Porter County could
be on the hook for more than $526,000 in rent for the Prosecutor’s Child
Support division pending possible litigation from the landlord of 15 N.
Franklin in downtown Valparaiso, where the office was previously housed.
The Board of
Commissioners and Prosecutor Brian Gensel received a letter from Attorney J.
Murray Clark, of Indianapolis-based Faegre Baker Daniels, notifying the
County that Clark’s client, 15 Franklin LLC, may pursue litigation against
the County unless the Child Support office is moved back into the space at
15 N. Franklin or the County makes a written commitment to make the
remaining lease payments by Dec. 21. The payments total $526,543.92 through
Dec. 31, 2024.
The threat of
litigation comes after the County Council put approval of the 2019 budget on
hold to see if the lease was deemed valid by an independent law firm.
The Council voted
6-1, with Karen Conover, R-3rd, dissenting, not to appropriate funds to pay
the lease in 2019, opting instead to have the Commissioners move the office
following the October preliminary verbal opinion from third-party law firm
Newby, Lewis, Kaminski & Jones stating that the lease has been void since it
was first signed in 1999 based on a 1993 ruling of the Indiana Court of
The Child Support
office moved into its new temporary space just today, in the former Casa del
Mar restaurant on the first floor of the old jail building at 157 Franklin
in Valparaiso. The Commissioners added the costs for build-out of the
temporary space to their master agreement with Shive-Hattery, the company
renovating the jail as part of the Commissioners’ $30 million capital
improvements project, at their Dec. 11 meeting.
Clark’s letter says
his client, who is described as the “Landlord”--not the property
owner--disagrees that the lease is invalid because, “The lease has been in
effect for over 19 years and Tenant has voluntarily and willingly agreed to
extend the lease term and remain subject to the Lease three times,” and that
the argument that the lease is unenforceable is “without merit” because,
“Among other things, the time for the Tenant to raise such objections has
long since passed.”
President Andy Bozak, R-1st, declined to comment on the letter, citing the
threat of pending litigation.
Biggs, R-North, said the Commissioners knew litigation was possible and
stand by their reasons for voiding-out the contract. “We certainly can’t be
expected to ignore the law,” Biggs said.
“Maybe had this
contract, when it was extended, been properly advertised and all the parties
given proper notice, maybe we wouldn’t be in this situation,” Biggs added.
The Child Support
lease has been in question since the Commissioners, McClure, and the County
Council were surprised to learn it was extended at a 2014 Commissioners
meeting where Blaney, the only current Commissioner who was on the Board at
that time, was absent, the lease was far from expiration, and the item was
not on the meeting’s agenda.
The discovery of
the lease, and each subsequent red flag associated with it, raised the ire
of the County Council, who approved the $3.6 million for the jail purchase
in April expecting to save money on the lease for Child Support by
relocating its office. The Council hasn’t appreciated the lack of
transparency surrounding the extension.
The lease extension
was signed by Porter County Prosecutor Brian Gensel a week before it was
presented to the Commissioners, and the owner of the property has also
benefited from a tax exemption since 2009.
The tax exemption
has saved the building’s owner more than $80,000 in property taxes over its
life, according to Porter County Auditor Vicki Urbanik.
A third party
assessment professional also determined that the true square footage of the
space does not match up with either the application for tax exemption or the
lease agreement itself.
Based upon these
factors, the Property Tax Assessment Board of Appeals (PTABOA) voted 2-1 in
October to recoup the funds from the past three years of the exemption,
which is as far back as the law allows.
Williams--Valparaiso businessman and Treasurer of the Indiana Republican
Party--runs Courtney Morgan LLC, the company that managed the property until
it was sold to 15 Franklin LLC in mid-2014, shortly after the ten-year lease
extension went through.
It is unclear who
has managed the property under 15 Franklin’s purview since.
The Porter County
Assessor’s office, in the process of examining compliance with the tax
exemption, has been in contact with Williams, Valparaiso Attorney William
Ferngren, who is the registered business agent for 15 Franklin LLC according
to the Indiana Secretary of State, and another player, Sharon Allen, whose
job title is unknown, but who provided the Assessor’s Office with an email
address connected to one of Williams’ businesses. After the lease was deemed
void by Newby, Lewis, Kaminski & Jones, Commissioner President Jeff Good,
R-Center, and County Attorney Scott McClure had a private meeting with
Williams about the opinion before notifying the County Council or Biggs that
the firm had come to a conclusion.