SUNBURY - The Shamokin Housing Authority (SHA) will go back to Northumberland County Court over Madison Court Apartments, this time to have a disputed debt removed from the property.
SHA 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., and to prevent the bureau from listing the property in future tax sale advertisements.
Legal battles
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 the Northumberland County Courts 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 Judge Charles 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 SHA 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 on Dec. 30 and SHA has renamed the property Madison Court Apartments and has managed them since.
No more liens
According to the civil complaint filed May 10, the tax claims bureau sent a bill for $14,736.31 certified mail to the authority in April. Attorney Vincent V. Rovito, solicitor for the tax claims bureau, 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.
"The Authority gives us a payment in lieu of taxes yearly, and the property fell into that category when (SHA) took it over in 2013," Rovito said Friday.
According to the tax notice, if payment is not made, or legal steps are 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.
SHA and the 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's 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."
SHA claims the Tax Claims Bureau was listed as a creditor in Red Gold's bankruptcy proceedings and received a copy of the trustees's 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.
"It is a ministerial task of governmental agencies to comply with court orders and there is no discretion in the case for the defendants to continue to refuse compliance with the Order of the Bankruptcy Court," the affidavit reads.
Nestico referred all comments to Rovito, who said "the matter is ongoing."
Attorney Frank Garrigan Sr., of Shamokin, is handling the case for the Shamokin Housing Authority, in place of the authority's regular solictor, Frank Garrigan Jr., who has a conflict because he also serves as Northumberland County solicitor.