HomeMy WebLinkAboutAgenda - 05-04-2021; 8-k - Refund Request – Lake Orange Inc. 1
ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: May 4, 2021
Action Agenda
Item No. 8-k
SUBJECT: Refund Request— Lake Orange, Inc.
DEPARTMENT: Tax Administration
ATTACHMENT(S): INFORMATION CONTACT:
Lake Orange, Inc. Refund Request Nancy T Freeman, Tax Administrator,
Email Regarding Lake Orange, Inc. (919) 245-2735
Appeal
North Carolina General Statute 105-381
North Carolina General Statute 105-287
Release/Refund Data - Lake Orange, Inc.
Resolution
PURPOSE: To consider a refund request submitted by Attorney Steve Yuhasz on behalf of Lake
Orange, Inc.
BACKGROUND: Attorney Steve Yuhasz has submitted a release and refund request for property
known as PIN 9857623476 and owned by Lake Orange Inc. for taxes improperly assessed from
2016 through 2019. The claim for this request is based on the premise that 45 of the 55 acres are
in the flood plain and unbuildable under Orange County regulations with little commercial value.
Mr. Yuhasz maintains that the values are incorrect due to a clerical error on the part of the Orange
County Tax Office appraisers. Mr. Yuhasz is requesting that the value be lowered to $103,000 for
each of the years. It should be noted that the value assessment for 2016 is $550,784 and for 2017
through 2019 it is $547,700.
Mr. Yuhasz included the year 2020 in his initial request. However, in an email dated April 6, 2021,
Mr. Yahasz withdrew the request for 2020 due to fact that on June 24, 2020, the Board of
Equalization and Review lowered the 2020 value to $151,300 due to property owner appeal.
Each year, property owners have the opportunity to appeal their values prior to the adjournment
of the Board of Equalization and Review. Once the Board adjourns, the Assessor has no statutory
authority to make adjustments on then current assessments.
The value for the 2020 tax year was adjusted by the Board of Equalization and Review in June
2020 to $151,500, which represented a correction to an appraisal error for the property initiated
by the taxpayer appealing the 2020 value.
North Carolina General Statute (NCGS) 105-381(a) allows the refund and release of taxes only
under very limited circumstances, including clerical error. In this case, the change in value made
for the 2020 tax year by the Board of Equalization and Review represents a correction to an
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appraisal error. The appropriate procedure is to correct the error and valuation for the current tax
year and subsequent years, which has been done for 2020 and forward according to NCGS 105-
287.
FINANCIAL IMPACT: Approval of the refund request would result in a $16,893.12 loss in
revenue.
SOCIAL JUSTICE IMPACT: There is no Orange County Social Justice Goal impact associated
with this item.
RECOMMENDATION(S): The Manager recommends that the Board deny this refund request
based on consultation with the County Attorney.
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The Law Office of
Steve F. Yuh.as z, PLLC
7404 Fast. Beach Drive
teak Island,'dC 2846
(919) 593-4887 steve@sfypIIc,c0M
December 28,2020
The Honorable Renee Price
Chair,Orange County Board of Commissioners
PO Box 8181 Dy ...
Hillsborough,NC 27278
I E:Property of Lake Orange;,h ic.PIN 9857,62-•3476
Lear Comroi ssioner Price:
On behalf of Lake Orange;Inc.I hereby request a.refund for property taxes improperly
assessed but paid for the years 2016,20171 2018, 2019,and 2020 and the release of thee
property tax improperly assessed.but unpaid:for the years 201.6,2017,2018,2019,and
2020"
I have been assisting jo]iYi'Tola:r';president and majority sharehnldcr of Lake Orange,
Inc.in'various�matters,'and earlier this year 1 itot i.ct�d'tli zt'the` 5 acre:I ake:Orange,Inc. '
property has an assessed vaiue'of$54' 70O Aj?p.'roxrrnately 45�a"er�s,oi tlie'property is
flood plain,unbuilclable'znder:Orange CounttT regulations and th�ts has little '
commercial value, 'I'considered this valuation to'be exeessive'aild t e''f Valu.atior was
appealed to Board.of Equalization and Review.On jufi6'-24 2020,based.on their staff
recommendation,the Board of E&R reduced the valuation to$151,500;This valuation
more accurately represents the true value of the useable portion of the property and the
improvements thereon.
