Report for Executive Committee October 25, 2000 Meeting

Request to Cancel Penalties on Property Tax Arrears Re: Property Tax Roll Accounts 7298201, 7298219, 7298235, 346661 Alberta Ltd. and Nicholaos and Bonnie Papadopoulos, 12211 – 23 Avenue, Edmonton, Alberta

Recommendation:
That City Council approve a settlement for arrears of property taxes for 346661AlbertaLtd. and Nicholaos and BonniePapadopoulos as follows:
accept payments of $22,622.89 as full settlement of taxes outstanding in the amount of $62,054.78, which will result in the write-off of $39,431.89 in penalties.

Report Summary

· This report addresses a verbal request by the Papadopouloses to provide repayment of tax arrears.

Report

· The Papadopouloses and 346661 Alberta Ltd. own Lots 1, 2 and 3 in Plan 8022521, Block 35, 12211 – 23 Avenue, Edmonton, Alberta.

· The Papadopouloses constructed a 6,000 square foot house on Lot 3 in 1989 and 1990. In the fall of 1992, a large landslide occurred on Lot 3, which threatens the house. The house is currently on the edge of the bank and is supported by a number of concrete piles installed by the Papadopouloses.

· The City was sued on the grounds that it failed to warn the owners about geotechnical instability or failed to take steps during the development process to protect the house. The matter proceeded to trial in early 2000. Justice Bielby of the Court of Queen’s Bench found the Papadopouloses to be largely the authors of their own misfortune, particularly by over-watering the slope behind the house. They were found 65% responsible and the City 35% responsible. Written submissions on the amount of damages suffered have been filed with the Court and a decision is expected in the near future on the amount of the claim. The Administration has instructed that an appeal be launched on the liability split on the basis that it imposes too high a standard on the City with respect to the development permit process.

· After the slide occurred, the owners stopped paying taxes on the three properties. Over the years the amounts of the assessments have gone down to reflect the loss of land and loss of value in the properties. Expert appraisers retained by both sides for trial have agreed that the actual market value of the house on Lot 3 is zero because the property likely cannot be sold. The City sued for the outstanding taxes but has taken no steps to proceed to tax sale pending the outcome of the trial.

· In the spring of 2000, the parties met to discuss a possible resolution of the tax issue. The Administration is prepared to recommend that this matter be dealt with separately from the main litigation on the slide.

· The owners propose to pay all arrears on the properties if the City writes off the penalties. The owners do not feel that they should pay the taxes in light of the physical condition of the properties and pending the outcome of the litigation.

· Some of the penalties were accrued at a time before the assessments were reduced to reflect the lower value of the properties. If the matter proceeded to a tax sale, it is unlikely that any of the lots would ever sell in light of the risk that further slides could occur at any time.

· Tax notifications were originally placed on the properties in 1996 and, under the advice of the Law Branch, the properties were removed from the 1997, 1998, and 1999 property tax sales. A new tax notification was placed on the properties in 1999 and again the properties were removed from the 2000 property tax sale.

Justification of Recommendation

· Cancellation of penalties will provide an orderly payment of accumulated tax arrears.

Background Information Attached

Summary Analysis of the Accounts

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Attachment 1

Summary Analysis of the Accounts

Tax Roll No. / Net Levy Including Local Improvements / Payments / Tax Recovery Costs / Penalties / Outstanding Balances
7298201 / $10,201.65 / ($16,806.61) / $325.50 / $ 7,507.26 / $ 1,227.80
7298219 / $ 9,745.18 / ($15,593.74) / $325.50 / $ 6,698.75 / $ 1,175.69
7298235 / $34,174.91 / $250.50 / $25,225.88 / $59,651.29
TOTAL / $54,121.74 / ($32,400.35) / $901.50 / $39,431.89 / $62,054.78

Outstanding Balance $62,054.78

Less Penalties $39,431.89

Balance to be Paid $22,622.89

Attachment 1 - Page 1 of 1