When this appeared in the Bay Creek HOA Newsletter:
The Virginia Department of Transportation briefed Bay Creek residents on the status of the improvements planned for Old Cape Charles Road (Route 642). The purpose of the project is to provide safety improvements and enhance access to the Cape Charles Harbor. The roadway will consist of two 12’ lanes and 8’ wide shoulders with 4’ being paved, which will accommodate bicycles and pedestrians. The Bay Creek HOA sold a small strip of land for a right-of-way easement near the Bay Creek entrance to VDOT for $31,000. Kevcor Contracting Corporation was awarded the construction contract for $4 million. Notice to Proceed was given in June 3, 2016, and construction will begin in July 2016.
several citizens contacted the Mirror with concerns. Given the players involved, we agreed, and sent these questions to the Town of Cape Charles:
Did the developer (Bay Creek South, LLC) or the HOA sell the property? If the developer conveyed the (real estate tax paying entity) property to the HOA, a non-real estate tax paying entity, did the developer pay the real estate taxes to the County and to the Town when conveyed (and if conveyed) to the HOA? At the time the HOA (and/or) the developer (Keyser-Sinclair) conveyed the property to Kevcor, were the County and Town prorated taxes paid at the time of closing as required by State statute? The Purchaser of the Property has the liability to collect the Tax. Did the HOA, if the land was conveyed to it by Bay Creek South, make sure the prior taxes had been paid at the Closing in which the HOA received Title? Did Kevcor make sure all prior year taxes were paid as well? Did the County and the Town determine the value of the real estate? Was it determined to be Acreage or as unimproved real estate? Makes a big difference on the amount of tax to be collected and or paid. Did we determine that the land was ‘unimproved’ at the time of the sale to Kevcor?
We received this response:
I suggest you contact Chris Isdell, VDOT, with most of those questions, and then if you need information about portions of specific lots I can assist. I believe that the right of way would have been acquired by VDOT rather than the contractor, Kevcor. It appears that there were small slices of properties owned by private parties that were exchanged, however the associated tax, if delinquent, will remain attached to the remainder of the property that still bears that particular tax map number. Adjacent to those properties is another slice owned by Bay Creek HOA. An HOA is not subject to Property taxes. Any assessments or valuations would not have been handled by Town staff.
So, the question was simple, was any HOA property sold? It was confusing as to why a comment on adjacent properties was given. Treasurer Pocock sent the reply, which made us wonder. We regularly ask Ms. Pocock questions about town finances, and she is always very quick to respond, and very clear and concise in her answers (so clear, even we can understand it). We did not feel this response was adequate, so we responded:
Collecting taxes is usually the main role of the Town Treasurer, so it would seem we would know not only when but from who tax is collected. Also, I believe it has been policy that the County and Town usually confirm the amount the Purchaser is to pay, even if not collected,and added to the tax parcel. On January 1, 2017, someone will be responsible for it. It would seem logical that we would know whether the HOA or Bay Creek South sold land in the Town. Also, who communicates with the County on activities such as building permits, building improvements etc. so that they can adjust tax assessment/values? Does someone else in the Town do that? From the County’s standpoint, they would not necessarily know, so whose responsibility is it to confirm land/improvement value activities to the County?
We received this back from the town:
I do not personally see every transaction that passes through. When we get a payment from a closing, it goes directly to the accounts receivable clerk who posts it and files it away. If there is a problem with it, then I get involved. That being said, we did not do any title search work for those properties to my knowledge. Your concern that the town is losing tax revenue is without basis, however, because the tax file with assessments that we load will include the lots in their entirety prior to the sale. I checked with the County and they haven’t reduced the assessments for those properties. We will collect a full year’s tax on them. If after the bills are created Bay Creek South, LLC. and private citizens appeal to the County for a tax abatement due to the loss of a portion of their property, we will pro-rate the taxes for the portion of the year that the land was owned by them. Either way, the Town will get what’s due. It does appear that the slices sold to VDOT were owned by Bay Creek South, LLC, and not the HOA, unless they dipped a little deeper into the roadside. Jeb Brady, Code Enforcement Official, and his assistant report construction and improvement activities to the Commissioner of Revenue’s office on a regular basis.
Again, simple questions — what were the assessments on these properties, whether paid or not?How would they know or not know if the HOA was or was not involved? What is the formal process? How is it communicated? So, the Mirror responded:
Thank you so much, I really appreciate it. I was not so much concerned about the Town losing the revenue ($30k is not really a big real estate deal), but trying to determine just who sold it. When the press release noted that the HOA sold the property, of course there would be red flags (I fielded several queries about this. Given the players, that is not unusual); glad we could confirm it was Bay Creek South, LLC. I understand that you would not be aware of every single transaction, however given that these parcels are part of the 642 Improvement project, which involves Bay Creek South, VDOT, the town, the county and a contractor, I believe the public deserved some clarification. Once again, thank you so much for providing this information, it is very, very helpful. As a note, the HOA and VDOT so far have not provided any information; VDOT is still reviewing.