As you may know,Lake Orange,Inc.was formed in 1967 when five owners (Nichols,
Patterson,Ray,Walker,and Tolar) adjoining the Erato River conveyed their property
below 620 feet in elevation to the corporation in order to prepare the land for the
construction of a dam and.water impoundment to serve Orange County. The
corporation then conveyed all the property below 615 feet in elevation to Orange
County,which subsequently constructed the dam and has since managed and
maintained the dam and lake (Lake Orange), Lake Orange,hic.retained certain rights,
including the recreation rights to the lake, Orange County obtained all the rights to the
I
ater,and a flood easement on and a right of•first're'fusal for any proposed.sale of the
original Lake Orange,hie property. The following year `1968,the Tcjlars conveyed a
separate ten-acre pare el to l,alce C�`range, Inn.w1u. comanis tl is itnprovemOtl s
metitiortecl'above;'arid'i`s t�►e'oi-d part of ale, LalcP`Orai ge,Iric:'propett-y not en�lLrely
confiaiiled�vithM4 flood plaiin.Tlixs t'en acre parcel,tial eii;addezL to'�thc brig nal'45'acres,
comprises the current 55`acre Bolding.
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The Machinery Act provides for a refund or release of a tax if the tax was a)imposed
through clerical error,b)an illegal tax,or c)was levied for au7 illegal purpose. I do not
believe the tax,in this case,was levied for za1 illegal purpose. It is apparent that the tax
imposed was,however,the result of a clerical error or an illegal tax.
Easily accessible county records show that the Lake Orange,Inc. (hereafter LOI)
property has been.taxed at an assessed value of$547,700 from 2017 through 2020 and at
an assessed value of$550,784 from 2011 through 2016. Without access to county
assessment records,it is not possible to determine if a clerical error was made,but a
likely scenario is this:When the Tolars conveyed the ten-acre parcel to LOI,it was
combined,for tax purposes with the rest of the LOI property(as was common in that era
for the convenience of both the owner and tax office).Although a distinction should
hat*e been made.e-weQn thn valy�r.of.the.fl.nod• l.at,,.prapexty (approximately 45 acres)
and the ten-acre addition,it apparently wash t. The value assigned per acre to the entire
property,through a clerical error,was derived from the value per acre of the ten-acre
addition.
been charged to LOI through the years have simply
Alternatively,the taxes that have
been illegal;illegal in the sense that they have been the result of appraisals arrived at
and applied not in compliance with the law. N.C.G.S. §105-286 requires that"All property,
real and personal,shall as far as practicable be appraised or valued at its true value in
money." The statute goes on to explain that the value is that of an "arms-length"
transaction,and that like properties must be appraised and taxed alike,in accordance
with an adopted schedule of values..
Flood plain is classified by the Schedule of Values as"wasteland," which is assigned the
same base price per acre as the surrounding land,with the explicit caveat that an
"influence factor"be applied to reduce the price per acre to account for its non-buildable
status. Here,nearby parcels have sizes and values;for example of:45 acres,$306,000;28
acres,$173,000;68 acres,$349,000;and 61 acres,$313,000. Applying the Land Size
Adjustment Table to these properties yields a base rate per acre of$2.1,250,$18,175,
$17,700, and$17,100,respectively. Using the average of these rates,$18,550, and the 55
acre listed size of the LOI parcel would suggest a valuation,after applying the Land Size
Adjustment,of$311,200 for the LOI land before any application of an influence factor.
However,the historic valuations for the years at issue are almost$200,000 higher!
Certainly there are factors that can contribute to different valuatiou7s for apparently
similar parcels-shape, soils,ease of access,development potential,marketability-all of
which can increase the value of one parcel relative to another. But none of these factors
add to the value of the LOI parcel. In fact,each factor,taken in turn,decreases the value
of the LOI parcel. 'The parcel is 8000' long,in places only several feet wide,with most
parts separated by wide expanses of water owned by others.The soils are all in flood
plain and thus unsuitable for installation of any sewage treatment systems. There is only
one practical point of access to a portion of the property, at Lake Orange Road, and most
of the parcel.can otherwise only be accessed by boat or through the property of other
property owners.Because the property is almost entirely in flood plain,it is completely
unbuildable;the property has no development potential.The marketability of the
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property is severely compromised by the existence of a flood easement:in favor of
Orange County over the bulk of the property and the cowity"s right of first refusal for
any prospective sale. These facts d.enumd the application of an influence factor to reduce
the valuation of the LOI tract as!conipared.to nearby tracts of similar size.These facts
exhibit a failure of Orange County to appraise the takeOrange,Inc. parcel at its "true
value uz money."
The current revised valuation of the L.OI land of$103,000 is a reasonable estimate of the
true value of the Lake Orange,h1c, property and has been accepted by Lake Orange,Inc.
going forward.Whether through clerical error or by a failure of the Orange County tax
appraisers to properly follow the legal requirements for assessing land,Lake Orange,
Inc.has for many years paid property taxes well in excess of what was justified.
