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County will pay $35K of McDaniel’s legal fees

By Bridget Flynn
Staff Writer
Published: Tuesday, May 11, 2010 4:13 AM CDT
LA PORTE — Two major advances were made Monday night in the resolution of the county property tax assessment dispute, but it also means La Porte County taxpayers will likely be forced to pay County Assessor Carol McDaniel’s legal fees.

County Commissioners held a special meeting in which they voted 2-1 to approve the property tax settlement in two Indiana Tax Court lawsuits over the county’s property tax mess. Mike Bohacek was the sole commissioner who voted not to approve the settlement, saying he was voting his conscience not to pay $35,000 in legal fees for McDaniel.

“I have a real problem paying somebody’s $35,000 of essentially blood money,” he said. “I did agree to the mediated agreement, but I had hoped that she would not move forward with her threat to secure fees, but indeed she has.”

Bohacek also expressed disapproval of the timing of the request for the payment of the legal fees, which he said was not discussed in the mediation.

“In the 11th hour a change was made,” he said to his fellow commissioners and the audience.

Commissioners approved the payment on the condition that it be sent to McDaniel as taxable income instead of sending it directly to her attorneys.

“Her laywers can’t be paid directly because she brought that suit as a private citizen. Her action was not OK’d by the county,” Bohacek said. “If she wants that money, she’ll have to claim it on her taxes.”

No payment would be made until the settlement is signed by all parties and approved by Tax Court Judge Thomas Fisher. The basis for the settlement is already being challenged in Indiana Supreme Court by Long Beach resident Bill Wendt.

Bohacek noted that the Michigan City Area Schools district might suffer if the settlement were not approved, and mentioned that he has a child who attends a school in that district.

If the settlement is approved by all parties, MCAS will receive the full $8.2 million it could have lost if the 2005-pay-06 property values certified by Hinchman for the 2006-pay-07 tax year were used instead.

While County Commissioners Barbara Huston and Ken Layton voted in favor of the settlement they both expressed agreement with Bohacek’s comments.

“I too am dismayed by this,” said Huston. “I feel the county has been held hostage, and this is a ransom we have to pay.”

“None of us wants to pay this,” she added. “We think it’s wrong, but ... we have to move forward. This has to end somewhere.”

“I can’t say I disagree with anything Mr. Bohacek said,” Commissioner Ken Layton said.

Layton said it was “irritating and appalling” that the county will pay the fees. He added that if the county does not pay the fees, the county will suffer, and teachers will be unemployed and not be able to provide for their families.

“Ms. McDaniel is more at fault in this mess than anyone else in this county,” Bohacek said after the meeting. “It’s appalling to me that she would demand $35,000 in cash to make it all go away.

“There’s a difference between costs and fees,” he added. “That’s the hair-splitting that McDaniel’s attorneys used. I have a problem with that.”

The County Council then held a special meeting in which they unanimously approved the settlement agreement. The settlement now awaits McDaniel’s signature. When asked Monday night if she planned to sign it, McDaniel said to talk to her attorney, Mark GiaQuinta, who did not return a call for comment. Fisher’s approval would be the final step in the settlement.

After the council’s vote, County Attorney Don Baugher then read the following statement:

“We the members of the La Porte County Council realize the magnitude of the decision we are called upon to make. Although we did not create the property tax problems, we are a party to a solution. Having fully examined the details of the settlement proposal, we find it in the best interest of the taxpayers of La Porte County to accept the conditions that have been negotiated and are before us. We also recognize that the consequences of not settling this issue would be devastating to several county entities, including the closing of schools, the possible bankruptcy of towns and cities and the foreclosure on homes of La Porte County taxpayers. Should these events occur, it will not be because of any action, or lack of action, on the part of the County Council.”

A few of the other issues addressed in the agreement were:

• The parties agreed to use corrected 2006 retrended assessed property values for the 2006-pay-07 tax year, subject to further corrections on 5,640 properties. These properties were identified by Crowe Horwath, an independent accounting firm that reviewed the retrended property values presented by Nexus Group.

• The Auditor shall certify to the DLGF the net assessed values for 2006-pay-07 on a form which recognizes that the certification does not mean he is attesting to the accuracy of the values rolled to him, but instead indicates that he has received the gross assessed values, has performed the calculations for deductions, exemptions and abatements, and any other calculations required by statute, and has arrived at net assessed values.

• La Porte County shall prepare new bid specifications for the 2012 tax year reassessment. The successful bidder shall, in addition to the reassessment, be required to perform a review for the 2006-pay-07 tax year of those 5,640 properties identified in the Crowe Horwath reports in which grade, age, and/or condition had been changed. The Crowe Horwath reports included the following recommendation:

“We recommend that La Porte County require its consultant to fully document the reason that changes are made to parcel records and provide the County with copies of such documentation. Example (sic) of documentation that would be appropriate for a remodel would be a building permit or a photograph of the improved home.”

• The parties to this Agreed Order acknowledge that their agreement does not represent, and shall not be construed to be, an admission by any party of wrongdoing or fault, nor does it represent an agreement as to the accuracy of the assessed values.

— Staff writer Alicia Ebaugh contributed to this story.