At its meeting
Tuesday night the Porter County Council heard that a third-party assessment
professional found office space leased by the County for the Porter County
Prosecutor’s Child Support division at 15 N. Franklin Street is more than
1,000 square feet smaller than some records state, according to an
application for a tax exemption.
was 3,200 square feet according to the original lease and 3,972 according to
an application for a tax exemption--is actually less than 2,800 square feet.
The County has
leased space for the Prosecutor’s Child Support division at 15 N. Franklin
Street since 1999. The original lease has been extended several times since,
most recently by Commissioner President at the time John Evans, R-North, at
a January 21, 2014 Commissioners meeting where it was not on the agenda and
one Commissioner was absent. At the time, the lease was several years from
expiration, and the extension appears to have been secured at an
above-market value price in the absence of a fair market rent analysis. The
owners of the property have also benefited from a tax exemption since 2009.
15 N. Franklin
Street was bought by Courtney Morgan LLC in 2004, whose registered business
agent with the Indiana Secretary of state was Charles Williams at the time
of the extension. Charles Williams, also known as Chuck Williams, is a
Valparaiso businessman and the Treasurer of the Indiana Republican Party.
Later in 2014,
after the secretive extension current Commissioner Jim Biggs, R-North, who
was on the County Council in 2014, termed “lucrative,” Courtney Morgan LLC
sold the building to its current owner, 15 Franklin LLC, whose registered
business agent is William Ferngren, a Valparaiso attorney.
Until receiving a
May 29 letter that revealed that the lease was valid through 2024, and a
rent increase of 2 percent per year begins in 2019, the current
Commissioners and County Attorney Scott McClure were under the impression
the lease expired this year, and they could soon move Child Support into the
old jail building they acquired in April for $3.6 million as part of their
$30 million capital improvements plan.
At least two
members of the County Council--Dan Whitten, D-At-large, and Sylvia Graham,
D-At-large--have said that their vote to release funds for the jail purchase
hinged at least partly on moving the Child Support office to save money on
the lease, which has cost the County $87,757.32 annually for the past four
The early extension
of the lease in 2014 was supposedly a response to $30,000 in upgrades to the
office paid for by the building’s owner, but has raised the ire and scrutiny
of the Council, Council Attorney Harold Harper, the Commissioners, McClure,
and the Property Tax Assessment Board of Appeals (PTABOA), which granted a
tax exemption on the property.
At the County
Council’s meeting Tuesday, Whitten renewed his concern about the way the
lease was extended, the price the County pays for it, and how it affects
taxpayers. “It’s problematic. Very problematic,” he said.
“I have great
concerns that the square footage isn’t jibing up on all three of these
venues, for lack of a better term, not just because it’s county money, but
because there’s federal reimbursement money here too,” Whitten added.
The County is
reimbursed with federal funds for two-thirds of the cost of the lease,
according to McClure.
In addition to the
extension being approved at an above-market price by only two Commissioners
at a meeting where public notice of the discussion was not given, the owner
of the property receives a tax exemption granted by PTABOA. According to
County Auditor Vicki Urbanik, the building’s owner has gotten nearly a full
year’s rent in tax breaks since 2009.
records from Porter County Assessor Jon Snyder, Williams took advantage of
an Indiana Statute that allows property owners who have property leased by
municipal entities to file for an exemption on their property taxes.
Snyder said in June
that the exemption appeared to be in order, except for the discrepancy in
square footage listed on the lease and the application for exemption. The
lease states that the County is using 3,200 square feet of space, but the
application says the County uses 3,972 square feet.
Soon after, Snyder
reached out to 15 Franklin LLC to have them remeasure the square footage of
the space Child Support uses. They were given the standard 30 days to comply
with the request.
“I’m not saying
but it’s probably
At the Council
meeting Tuesday, Whitten called on Snyder to give an update on his progress
with the property. Snyder said he retained the services of Scott Potts, an
assessment professional from Assessment Analytics, Inc. who has contracted
with the County before, for a third-party evaluation of the property at the
behest of PTABOA. In a letter to the Council dated July 30, Snyder said he
finds Potts’ work very accurate, and his office has “relied upon his
expertise at complex sites, such as hospitals, mills and big box type retail
In his letter,
Snyder also said he was contacted by Sharon Allen, who claimed to be a
property manager of 15 N. Franklin. Earlier this year, Williams was still
managing the property. Lately, the Assessor’s office and Potts have
communicated with Allen.
Potts reported he
had access to the whole property. He remeasured everything and concluded
that Child Support uses only 2,758 square feet of the space.
Potts said Allen
supplied blueprints with shaded portions indicating the space leased by the
County. When he measured, he found those drawings inaccurate, and the
inaccuracy was limited to the Prosecutor’s Child Support space.
“The only oddity of
this building was the Prosecutor’s office, and it was quite odd,” he said.
Potts added that “Nothing else varied by more than 20 square feet” in the
building, even despite odd angles in the second-floor lobby.
Potts said the
other units in the building were measured for leased space using interior
measurements, but it appears Child Support wasn’t.
The exterior walls
are two feet thick, Potts said. If an odd storage area and the exterior
walls are figured in as leased space, then the number starts “getting in the
ballpark” of 3,200 square feet. According to Potts and Snyder, using
exterior measurements for leased office space is not common practice.
Vice-president Jeremy Rivas, R-2nd, asked if the storage area was part of
the space leased by the County. Potts said it was shaded on the blueprints
Allen gave him, but he said it was “a dead space at the top of the stairway
going up from the basement.” He added, “There’s lots of spiders in that
space. I don’t think anybody goes there. I may have been the first one to
visit it in a while.”
Whitten asked Potts
if he saw any signs of the $30,000 in improvements the lease extension
promised. Potts said he couldn’t know for sure.
“I can’t find any
indication that walls were moved or not moved because of the way the
building is constructed. If you were to move an interior wall, there would
be no scarring to the interior walls or ceiling. There’s no way to really
tell,” he said.
“Bottom line is we’re only using 2,758 square feet. The contract’s for
Larson, R-At-large, said the lease looks more and more suspect to him, as if
laws have been stretched. “We’re probably beyond stretching,” he added. “I’m
not saying that it’s illegal, but it’s probably very close.”
Larson also noted
that litigation on the matter could get very costly despite clear problems
with the paperwork, to which Whitten agreed. “I think we need to make some
decisions about how far down the litigation road we’re willing to go,”
“We do want the
resolution that is quickest and best for the taxpayers,” Whitten added.
Rivas said, “I
think we need to coordinate an executive session with the Commissioners
because this is something I am not interested in moving forward with.”
The Council expects
to meet in executive session to discuss the legality of the lease and the
potential for litigation surrounding it. Whitten also suggested that the
Council ask the Commissioners how soon they can move the Child Support
office. In the meantime, Whitten, Rivas, Larson, and Council President Andy
Bozak, R-1, were vocal about having reservations about allocating any more
money for the lease at the Council’s upcoming budget hearings.
Snyder said the
earliest PTABOA could take any action on the matter would be mid-September,
as all involved parties would have to receive 30-days notice. Snyder said he
will keep the Council updated.