71Z.mn stoff! -,ed,the Board of County C:'omnaliswioners,,
now has the opportunity to complete the process begun.by the Board of Equalization
and'Review by refunding to Lake Orange,Inc, the property taxers improperly assessed
but paid for the years 2016, 2017,2018,2019,and 2020 m-id the release of the property tax .
improperly.assessed but unpaid for the years 2016,2017,2018,201.9, and 2020.
Very truly yours,
Steve F.Yuhasz
cc: Bonnie B. Flammersley,County Manager
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From: Steve Yuhasz<steve@sfypllc.com>
Sent: Tuesday, April 6, 2021 1:35 PM
To: Nancy Freeman
Subject: [EXTERNAL MAIL!] Re: Lake Orange Inc Appeal
Nancy-
Thank you for this reply.
First, the inclusion of the tax year 2020 in the appeal was inadvertent and a result of my confusion as to
which tax years are in dispute. After the action taken by the Board of Equalization and Review on June
24, 2020 regarding the property and the subsequent tax bill due in 2020 in the amount of$1606.24 (now
$1668.22 including interest) the assessment for 2020 and years following is acceptable and the appeal for
tax year 2020 is hereby withdrawn.
I understand the hold on tax collection is now ended and that Lake Orange. Inc. is now obligated to
immediately pay all the taxes due. Frankly, Lake Orange, Inc. is not financially able to do that. I have
spoken with John Tolar, President of Lake Orange and proposed that he visit your office on Friday with
the funds to pay the 2020 tax bill and to meet with you to discuss a plan to pay the approximate $16,000
in back taxes due on the property. As you may be aware, the only source of income for Lake Orange, Inc.
is the user fees generated from lakeside lot owners. Unfortunately, the means to enforce payment of those
fees lack the teeth that some agencies possess - thus the continual difficulty in meeting some obligations.
I appreciate your attention to this matter.
-Steve
On 4/6/2021 12:49 PM, Nancy Freeman wrote:
Good afternoon Mr. Yuhasz,
I have attached my response to your letter received January 11, 2021. As noted, I will
submit your request for refund/release of taxes for Lake Orange Inc. property known as
PIN 9857623476 at the May 4, 2021 meeting of the Orange County Board of
Commissioners.
I have also attached a copy of legal opinion from Chris McLaughlin at the UNC School of
Government entitled, "Coates Canons - When Does an Appraisal Error Justify a Refund".
In addition I included a copy of the 2021 Notice of Revaluation and an informal appeal
form. I would encourage that an appeal be submitted based on the statement of value
in your letter of$103,000 for 2021. We are accepting informal appeals through the end
of April.
Thank you for your patience. A hardcopy of this letter and enclosures will be mailed
today. Please let me know if I can be of further service.
Best regards,
Nancy Freeman
Tax Administrator
Orange County Tax Office
Hillsborough, NC
919-245-2735
"How wonderful it is that nobody need wait a single moment before starting to improve
the world." - Anne Frank
CONFIDENTIALITY NOTICE: All email messages, including any attachments, generated from or received by this
account are the property of
Orange County Government and as such are considered public domain and are subject to the North Carolina Public
file:///SI/Agendas/2021/05-04-21/6-c%202%20-%2OEmai1%2ORe%2OLake%200range%201nc.%2OAppeal.txt[4/19/2021 1:35:18 PM]
Records Law. Certain 7
confidential information may be transmitted and any unauthorized review, use, disclosure or distribution is prohibited.
If you are not the
intended recipient,please contact the sender by reply email and destroy all copies of the original message.
From: Steve Yuhasz<steve@sfypllc.com>
Sent: Monday, February 1, 2021 2:57 PM
To: Nancy Freeman<nfreeman@orangecountync.gov>
Cc: Valerie Curry <vcurry@orangecountync.gov>
Subject: [EXTERNAL MAIL!] Re: Lake Orange Inc Appeal
Thank you. I understand how with so many people working remotely it is easy for the
lines of communication to get tangled.
Steve
On 2/1/2021 2:20 PM, Nancy Freeman wrote:
Good afternoon Mr. Yuhasz,
I wanted to reach out to you to apologize for my oversight. I received a
copy of your letter of appeal sent on behalf of Lake Orange, Inc. in mid-
January. I notified our Assessment staff in order to begin research on
this situation. However, I failed to notify our Collections staff of your
letter of appeal, and an enforced collection effort was recently initiated.
That effort has been stopped at this time.
Our office is formulating a response to your letter of appeal, and we
should be updating all parties within the next few weeks.