Somewhat confused, the Mirror contacted VDOT with the same set of questions, and this is the response:
Did the developer (Bay Creek South, LLC) or the HOA sell the property? The developer conveyed property to VDOT, but there were no delinquent taxes because taxes were paid through December 2015.
If the developer conveyed the (real estate tax paying entity) property to the HOA, a non-real estate tax paying entity, did the developer pay the real estate taxes to the County and to the Town when conveyed (and if conveyed) to the HOA? At the time the HOA (and/or) the developer (Keyser-Sinclair) conveyed the property to Kevcor or VDOT, were the County and Town prorated taxes paid at the time of closing as required by State statute? The Purchaser of the Property has the liability to collect the Tax. Did the HOA, if the land was conveyed to it by Bay Creek South, make sure the prior taxes had been paid at the Closing in which the HOA received Title? Did we determine that the land was ‘unimproved’ at the time of the sale to Kevcor or VDOT? All of these questions should be directed towards Northampton County because they handled the negotiations for several parcels. You can contact John Andrzejewski for assistance.
Did Kevcor or VDOT make sure all prior year taxes were paid as well? Did the County and the Town determine the value of the real estate? Was it determined to be Acreage or as unimproved real estate? Makes a big difference on the amount of tax to be collected and or paid. The HOA parcel was exempt from taxes.
Again, did the developer convey any HOA property? Yes or No? Confusing, why would the County handle the negotiations for the developer and or HOA? The County should be fully aware of the Annexation Agreement covering the Connector Road, so how was this Agreement enforced by the County? See below:
1. Under the Connector Agreement, Brown & Root agreed, upon satisfaction of certain traffic flow conditions (which conditions may have been met or why else construct the Connect Road?), to commence construction of a new access corridor from Route 184 to the Brown & Root property. Connector Agreement Para. 4. The Connector Agreement specifically provides:
Brown & Root’s obligations contained herein shall apply only to the property designated as Accawmacke Plantation. Furthermore, the subsequent purchasers of individual lots or other incidents of individual ownership shall not incur the obligations of Brown & Root contained herein. It is the intent of the parties not to impose the obligations of Brown & Root contained herein upon the consumers who purchase lots, condominiums, and or memberships within Accawmacke Plantation.
The obligations of Brown & Root, contained herein, except as provided above, shall run with the land and be binding upon the subsequent owners of Accawmacke Plantation, which owners shall assume all of those obligations and relieve the prior owner thereof.
Connector Agreement Para. 8.
2. Each of Baymark, Bay Creek, Bay Creek South and Bay Creek Marina Resort is a successor in title to Brown & Root with respect to all or a portion of the real property contained in Accawmacke Plantation, now Bay Creek at Cape Charles, and each has succeeded to Brown & Root’s obligations under the covenants with respect to streets, excess water and sewer capacity and connector road construction under the Annexation Agreements.
Given VDOTs response, the Mirror next contacted the County, and received this response:
Here’s some additional information. I don’t know if it answers all the questions. A property belonging to Bay Creek HOA was sold to the Commonwealth of Virginia (VDOT) for $31,300 on April 7, 2016.. The tax map numbers are 90-6-CA1 and 90-2-2. The paperwork was prepared by VDOT/VA Attorney General in Suffolk, Virginia. The HOA is a tax exempt entity as well as VDOT thus no tax issues. If the property was transferred from Bay Creek South LLC to the HOA, I would think the taxes would have been paid in order for the closing/transfer to be completed. However I do not have closing documentation to confirm. If there is anything else, please let me know.
John Andrzejewski, in an effort to provide some clarification, did provide the deed, which can be viewed here.
So the HOA did convey property? Then why would the town and VDOT say that Bay Creek South conveyed the Property??? If this did occur, how did the HOA independent board members vote as Bay Creek South could not vote under the VA Constitution? Were the HOA independent voters aware that Bay Creek South had an obligation under the Annexation Order to pay for the Connector Road? Just to be clear, Bay Creek South cannot convey HOA property, only the Board of the HOA can sell its assets and without Bay Creek South voting on it.Conveying the land to a third party HOA does not avoid the Annexation Agreement obligations as the Annexation Agreements are filed in the County land records as a condition of the Special Annexation Court’s requirement under Law No. 27 November 1991, which the County agreed to in its Circuit Court Order as well. The HOA might have significant liability if the terms of the sale and Title to property did not convey this continuing obligation.
Of note, at one time the Town was suing/attempting to move to auction the tax deeds for non-payment of taxes on various parcels in Bay Creek and Richard Foster had the property conveyed to the HOA by deed. Did Foster transfer the properties without payment of the prior year taxes, so the HOA board could move the Connector Road obligation to the HOA who then would sell the property to the VDOT?
If anyone can tell us just what really happened, we would appreciate it. We asked very simple questions, why can’t we get simple answers, unless officials are purposely obfuscatory. Something is going on here, and the stakes are very high. At some point, our government officials need to do what the public has entrusted them to do, and part of that is being sure that parties who are obligated to adhere to Law No. 27 are made to do so.