Obstacles slow effort to collect $20 million in back taxes

VALPARAISO, Ind. (AP) - When Porter County closed the books on property tax collections last year, they didn't exactly balance.

Records from the Porter County treasurer's office indicated nearly $20 million was still owed the county on more than 9,400 parcels of property.

Outstanding tax bills ranged from a penny to about $5.5 million. The bills not only covered debt owed for real estate taxes, but personal property taxes, taxes on mobile homes and other fees or assessments collected on behalf of another agency - such as a conservancy district or solid waste district - by the treasurer's office.

Of the 9,400 properties with outstanding bills, more than 2,700 of them owe less than $100, The Times in Munster reported (http://bit.ly/1CPj5qB ).

Many of those will be paid by the next installment, Porter County Treasurer Michelle Clancy said. Sometimes, especially when the bill is small, the discrepancy can be as simple as someone writing a check for the wrong amount.

It's the larger debts that concern officials and can be targeted for annual county tax lien sales. Even then, depending on circumstances, debts can be placed in a type of holding pattern while issues are resolved.

The largest amount owed on the treasurer's delinquent tax log is Floramo Partners LLC, the Illinois-based developer of Falling Waters subdivision in Porter Township. The bills on about 250 parcels of land ring up at about $5.5 million.

That debt is not entirely property taxes, Clancy said. The vast majority are assessments on the undeveloped parcels owed to a local conservancy district.

The county moved to sell lots in the subdivision at its annual tax sale in 2010. However, the developer filed bankruptcy.

That case is still in court, Porter County Attorney Betty Knight said. She said the case is "extremely complicated."

The second highest debt is of Lucky Dog LLC, the original developers of the Natural Ovens bakery in Valparaiso. The company abandon the dome years ago, leaving a debt of nearly $1.7 million in unpaid property taxes.

The property failed to sell during tax sales because the debt was higher than what the property is worth, Knight said. The County Commissioners used a state law that let them to deed the property to Valparaiso. The agreement called for the city to demolish the dome, which they are in the process of completing.

The city does not assume the tax liability. However, Knight said, the agreement calls for the city to pay funds to the county if the property is redeveloped and becomes profitable.

According to county records, Valparaiso resident Phil Reiner owes about $972,000 on 11 properties in his name.

Clancy said those properties, which include R-Way Skate Center in Portage, a shuttered restaurant on U.S. 20 in Portage and Pepe's restaurant and Big Shots bar in South Haven, could be included in the 2015 tax sale.

Reiner filed bankruptcy in 2011, which prohibited the county from certifying the properties for tax sale. The bankruptcy case was dissolved in November 2014, according to records, with the Porter County treasurer, among others, listed as creditors.

Messages left for Reiner were not returned.

Property taxes on 13 undeveloped acres within Chesterton's Coffee Creek development had a delinquent tax bill of more than $350,000 after the November tax payment deadline and had previously been put up for tax sales, but never sold.

According to records, the property was owned by Tara Management LLC.

Clifford Fleming, principal of Tara Management LLC, said he did not own the property, that it had been deeded to Lake Erie Land Co. in 2005, but that a mistake had been made in the Porter County auditor's office when the deed was filed.

Auditor's staff member Nancy Biggerstaff confirmed the error was made and records were recently corrected. The tax bill, minus penalties accumulated since 2005, has been sent to LEL.

Putting up properties for tax sales, Clancy said, doesn't guarantee they'll be sold. Properties are eligible for tax sales if taxes haven't been paid for three consecutive installments.

In June 2014, 1,032 properties, totaling $5.5 million of debt were certified for tax sale, Clancy said.

Notices were sent to property owners and payment, totaling $1.5 million on 536 properties was received.

Of those remaining, 107 parcels, totaling about $2 million, were removed from the sale for various reasons, including bankruptcy filings.

At the October tax sale, 108 parcels were sold.

"There are some properties, that for whatever reason, aren't sold," Clancy said.

She said many buyers are firms who hope to make a profit if owners decide to pay their debt and associated fees and penalties; or to profit by selling the property for a higher amount after the 12-month redemption period.

Those that don't sell can be eligible for a commissioners certificate sale, which allows the commissioners to sell to the highest bidder, but at a lesser amount than the county tax lien sale. If properties aren't sold through that process, commissioners can decided to hold a commissioner deed sale.

Clancy said properties eligible for a county tax sale will be certified in late June.

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Information from: The Times, http://www.thetimesonline.com