINTENANCE" section, the Declaration states:
The undersigned hereby certifies that the land shown on the
subdivision plat referenced under "Property Description" on
page 1 [of the Declaration, which property is the property
shown on the plat recorded at Plat Book 96, Page 16-17,
Orange County Registry] is owned by the undersigned and is
located within the subdivision regulation jurisdiction of
Orange County and hereby freely dedicates all rights-of-
way, easements, streets, recreation area, common area,
utilities and other improvements to public or private
common use as noted on this plat, and further assumes full
responsibility for the maintenance and control of said
improvements until they are accepted for maintenance and
control by an appropriate public body or by an incorporated
neighborhood or homeowners association or similar legal
entity. (Emphasis added.)
The recorded final plat (pages 1 and 2) of Mill Creek II,
Section Two, Phase A together with the Declaration recorded for
this subdivision restrict the use of Parcels 04 and 05 to open
space and effective September 20, 2004. They do nothing with
respect to Parcel 06 and Parcel 07. And, Parcel 06 is not
intended to be used for open space at all. It was to be conveyed
to Orange County for future public road extension purposes.
In a deed recorded on November 13, 2007 at Book 4408, Page
346, the Walkers conveyed Parcels 04, 05, 06 and 07 to the Mill
Creek of Orange County Homeowners Association, Inc. That deed,
effective that date, accomplished, with respect to Parcels 04,
05 and 07, what is required by N.C. Gen. Stat. § 105-277.8 to
make the value of those parcels nominal. The conveyance of
Parcel 06 to the Homeowners Association is not consistent with
the October 1, 2003 Resolution of approval of the preliminary
plan of this subdivision. That Parcel was to be deeded directly
from the Walkers to the County.l
'My file contains copies of unrecorded but signed deeds, one dated December
l0, 2008, the other dated January 4, 2008, from the walkers and the Mill
Creek of Orange County Homeowners Association, Inc. Both of these deeds
purport to convey Parcel 06 to Orange County.
F:\Lisa\letters\John Smith ltr re Walker Mill Creek prop.doc
Mr. John Smith
Page 4
July 2, 2009
In summary, Parcels 04, 05 and 07 did not qualify for the
special tax appraisal provisions of N.C. Gen. Stat. ~ 105-277.8
until November 13, 2007 because those parcels, no matter whether
and how restricted as to use by the recorded plat of the
subdivision and by the Declaration pertaining to the
subdivision, were not owned by a non-profit homeowners
association until that date. Parcel 06 does not qualify for the
special tax appraisal provisions of G.S. § 105-277.8 even though
it may be owned or has been owned by a non-profit homeowners
association because it was not held by the association "for the
use, benefit, and enjoyment of all members of the association
equally," because each member of the association did not have an
"irrevocable right to use and enjoy, on an equal basis [that
property]" and because the right of members of the association
to use that parcel, if any, is not "appurtenant to taxable real
property owned by a member of the association." Id. On the other
hand, an January 1 of the year following the conveyance of
Parcel 06 to Orange County (conveyance was accomplished upon
delivery of the executed and acknowledged deed to the County
evidenced by the deed's recording), Parcel 06 becomes exempt
from property taxes as provided in N.C. Gen. Stat. §§ 105-
278.1(b) and 105-285(d).
Notwithstanding Parcels 04, 05, 06 and 07 not qualifying
for the special tax treatment mandated by N.C. Gen. Stat. §§
105-278.8 and 105-278.1, tax relief may be available to the
owners of this property.
All of the Parcels in Mill Creek, II, Section Two, Phase A,
were in the agricultural present use value program until
September 20, 2004, the date the final plat of that subdivision
was recorded. I think it is permissible for the Tax Assessor to
regard Parcels 04, 05, 06 and 07 of that subdivision as being
disqualified from present use value effective September 20,
2004. Parcels 04, 05, 06 and 07 (all in Phase A, Section Two),
because restricted as to use, however inartfully those
restrictions are documented,2 can be valued nominally thereafter
until transferred to the homeowners association (Parcels 04, 05
and 07) and to Orange County {Parcel 06). Using this approach,
the value is not the statutory nominal one required by N.C. Gen.
