Judge said he doesn't have authority to remove tax lien from Shamokin apartment complex
SUNBURY - Northumberland County Judge Charles Saylor ruled last week that he doesn't have the authority to direct Northumberland County Tax Claims Bureau to remove a tax lien of $14,736.31 on Madison Court Apartments or remove the property owned by Shamokin Housing Authority from future tax sales.
In his Nov. 26 two-page order, Saylor said, "In the ordinary case, property tax liens are accorded non-dischargeable status, that is, a bankruptcy proceeding and order would have no effect on the ability of municipalities to recover taxes due and owing from the debtor's estate by virtue of a lien on any realty. Property tax liens must be specifically discharged by a bankruptcy court. The bankruptcy court's order relates to general creditors of the bankruptcy estate and does not express any specific intention to discharge the property tax lien at issue."
Saylor issued the order after hearing brief arguments in the case Nov. 6 from tax claims bureau solicitor Vincent V. Rovito Jr. and housing authority counsel Frank E. Garrigan.
Rovito said he was pleased with the judge's ruling. The attorney said the housing authority can appeal Saylor's ruling within 30 days to the state Superior Court.
The housing authority filed a civil complaint May 10 against the Northumberland County Tax Claims Bureau and its director, Jan Nestico, to remove a property tax lien of $14,736.31, as of April 2013, on the apartment building at 614 N. Shamokin St., Shamokin, and to prevent the bureau from listing the property in future tax sale advertisements.
Between 2009 and 2012, the city's housing authority was locked in legal battles with Red Gold Enterprises Inc., and company president Eugene Picarella over a $1 million mortgage on the then-Center City Apartments. The authority accepted the mortgage in 2009 from the Pennsylvania Housing Finance Agency (PHFA) after Northumberland County Court dismissed with prejudice a previous foreclosure action filed by the PHFA when Red Gold failed to pay on the mortgage for approximately 11 years.
After Saylor agreed with the authority's motion that the mortgages were still valid, Red Gold appealed the ruling in higher courts, all the way to the state Supreme Court, and each affirmed Saylor's decision. With no more appeals left, the company filed for bankruptcy in September.
On Dec. 10, U.S. Bankruptcy Court Judge John J. Thomas ordered Center City Apartments, its petty cash account and funds from the rents the housing authority collected from tenants and kept in escrow, be transferred to the authority with a deed in lieu of foreclosure. The transfer of property took place Dec. 30 and Shamokin Housing Authority has renamed the property Madison Court Apartments and has managed it since.
According to the civil complaint, the tax claims bureau sent a bill for $14,736.31 certified mail to the authority in April. Rovito said the bill was for unpaid property taxes for a portion of 2010, and all of 2011 and 2012.
That period matches the time frame of disputed ownership.
Rovito said the authority gives the tax claims bureau a payment in lieu of taxes yearly, and the property fell into that category when Shamokin Housing Authority took it over in 2013.
Garrigan previously said since the taxes, liens, claims and any encumbrances were discharged by the bankruptcy court at the sale, the judge should give full faith and credit to the bankruptcy court order.
Could be sold
According to the tax notice, if payment is not made or legal steps are not taken to challenge the claim, the property will be sold without consent. It was the same fate that almost happened with Center City in 2009, but a last-minute $74,000 payment from Red Gold for taxes from 2004 to 2008 was made on the eve of Northumberland County's first judicial tax sale.
The housing authority and tax claims bureau were at odds over the matter, since authority executive director Ronald Miller felt the payment was made too late, after the property had already been put up for tax sale previously, with no bidders.
Wording on the current claim states, "If you pay this claim after July 1, 2014, but before the actual sale, the property will not be sold, but will be listed on advertisements for such sale."
Authority officials claim the authority does not owe the money because one of Thomas' conditions states, "the (bankruptcy) trustee, the debtor and the debtor's creditors shall have no further liens, encumbrances, claims or interest against the property being transferred following the closing."
The authority claims the tax claims bureau was listed as a creditor in Red Gold's bankruptcy proceedings and received a copy of the trustees' motion for the private sale of the property "for leave to give a deed in lieu of foreclosure," and a notice that any objections to the sale had to be filed by Dec. 6. No objection was filed, they say.