Again, please accept my apology for this oversight.
Best regards,
Nancy Freeman
Tax Administrator
Orange County Tax Office
Hillsborough, NC
919-245-2735
"How wonderful it is that nobody need wait a single moment before starting to
improve the world." - Anne Frank
CONFIDENTIALITY NOTICE: All email messages, including any attachments, generated from or received by this
account are the property of Orange County Government and as such are considered public domain and are
subject to the North Carolina Public Records Law. Certain confidential information may be transmitted and any
unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient,please
contact the sender by reply email and destroy all copies of the original message.
file:///SI/Agendas/2021/05-04-21/6-c%202%20-%2OEmai1%2ORe%20Lake%200range%201nc.%2OAppeal.txt[4/19/2021 1:35:18 PM]
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§ 105-381. Taxpayer's remedies.
(a) Statement of Defense. — Any taxpayer asserting a valid defense to the enforcement
of the collection of a tax assessed upon his property shall proceed as hereinafter provided.
(1) For the purpose of this subsection, a valid defense shall include the
following:
a. A tax imposed through clerical error;
b. An illegal tax;
C. A tax levied for an illegal purpose.
(2) If a tax has not been paid, the taxpayer may make a demand for the release
of the tax claim by submitting to the governing body of the taxing unit a
written statement of his defense to payment or enforcement of the tax and a
request for release of the tax at any time prior to payment of the tax.
(3) If a tax has been paid, the taxpayer, at any time within five years after said
tax first became due or within six months from the date of payment of such
tax, whichever is the later date, may make a demand for a refund of the tax
paid by submitting to the governing body of the taxing unit a written
statement of his defense and a request for refund thereof.
(b) Action of Governing Body. — 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 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 tax liability or notify the taxpayer in writing that no
release or refund will be made. The governing body may, by resolution, delegate its authority to
determine requests for a release or refund of tax of less than one hundred dollars ($100.00) to
the finance officer, manager, or attorney of the taxing unit. A finance officer, manager, or
attorney to whom this authority is delegated shall monthly report to the governing body the
actions taken by him on requests for release or refund. All actions taken by the governing body
or finance officer, manager, or attorney on requests for release or refund shall be recorded in
the minutes of the governing body. If a release is granted or refund made, the tax collector shall
be credited with the amount released or refunded in his annual settlement.
(c) Suit for Recovery of Property Taxes. —
(1) Request for Release before Payment. — If within 90 days after receiving a
taxpayer's request for release of an unpaid tax claim under (a) above, the
governing body of the taxing unit has failed to grant the release, has notified
the taxpayer that no release will be granted, or has taken no action on the
request, the taxpayer shall pay the tax. He may then within three years from
the date of payment bring a civil action against the taxing unit for the
amount claimed.
(2) Request for Refund. — If within 90 days after receiving a taxpayer's request
for refund under (a) above, the governing body has failed to refund the full
amount requested by the taxpayer, has notified the taxpayer that no refund
will be made, or has taken no action on the request, the taxpayer may bring a
civil action against the taxing unit for the amount claimed. Such action may
be brought at any time within three years from the expiration of the period in
which the governing body is required to act.
(d) Civil Actions. — Civil actions brought pursuant to subsection (c) above shall be
brought in the appropriate division of the general court of justice of the county in which the
taxing unit is located. If, upon the trial, it is determined that the tax or any part of it was illegal
or levied for an illegal purpose, or excessive as the result of a clerical error,judgment shall be
G.S. 105-381 Page 1
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rendered therefor with interest thereon at six percent (6%) per annum, plus costs, and the
judgment shall be collected as in other civil actions. (1901, c. 558, s. 30; Rev., s. 2855; C. S., s.
7979; 1971, c. 806, s. 1; 1973, c. 564, s. 3; 1977, c. 946, s. 2; 1985, c. 150, s. 1; 1987, c. 127.)
G.S. 105-381 Page 2
4/19/2021 G.S. 105-287
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§ 105-287. Changing appraised value of real property in years in which general reappraisal is not made.
(a) In a year in which a general reappraisal of real property in the county is not made under G.S. 105-
286, the property shall be listed at the value assigned when last appraised unless the value is changed in
accordance with this section. The assessor shall increase or decrease the appraised value of real property, as
determined under G.S. 105-286, to recognize a change in the property's value resulting from one or more of the
following reasons:
(1) Correct a clerical or mathematical error.
(2) Correct an appraisal error resulting from a misapplication of the schedules, standards, and
rules used in the county's most recent general reappraisal.
