THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Sunday, February 19, 1995 TAG: 9502190063
SECTION: LOCAL PAGE: B1 EDITION: NORTH CAROLINA
SOURCE: BY ANNE SAITA AND TONI WHITT, STAFF WRITERS
DATELINE: CURRITUCK LENGTH: Long : 166 lines
For at least five years, some Currituck County developers have received tax exemptions, in violation of state law, on recreational and open land they own.
The exemptions were provided by the tax assessor and a former Board of Commissioners, and current county officials admit the error.
A lone Kitty Hawk man, spurred by a developer's actions, caught the mistake. He says the county could collect hundreds of thousands of dollars in back taxes, but his major focus is winning relief for one group of property owners who feel they paid for the developers' tax break.
The whole matter hinges on a state law designed to encourage open land in dense developments. The law allows common properties in developments, such as tennis courts and swimming pools, to be declared tax-exempt - but only if the land is deeded to a homeowners' association.
In Currituck, county officials waived real estate taxes on such parcels even though they were privately held and not turned over to an association.
Currituck County tax assessor W.C. ``Mickey'' Dozier and county attorney William Romm conceded last week that some properties were improperly exempted, but said county officials are going back through mainland and Outer Banks developments to remedy the mistake.
``The thing here is ownership,'' Dozier said. ``That's where we dropped the ball.''
A former manager of the Corolla Light resort community, David Holton, 47, of Kitty Hawk, picked up the fumble last year.
Members of the Corolla Light Community Association protested when the community's developer, Outer Banks Ventures Inc., wanted to move tennis courts there, rezone the land and use it for commercial purposes. Developer Richard Brinkley said at a public hearing in August that the land was his to do with as he pleased. The county agreed and rezoned the land.
Holton, who had recently left his job as community manager, began to dig into records. He found that in 1989, the county had granted a request by the developer for a tax exemption on that land, even though it had not been turned over to the homeowners' association, and broadened the exemption to cover similar plots in other developments.
Holton now represents about 60 members of the Corolla Light Community Association, including nine Hampton Roads residents, who collectively own 96 parcels and think their taxes went up to cover the revenue lost to the developer's tax exemption.
Operating as Tax Resolutions, Ltd., Holton is asking that the county refund $1,086 for each property owned by the taxpayers who have joined him. He plans to keep 45 percent of the money recovered to pay for his expenses in pressing this appeal. He has also demanded that the county reduce the 1995 assessments on the lots and homes by nearly $15,000 each.
A hearing on Holton's request is scheduled for 6 p.m. Monday at the county courthouse.
Holton said nine tax-exempt parcels, some of which Outer Banks Ventures deeded to the homeowners' association in December, have an assessed value of almost $8 million.
That translates to $224,000 in taxes to the county if it collects for the past five years. Holton estimates that with penalties and interest, it will total $377,000 just for the Corolla Light property. About a dozen other developments could be involved.
The Carolla Light parcels include an oceanfront recreation complex, sewer plant, indoor sports center, tennis courts, water tower, grass course and two other areas.
To bolster his argument, Holton points to a statement Dozier made in 1989 when commissioners approved the tax exemption on the Corolla Light property.
``The tax assessor informed the board that the open space, common property and community property was reflected in the market values of the individual lots that have been sold,'' say the minutes from the May 1989 session of a county commissioners meeting when they were acting as the Board of Equalization and Review.
None of the current Currituck County commissioners served on the board at that time.
Dozier says the values of the common property were ``reflected'' in the individual property values because the amenities at Corolla Light made the property more attractive and landowners could fetch a higher price.
State experts also agreed that residential areas with added amenities, such as a swimming pool or clubhouse, may be appraised at a higher value.
While the county says no one was unfairly taxed, officials have begun charging developers back taxes on the properties. By law, they can recover back taxes for the previous five years. Dozier said interest and penalities are negotiable.
``When allegations are made, you start tightening your belt and start searching and digging,'' he said of his efforts to put wrongly exempted property back on the tax books.
Richard Brindley, of Outer Banks Ventures, was not available for comment. His son, Douglas Brindley, said, ``If there was an error made, it was the county's.''
``The values are included in the property of individual owners,'' Brindley said. ``The property values are higher because of the amenities there. Everyone is paying a pro rata share of the amenities.''
Dozier was adamant: ``Mr. Brindley did not receive any special privileges or special consideration.''
The change in policy has left local developers like Ronnie Cooper confused and angry.
Cooper said he set aside 2acres on his 40-acre Hunter's Wood subdivision on the mainland for open space in 1990, as required by a county ordinance. Until this year, he never was asked to pay taxes on the property.
``I was told each lot in there would be increased in value for tax purposes, so that they would get their tax on those spaces,'' Cooper said.
In December, Cooper received a letter from the county tax department, informing him that the 2-acre open space was no longer exempt because it had not been deeded over to a homeowners' association.
Cooper said he has not sold enough lots to form a nonprofit homeowners' association.
He is now being asked to pay about $130 annually for the property.
``We're not talking a lot of money. It's a matter of principle,'' he said.
The basic tax rate on property in Currituck County is 56 cents per $100 of evaluation, less than half the property tax rate in most Hampton Roads cities. Residents of some areas, such as Corolla, also pay several cents more for fire protection and garbage collection.
Several land owners in Corolla Light said that although the tax rate is low, they have long felt that their assessments have been too high. They said that because they don't vote in the county, they felt they had no say in their assessments.
``I feel like, in general, that the way they assess out there tries to gouge nonresident property owners,'' said Finley Foster, an engineering consultant in Marietta, Ga., who bought an oceanfront lot in 1984 for $225,000.
Other property owners expressed the same sentiment. ``Some of the people down there get taxed so bad, I don't see how they can afford it,'' said one 73-year-old Virginia Beach resident, who owns three properties in the Corolla area.
A comparison of sales prices and assessments of property belonging to homeowners who have joined in the complaint indicates that assessments averaged about 15 percent higher than sales between 1987 and 1989, when the assessments were done. Of 60 properties reviewed by The Virginian-Pilot and The Ledger-Star, 17 were purchased between 1987 and 1989.
Of those sales, assessments range from 9.75 percent below the sale price to 236 percent above the sale price. Four properties were assessed at less than their sale price, while 13 were assessed above the sale price.
``That doesn't sound too good,'' said Robert Pearson, president of Pearson's Appraisal Service, the Richmond, Va., company that managed the reassessment of 1989. ``I wish I could respond with a real logical explanation, but I haven't been involved with those appraisals.''
Pearson said the common property and open land was assessed seperately and that those assessments were not included in the individual properties.
Luther P. Ford, the appraiser who did the reassessments as an employee of Pearson's Appraisal Service, no longer works for the company and could not be reached for comment. Ford is currently appraising Currituck properties for the 1997 reassessment.
Dozier said Ford visited ``each and every'' property in Corolla Light.
Pearson said that after the 1989 assessment, an inordinate amount of complaints came from property owners in the Northern Outer Banks in Currituck.
``I know that when we finished that project, there were a lot of complaints and a lot of changes made,'' Pearson said. ``There was a big outcry from the taxpayers.''
Pearson said the property owners in Corolla Light should have complained about their assessments at that time, if they thought they were overassessed. ILLUSTRATION: Color photos
David Holton is representing property owners who think their taxes
were raised to make up for a tax break for developers.
ROBIE RAY
The rezoning of the plot containing these tennis courts in the
Corolla Light resort community led to the discovery that similar
``open spaces'' in developments were not being taxed.
by CNB