Stat. § 105-277.8 or the tax exempt one required of N.C. Gen.
Stat. § 105-278.1. Rather it is a defensible permissible
z The recorded plat and Declaration of Restrictions of Phase A of this subdivision did not restrict the use of Parcel
07. However, the BOCC approved Resolution of Approval of the Preliminary Plan of this subdivision required
Parcel 07 to be restricted as to use. And the Declaration of Restrictions in the portion of it describing the property
subject to it does refer to Parcel 07 as an "Open Space Parcel." The error in documenting the subdivision consistent
with the approval resolution can be corrected.
F:\Lisa\letters\John Smith ltr re Walker Mi1T Creek prop.doc
Mr. John Smith
Page 5
July 2, 2009
appraisal one in recognition of their true value in money in
their restricted condition.
The taxes plus interest, penalties and costs for these
parcels coming out of the use value program are due for the year
the property is disqualified from the use value program (2004)
and the three prior years (2003, 2002, 2001). N.C. Gen. Stat. §
105-277.4(c) The deferred tax bill became due and payable when
the property failed to meet the present use value requirements,
Id., and should be collected. The failure of the tax assessor's
office to levy the taxes on these parcels in 2004 and to create
a deferred tax bill when they were disqualified from the use
value program was a tax abstract clerical error and an
immateriality pursuant to N.C. Gen. Stat. § 105-394. See
Northampton County Drainage Dist. Number One v. Bailey, 92 N.C.
App. 68, 373 S.E.2d 560 {1988), rev'd on other grounds, 326 N.C.
742, 392 S.E.2d 352 (1990}, modified on other grounds, 326 N.C.
742, 392 S.E.2d 352 {1990}.
This clerical error had the effect of these parcels being
valued at amounts inconsistent with their restricted use. This
error can be corrected by discovering the value of these parcels
for the years 2005, 2006, 2007, 2008 and 2009 as described above
pursuant to N.C. Gen. Stat. § 105-312. That tax, if any, should
be collected. This "discovery" together with the tax bill
consistent with it will provide the taxpayer with a valid
defense to the collection of the tax already assessed against
these parcels for the years in which they-were assessed
incorrectly because of the clerical error. The timely request
for release/refund made by or on behalf of the taxpayer (already
received) provides the Board of County Commissioners with a
basis for a release or refund, pursuant to N.C. Gen. Stat. §
105-381, of the amount of the erroneous tax.
The documentation of this subdivision from preliminary plan
approval to final plat approval, including the recording of
documents necessary to accomplish the preliminary plan approval
requirements, was not done correctly and the errors were not
caught in the final plat review process. These errors created
the property tax problems that you are being asked to resolve. I
have not determined whether documentation after September 20,
2004 has corrected the errors. Documents in my file indicate
there may be documentation problems with Phase B of Mill Creek
II, Section II also. For example the plat of Phase B recorded on
September 5, 2008 at Plat Book 104, Page 75 of the Orange County
Registry contains an unsigned and therefore ineffective
CERTIFICATE OF OWNERSHIP AND DEDICATION. With a copy of this
letter to the Planning Director, I am requesting his assistance
in seeing that all is properly documented with this subdivision.
F:\Lisa\letters\~ohn Smith Itr re Walker Mill Creek prop.doc
~o
Mr. John Smith
Page 6
July 2, 2009
In part the result of the final plat documentation process
of Mill Creek II, Section Two, the Planning Department has
initiated or will initiate new procedures to insure that all
declarations, deeds and final plats are carefully reviewed to
insure they conform to preliminary plan requirements and are
recorded contemporaneously as necessary. That new procedure
should eliminate the tax problems you have encountered with this
subdivision.
Very truly yours,
COLBMAN,~ GLSDHILL, HARGRAVB & PEER, P.C.
ffre5/ E. Glec`~iill
GEG/lsg ~
xc: Craig Benedict
Jo Roberson
John Roberts, Esquire
F:\L,isa\letters\JOhn Smith ltr re Walker Mill Creek prop.doc