Posted Jun 6, 2010, 5:14 PM
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Flint 'can't afford' more than $7M owed for Genesee Towers after Michigan Supreme Cou
http://www.mlive.com/news/flint/inde...e_than_7m.html
Quote:
Flint 'can't afford' more than $7M owed for Genesee Towers after Michigan Supreme Court decides to not hear case
By Laura Misjak | The Flint Journal
June 04, 2010, 4:36PM
Staff writer Laura Angus contributed to this report.
FLINT, Michigan — A state supreme court decision this week likely doubled the city’s deficit overnight.
The city and its taxpayers are now on the hook for at least $7 million for the Genesee Towers — after the court refused to hear an appeal on the December ruling on Thursday — and taxes could be raised to settle the debt.
Flint attorney Peter Bade is determining whether to ask the court to reconsider it’s decision — a move he must make within 21 days of the June 3 decision.
“The supreme court’s decision not to take the case does not mean the plaintiff was correct,” Bade said.
The decision simply means the court didn’t think the Genesee Towers case would not affect state law, or that it was “not worth their time,” Bade said.
Bade said he believes the Genesee Towers case could impact declaring condemnation of properties and arbitrators’ approach on cases.
The city and the building’s owners — V. Kumar and Sasikala Vemulapalli — agreed to enter into arbitration over the property and its worth in 2006, after the city condemned the 19-story building in downtown Flint.
The decision in 2007 awarded the Vemulapallis more than $6 million — including legal fees but reduced by the cost of repairs, according to court documents.
City officials appealed, arguing the arbitrator exceeded his scope of authority in reaching the decision.
The case was appealed multiple times, until the Court of Appeals ruled in December that the arbitrator reached a decision based on the arbitration agreement and evidence presented, and found there was no error in the arbitration award.
City officials said they intended to appeal the decision, but the Michigan Supreme Court refused to hear the case Thursday.
The attorney for the building’s owner, Kenneth Harrison of Plymouth, said the bottom line was the city agreed to enter into binding arbitration and had to accept the outcome.
“If you don’t like it, tough — if you entered into that process,” he said.
If the city doesn’t pay up, Harrison said there is a law that requires the city’s treasurer to increase taxes immediately to pay the debt, though that is “nothing, of course, we want to do.” He intends to talk with the city about payments.
V. Kumar Vemulapalli, owner of Genesee Towers, declined to comment on the ruling and directed questions to his attorney.
“It’s up to the attorneys to decide where it’s going to go,” he said.
If the arbitrator’s ruling holds, the city may have to tack on a special assessment to property taxes, Bade said.
The assessment’s cost has not been determined, but Bade said the cost would most likely not be added to the 2010 tax rolls.
“The city can’t afford this judgment,” he said.
City administrator Gregory Eason said arbitrator’s ruling “will have a significant impact on the city,” and it’s $8 million budget deficit.
“This just only compounds our existing circumstances,” he said.
The administration and city council will discuss every financial path to help cover the costs, Bade said, but confirmed that state law allows the plaintiff to have the costs put on the tax rolls.
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