Atop a mountain near White Haven is a house constructed a few years ago to resemble a log home, with a large pentagon-style window on 1.38 acres.
It’s partially unfinished but was assessed at $198,900 for taxation purposes based on sale prices of other properties in the private Autumn Mountain Woodlands residential community near Interstate 80, which features mostly new homes.
This property stands out for two reasons:
• A corporation set up by Grigorijs Vilcins was able to buy it for only $500.
• The assessment may be reduced to $1,000.
Vilcins’ company, Mountain Terrace Properties Inc., landed this deal because it was on the winning end of an error and is exercising its rights under the law, according to a review of records and interviews.
Mountain Terrace Properties bought the house at 54 Mountain Terrace in Foster Township from the repository, a pool of tax-delinquent properties.
Repository properties can be purchased at any time and are sold for as little as $500 because nobody wanted them at two prior tax auctions, including popular free-and-clear auctions in which liens and back taxes are removed.
The property was added to the repository in March 2013, and Mountain Terrace snatched it up that November, county records show.
Most properties that land in the repository are rundown structures, land slivers or large undeveloped parcels with access problems or other hurdles — raising questions about why the valuable Foster Township house escaped the interest of competitive bidders who flock to free-and-clear auctions.
The possible reason: it was not listed in a free-and-clear auction as required.
Representatives of Northeast Revenue Service LLC, the county’s tax-claim operator, recently reviewed their records and have concluded the property was mistakenly added to a repository list due to “human error.” Company officials say it’s the first time they’ve discovered such an error.
The company said the property may have been inadvertently lumped in with two other tax-delinquent properties that had been owned by the same person, Daniel McDevitt. These two properties did not sell at free-and-clear sales and went into the repository, where they were purchased by two other corporations listed at the same White Haven post office address as Mountain Terrace, records show.
What’s the check and balance to detect such a mistake?
Northeast Revenue must notify all three taxing bodies — school, county and municipal — of proposed repository sales because they have the right to research and reject them.
Some schools and municipalities have paid little attention to these notices in the past, although that may be changing.
Wilkes-Barre officials, for example, took steps in June to ensure Northeast Revenue’s notices about pending sales were forwarded to the solicitor’s office for a review after discovering no city representatives had objected to the repository sale of an eyesore property the city had slated for demolition.
Prior county manager Robert Lawton had approved repository sales at the time Mountain Terrace bought the property, which meant there was no public disclosure or discussion that could have raised flags about why a property assessed at nearly $200,000 was proposed for sale at $500.
Lawton later determined this process made him uncomfortable and asked the county council to start publicly approving proposed repository sales. Under the current system, details about the purchases are publicly discussed at both a work session and public meeting.
The assessment reduction stems from the state assessment law, which includes special provisions for repository properties to prevent them from remaining in limbo with no taxes paid.
The law says the sale price of a repository property “shall be deemed to be the fair market value of the property for tax assessment purposes.” That assessment can’t change until the property is sold, improved or revalued as part of a new countywide reassessment, the law says.
County Assessment Director Anthony Alu said the county has long required repository buyers to file assessment appeals to qualify for this reduction, but some lawyers and property owners have privately questioned the legality of imposing this step instead of automatically lowering the value.
Attorney William Vinsko, who is representing Mountain Terrace, said he is awaiting county judicial rulings on three assessment reductions for repository buyers seeking values mirroring their purchase prices.
“I want to work with the county and other taxing bodies because they have procedures they want to follow, but we believe the law is clear,” Vinsko said. “The goal is to make the assessed value the repository sale amount because we’re trying to keep in conformity with the Pennsylvania assessment law.”
County Chief Solicitor Romilda Crocamo said Friday her office will be completing a review of all procedures involving repository properties.
Alu noted the lowest value permitted in the county’s assessment system is $1,000 — a threshold set by a prior administration as part of the last reassessment that took effect in 2009. Vinsko said his clients have agreed to that amount, even though it’s not technically the purchase price.
Mountain Terrace would pay $15.88 in school, county and local taxes combined with a $1,000 assessment, compared to a bill of $3,160 with the current assessment under present tax rates.
The company owes $10,000 in unpaid taxes for 2014 and 2015 because the owner, who could not be reached for comment, failed to pay as the tax challenge was processed. The property is eligible for an October first-stage sale if the debt or court action are not resolved.
Vinsko said he also is awaiting a court ruling on an assessment reduction request for a former Wilkes-Barre factory at 447 New Grove St. that Future Horizons PA LTD bought for $500 from the repository in March 2013.
Future Horizons owner Alex Zbinovsky, of New York, said he is exploring residential and commercial options for the property, which was occupied by several companies in the past, including Rex Laboratories in the 1970s.
“Until this tax appeal is resolved, I can’t proceed with a development project,” Zbinovsky said.