LAST FEBRUARY, when Supervisor John McCowen pointed out that the County should not lend the ongoing parcel scam at the Brooktrails township just west of Willits the legitimacy of the County's backing, his fellow Supervisors voted 4-1 to let the scam continue, essentially saying they didn’t care: “Buyer beware.” Now it turns out that the County-approved scam is also costing the County tens if not hundreds of thousands of dollars a year out of the General Fund, according to Linda Williams in last week’s Willits News.
IT’S A CONVOLUTED SCAM compounded by state and county rules, further compounded by the ongoing real estate market depression.
HERE’S SUPERVISOR McCOWEN’S summary of the problem from last February (2011): “Many of these lots are routinely tax defaulted,” began McCowen, half expecting his colleagues to be sympathetic to his carefully researched analysis. “They are auctioned by the County. They are purchased often by speculators or unsuspecting members of the public. They currently are under a water moratorium. For many of them sewer is not available under any circumstances. They are postage stamp sized lots where it would not be feasible to do septic. So without sewer they are essentially unbuildable. People purchase these either directly, thinking they’re getting a bargain, or they purchase them from a speculator who bought them, often over the internet, pay exorbitant, inflated prices, then they start making the inquiries they should have made in the beginning. They find out they bought a worthless piece of ground. They quit paying on it. Eventually it tax defaults. We sell it again at auction, a speculator buys it up, resells it. I suspect some of these lots have been sold multiple times over the last 30 years, and, so, I’m looking at this as if the County in a sense is essentially complicit in fraud in that we know we are auctioning worthless lots, in some cases picked up by speculators, marketed to unsophisticated people. For the Brooktrails lots about half the names of the owners are Hispanic or Asian surnames. I think at a minimum, if we’re going to be selling these lots we should do everything we can to notify the public of the true condition of them. And I know that’s not in the economic interest of the County. But I’m asking the question, Is it ethical to just sell these lots on the open market or at open auction without providing the information about serious material defects that we know affects the value and the buildability of these lots?”
TURNS OUT that McCowen, as accurate as he was in his basic assessment, was wrong that having the County back away from the scam is “not in the economic interest of the County.” Why? Because, as Ms. Williams points out, more and more of the unbuildable lots are either being abandoned or sitting unsold, causing the County to lose tax revenues at the same time it advances the Brooktrails portion of the taxes back to Brooktrails from the County’s general fund (under the so-called “Teeter Plan”). The County also pays Brooktrails fire and water fees on the tax-defaulted, County-owned empty lots even though there’s minimal threat of fire and no water or sewer hook-ups. And Brooktrails is poised to jack up their fire and water fees by 50%.
UNTIL a couple of years ago, most of the Brooktrails lot owners would at least pay the taxes and fees on their unbuildable lots. And most of those that defaulted on their taxes were eventually resold to other unwitting buyers and the County would pick up the back taxes from the new owners, new owners who, like the old owners, were unaware that their new property was unbuildable. But now with the real estate market depressed, plus the increasingly high accumulated taxes, fees and penalties on these lots, owners are walking away without paying the County back. More and more of the lots sit unsold and the County has no chance of recovering the back taxes, not to mention the basic property tax revenue.
THIS IS NOT A SMALL PROBLEM. 4,089 (almost 75%) of the assessable 5,502 Brooktrails lots are vacant and are likely to remain so. No taxes were paid for almost 600 of the 4,089 vacant lots last year. Substantial penalties and interest accrues, but is only paid if the owner eventually pays it or if the lot defaults and is resold to cover the outstanding debt to the County. But who’s buying? Nobody. As the fees increase and accumulate it’s harder and harder to sell the unbuildable lots because the back taxes and fees can be more than the small lots are assessed for.
ASSUMING McCowen brings the issue back to the Board with this new information that the County is losing serious money on the scam, some of his fellow “we-have-no-money” Supervisors should see the light. (Although the way out of this convoluted tax mess now after all these years is far from clear.)
WHEN McCOWEN tried to point out the scam
His fellow Supervisors didn’t give a damn
Why can’t Brooktrails
Just keep up the non-sales?
Because Mendo can’t go on being Sacrificial Lamb.
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