Are the fees assessed by the city of Granite Shoals in the 1980s liens or taxes? Did the city “hide” them, and what’s the recourse for property owners stuck paying them? Those questions, as well as some people’s blood pressure, came up during the City Council’s regular meeting October 22.
The city sent out notices this past summer to let affected property owners know about outstanding liens.
John Kelso told the council he received a notice of an outstanding lien of $600 on property he owns that originally belonged to his parents. The initial lien attached to the property in the 1980s was $45 but has ballooned to the current amount due to interest.
“If they would have known, they would have paid that,” he said of his parents. “Y’all have kept that hidden.”
The city, however, disputed the “hidden” claim, one that has been previously made. In a statement he read during the council meeting, Mayor Carl Brugger countered that the city was actually trying to alert residents with property liens to their existence.
“First, the city did not hit landowners with hidden liens,” he read. “Through a series of ordinances adopted by the City Council in the 1980s, the city made assessments for the costs of road paving against the properties abutting the roads to be paved. A number of those liens have never been paid off. This summer, the city notified property owners if an outstanding lien still exists on their property in order to increase public awareness and clear up confusion.”
The day after the meeting, City Manager Jeff Looney explained that the notices were sent out to “educate and inform the public.”
“We want people to know they’re out there,” he said. “That lien will stay in there and continue to have interest put on the original amount. It only becomes effective when the (property owner) gets ready to sell the property.”
Looney noted that some people have already paid the claims.
Pastor Jackie English said he wasn’t surprised the liens have existed for this long. English has been the lead pastor at Christ Redeemer Fellowship in Granite Shoals since 1998 but a pastor in the community since 1977.
He said that, until recently, record keeping and ordinance tracking were challenging for City Hall. In the 1980s, the Granite Shoals city government was led by well-meaning people on the council who lacked the experience of running a city or “even a small, provincial place like Granite Shoals.”
“It wasn’t at all unusual for one administration to pass an ordinance, and by the time the next administration took over, people had forgotten what had been passed previously,” English said. “It might be in a minute book, but it wasn’t stored in anyone’s memory, so they didn’t know what they didn’t know. Without a professional city management team in place, there was no continuity, and it was really no one’s job to keep up with all of the moving parts of city government.”
Marilyn Kelso, who said her middle name is “research,” also addressed the council during the October 22 meeting. She spent 30 years working for the state of Texas, much of it in rules and regulations. She described the assessments the city was attempting to collect via liens as taxes.
She noted cities collect money three ways:
• taxes, which change, and “a person has no say whether or not they must pay a tax. An example is property tax.”
• fines, which are imposed punishment for offenses. “Fines can be gotten rid of,” she said.
• fees, which are sums paid or charged for a service. “Paying a fee to ride a tollway,” she said.
“Bottom line,” she said, “to try and collect these taxes and continue having these lines on the books is illegal.”
In his statement, Mayor Brugger said state law allows for the forgiveness of delinquent property taxes after a certain time has passed. But, he pointed out, the assessments for street improvements placed on these properties in the 1980s weren’t taxes.
“There is an exception in state law for delinquent property taxes that are more than twenty years old, but the courts of Texas have long held that that special assessments for street improvements are not taxes,” he read. “For that reason, the exception does not apply, and the Texas Constitution prohibits the city from cancelling these liens.”
Granite Shoals City Attorney Josh Katx explained during the council meeting that the liens issued in the 1980s for street improvements fell under the Texas Transportation Code.
“Today, it’s more common to issue bonds to avoid this whole issue,” said Katz, adding that, 50, 75, and 100 years ago, cities did these assessments. “Is it a tax? In the two cases I’ve found, it’s clear it’s not a tax; it’s an assessment. My legal position is that the city’s liens are assessments. Therefore, the tax code doesn’t apply to them.”
“The (Texas) Transportation Code is very clear on this,” Looney said. “Cities have used impact fees, and that’s basically what this was.”
Marilyn Kelso, however, told the council she wanted to see the paperwork regarding the initial notice of liens.
“Who was supposed to send out the notices in the original taxes?” she asked. “The ordinance states these notices had to be posted, each person had to be sent an individual tax for street improvements. Do you have evidence Granite Shoals notified the original owners?”
Without a paper trail to support that the original property owners were notified of the liens, Kelso urged city leaders to rethink collecting money on the “illegal liens and taxes.”
“That would be the right thing to do and the legal thing to do,” she said.
On October 23, Looney pointed out that past city councils put notices in area newspapers regarding these claims, but the current council is dealing with the aftermath of what happened decades earlier.
“The thing I think is sad is folks think the city hid something,” he said. “They’re blaming this council. This council didn’t hide anything. They brought it front and center. You have a good city council. They want to do the right thing.”