(2a) Recognize an increase or decrease in the value of the property resulting from a conservation
or preservation agreement subject to Article 4 of Chapter 121 of the General Statutes, the
Conservation and Historic Preservation Agreements Act.
(2b) Recognize an increase or decrease in the value of the property resulting from a physical
change to the land or to the improvements on the land, other than a change listed in
subsection (b) of this section.
(2c) Recognize an increase or decrease in the value of the property resulting from a change in the
legally permitted use of the property.
(3) Recognize an increase or decrease in the value of the property resulting from a factor other
than one listed in subsection(b).
(b) In a year in which a general reappraisal of real property in the county is not made, the assessor may
not increase or decrease the appraised value of real property, as determined under G.S. 105-286, to recognize a
change in value caused by:
(1) Normal,physical depreciation of improvements;
(2) Inflation, deflation, or other economic changes affecting the county in general; or
(3) Betterments to the property made by:
a. Repainting buildings or other structures;
b. Terracing or other methods of soil conservation;
C. Landscape gardening;
d. Protecting forests against fire; or
e. Impounding water on marshland for non-commercial purposes to preserve or enhance
the natural habitat of wildlife.
(c) An increase or decrease in the appraised value of real property authorized by this section shall be
made in accordance with the schedules, standards, and rules used in the county's most recent general reappraisal.
An increase or decrease in appraised value made under this section is effective as of January 1 of the year in
which it is made and is not retroactive. The reason for an increase or decrease in appraised value made under this
section need not be under the control of or at the request of the owner of the affected property. This section does
not modify or restrict the provisions of G.S. 105-312 concerning the appraisal of discovered property.
(d) Notwithstanding subsection (a), if a tract of land has been subdivided into lots and more than five
acres of the tract remain unsold by the owner of the tract, the assessor may appraise the unsold portion as land
acreage rather than as lots. A tract is considered subdivided into lots when the lots are located on streets laid out
and open for travel and the lots have been sold or offered for sale as lots since the last appraisal of the property.
(1939, c. 310, ss. 301, 500; 1953, c. 970, s. 5; 1955, c. 901; c. 1100, s. 2; 1959, c. 682; c. 704, s. 2; 1963, c. 414;
1967, c. 892, s. 7; 1969, c. 945, s. 1; 1971, c. 806, s. 1; 1973, c. 695, s. 10; c. 790, s. 2; 1987, c. 655; 1997-226, s.
4; 2001-139, s. 2; 2008-146, s. 1.2.)
https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/BySection/Chapter_105/GS_105-287.html 1/1
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Illegal tax G.S. 105-381(a)(1)(b) BOCC REPORT - REAL/PERSONAL
May 4, 2021
ACCOUNT BILLING ORIGINAL ADJUSTED FINANCIAL
NAME NUMBER YEAR VALUE VALUE IMPACT REASON FOR DENIAL Status
Lake Orange Inc. 221488 2019 547,700 103,000 (4,266.45) Unpaid
Lake Orange Inc. 221488 2018 547,700 103,000 (4,188.63) Request does not meet the qualifications of a clerical error and Unpaid
therefore not subject to NCGS 105-381. Partially
Lake Orange Inc. 221488 2017 547,700 103,000 (4,132.15) paid
Lake Orange Inc. 221488 2016 550,784 103,000 (4,305.89) Paid
(16,893.12) Total
The spreadsheet represents the financial impact that approval of the requested release or refund would have on the principal amount of taxes.
Approval of the release or refund of the principal tax amount also constitutes approval of the release or
refund of all associated interest, penalties,fees,and costs appurtenant to the released or refunded principal tax amount.
March 18, 2021 thru April 14, 2021
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NORTH CAROLINA RES-2021-029
ORANGE COUNTY
REFUND RESOLUTION(Denial)
Whereas,North Carolina General Statutes 105-381 allows for the refund of taxes when the Board
of County Commissioners determines that a taxpayer applying for the refund has a valid defense to the tax
imposed;and
Whereas,the properties listed in the attached"Refund Request'has been taxed and the tax has
been collected: and
Whereas,as to the property listed in the Refund Request,the taxpayer has timely applied in
writing for a refund of the tax imposed but has not presented a valid defense to the tax imposed as
indicated on the Request for Property Tax Refunds.
NOW,THEREFORE,IT IS RESOLVED BY THE BOARD OF COUNTY
COMMISSIONERS OF ORANGE COUNTY THAT the property tax refund recommended for denial
are denied.
Upon motion duly made and seconded,the foregoing resolution was passed by the following
votes:
Ayes: Commissioners
Nayes:
I,Laura Jensen,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
Clerk to the Board of Commissioners