For more than five years, former mayor turned citizen watchdog Charles Neal kept an eye on the mounting liens against the former Army ammunition plant property in Riverbank.
The special assessment that is levied for fire services by the Stanislaus Consolidated Fire Protection District has never been paid on the Claus Road property that is owned by the federal government and leased by the city of Riverbank. The 173-acre developed property is currently assessed at a rate of about $56,000 a year.
Neal periodically went to the Stanislaus County Treasurer/Tax Collector’s Office to check the amount of the liens.
“They’d say they owe $300,000, they owe $400,000, they owe a half a million, and I’d tell the fire board about it,” Neal said. “Then one day, out of the clear, it comes up zero.”
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That was in late 2015; documents at that time show the lien was more than $620,000, including penalties and interest.
He asked, what happened? Were the liens paid? He was handed a letter to the contrary.
The district’s attorney at the time had written a letter to the county’s auditor-controller that authorized the removal of liens against the property. Eight years of nonpayment was forgiven from 2006 to 2014.
The property, still on the tax roll, again is collecting debt. There is nearly $100,000 in unpaid assessments from 2015 and 2016, and while the officials with Stanislaus Consolidated hope to be paid, the reason for nonpayment persists. The city and the fire district disagree over who is responsible for paying the assessment, and there are still unanswered questions over how the district came to the decision of removing the liens in the first place.
Neither Army nor city wants to pay
The property owner, the U.S. Army, has always responded to letters from the county tax collector by citing an article in the U.S. Constitution that federal property is not subject to local or state taxes.
Stanislaus Consolidated’s past and present attorneys agree with the Army and expect the city, which has occupied the property since 2010, to pay.
The Riverbank Local Redevelopment Authority is a city agency that oversees the former ammunition plant, now the Riverbank Industrial Complex. Six years ago it started with a few tenants and now has nearly 40.
The city’s interest in the property is in spurring economic development and it will eventually be conveyed to the city as part of the U.S. Department of Defense’s 2005 Base Realignment and Closure. The plan was for the Army to convey the ammo plant property to the city at the end of a five-year lease, but environmental cleanup has held up the process and will continue to do so for at least another two years, said the authority’s executive director, Debbie Olson.
In addition to $2.3 million the authority expects to collect in rent and utility payments from the tenants in the 2016-17 fiscal year, the Army this year and every previous year has given the city money for the maintenance, security and fire protection of the property.
The authority received more than $900,000 the first year of the lease in 2010. The amount decreased as more tenants were added to the complex; the most recent payment was close to $100,000.
“The City is currently in the unjustifiable and contradictory position where it has accepted over $1.9 million in ‘reimbursement’ payments from the Government for obtaining fire protection for the … site yet refuses to pay the District,” reads a 2014 letter to the tax collector by district board member David Woods.
Still, Olson says the city will not pay the assessment until it owns the property.
“The Local Redevelopment Authority and the city has always maintained that we will pay the assessments as soon as we are the property owners,” Olson said. “Those assessments fall on the property owner, which is currently the Army and therefore, (per) our legal advisers, we are not obligated to pay those until we own the property.”
She said the money from the Army, the portion of which is for “fire protection,” is intended for the repair, upkeep and inspection of the complex’s sprinkler system, which she said has amounted to about $150,000 since 2010.
Letters to the city by the one of district’s lawyers point to sections of the lease between the Army and the city stating the city is responsible for “any and all taxes imposed by the state or its political subdivisions upon the Lease Premises” and says the city is “reimbursed” by the Army for those taxes.
It goes on to say the district is the sole agency responsible for providing fire services to the complex.
Since the city began leasing the property in 2010, the district has been dispatched there eight times, including once for a trash fire, once for arcing or shorting electrical equipment, and twice for medical calls.
‘Both think they are right’
The district has asked the Army to put more concrete language in the next lease agreement with the city’s Local Redevelopment Authority, which has been in negotiations since the last one expired in March. A letter from the district’s attorney asks that the new lease specify the city is responsible not only for taxes but for the special assessment as well.
Stanislaus County staff, the tax collector and county counsel got involved as mediators in the dispute between the city and the district in 2011, when the former ammo plant property was delinquent for five years, the point at which a delinquent property would be put up for sale at public auction. But the county cannot sell a federal property. So for four years lawyers from the city, the district and the Army sent letters, each asserting its own contrasting views.
“Trying to get the two sides to talk to each other was tough; they both think they are right,” said Tax Collector Gordon B. Ford. “The fire district and the city of Riverbank and the federal government are all” going back and forth “and it’s the taxpayers who pay all the bills for the attorneys.”
Ford said the county was no longer involved in the conversation when the decision was made to remove the liens.
Questions elicit varied responses
It’s a decision that still has many unanswered questions. During public comment at board meetings Neal has asked who was involved in the decision, was there a vote by the board and was it done in secrecy?
The Modesto Bee asked the same questions and got a variety of responses.
The district’s chief, Matt Daly, wasn’t chief when the liens were removed in 2015, and the district’s attorney, Christopher Diaz, also was not there at the time. Both say they have no knowledge of whether the decision was voted on by the board.
Diaz said that while he doesn’t know whether there was board action, if there was, it was done in closed session and “they wouldn’t be required to report that out.”
The letter to the auditor controller was signed by the district’s previous attorney, William D. Ross. Ross said the decision was voted on by the board in closed session and reported out in open session; but board minutes from the four meetings prior to the lien removals shows no such action.
Woods, who was board president at the time of the letter, said the board never voted to remove the liens but would have liked to have had the opportunity.
Whether the the liens were removed without board action or if the board voted and the action was not reported, the decision was not made pursuant to the Brown Act, California’s open meeting laws, said Nikki More, an attorney with the California Newspaper Publishers Association.
“This decision is a substantive one that affects the finances of the district, and any prudent board would have a serious interest in discussing whether and why to remove the lien, and then should vote to take such action,” she said. “This should be done openly and publicly unless attorney-client privilege closed-session exemptions allow a portion of the discussion to be confidential. I think it is troubling that there is absolutely no history of making this action public and think it’s very likely that the Brown Act was violated to accomplish this under the dark of night.”
During closed session, Stanislaus Consolidated’s board discussed “potential” or “anticipated litigation” regarding unpaid assessments for the former ammunition plant property before the liens were removed and has continued to do so at least 16 times since. No action has been reported out, according to board minutes.
More debt for unpaid assessments on the property has accumulated. It is up to $99,395 for 2015 and 2016, said Assistant Tax Collector Jegan Raja.
If both the city and the district continue to stand their ground or if a new lease agreement between the city and the Army doesn’t provide some clarity, “In 2021 we have to start the same process that we did last time,” Raja said.
It’s unclear who will own the property then; Olson doesn’t expect it will be conveyed until at least 2019. Either way, the liens are associated with the property, not the current owner.