Lazaro Aleman
ECB Publishing, Inc.
The Jefferson County Commission recently spent nearly an hour discussing an issue that dated from more than a decade earlier and centered on a property that was once under the auspices of the State Housing Initiative Partnership (SHIP) program.
A state-funded program, SHIP is designed to help local governments provide affordable housing to very low, low and moderate-income residents, so that the latter can become first-time homeowners. The program offers other housing assistance as well.
Triggering the commission's Feb. 21 discussion, was the request of a tax certificate holder that the subject property be foreclosed and put up for sale so that the latter could recoup his investment. Certificate holders are individuals who pay the owed taxes on delinquent properties and in return collect interest on their investments. After a stipulated period of time, if the delinquent property owner hasn't paid the back taxes and interest, the certificate holder can call for the property to be foreclosed and sold so that the investment can be recouped.
The story that emerged from the commissioners' discussion concerned the Yeager Contracting Company, Inc., which in 2007 purchased a small property on the southeast side of town intending to construct a house.
According to the information provided at the meeting by County Attorney Buck Bird, Yeager purchased the property for $25,000 and expended $81,000 to construct a 1,350-sq. foot single-family dwelling that was to be sold through the SHIP program.
Bird told commissioners that Yeager gave the Jefferson County SHIP program a promissory note for $107,000 at zero-percent interest and a mortgage on the small lot. The expectation, Bird said, was “that the house would sell for $120,000 and the construction loan would be paid to the county with the difference being a profit for Mr. Yeager.”
Then the Great Recession hit. The house never sold, remained vacant, and the county put it on the tax roll in 2013. Today, the house, which has never been occupied, owes about $16,000 in property taxes, which is why tax certificates were sold on it and why the holder is calling for a deed sale.
Bird told the commission that Yeager was asking that the county pay the delinquent tax bill to prevent a foreclosure and the tax deed sale. Yeager also, according to Bird, was asking that the county invest $15,000 or so to prepare the property for sale, as its condition has deteriorated. Additionally, Bird said, the water and sewer service would have to be connected, at an estimated additional cost of about $4,500.
In return, Bird said, Yeager was offering to deed the property to the county in lieu of a foreclosure. Yeager was willing to do this even though the total dollars advanced on the $107,700 note were unknown and any paperwork to that respect was unavailable, Bird said.
He noted that the property appraiser office assessed the value of the house and lot at $76,275 as of August 2018.
Bird suggested that the county could make a counteroffer. It could pay the delinquent tax bill to prevent the tax deed sale, accept the deed from Yeager, and then choose whether to invest the money for the needed improvements, or sell it “as is” on the open market.
He noted that a tax deed sale to a third party would still make the latter subject to the county's promissory note and mortgage on the lot.
“Which could result in Jefferson County having to institute foreclosure action against the new owner and Mr. Yeager or negotiate a settlement with the news owner and satisfy the debt,” Bird said.
Commission Chairwoman Betsy Barfield objected strenuously to the idea of the county putting more money into the property. It was her contention that Yeager owed the county $107,000 and she couldn't see the county putting another $35,000 or so into an already bad deal. She was for proceeding with the foreclosure and the deed sale, she said.
Others of the commissioners, however, argued that having the house deeded to the county and the county in turn selling would recoup some of the losses. They saw it as the lesser of two evils.
Barfield argued for holding Yeager accountable? She termed it unconscionable that he should get away with not paying the loan and on top of it have the county paying to repair the house, connect the utilities and pay the back taxes.
Her arguments, however, failed to convince a majority of the commissioners. The board voted ultimately 3-2 to accept the deed in lieu of foreclosing on the property as Yeager had requested.
“The county is definitely a loser on this,” Barfield said.