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Feather River Bulletin
Quincy, California
November 10, 2010     Feather River Bulletin
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November 10, 2010

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FEATHER RIVER ing Areas Since 1866 Wednesday, Nov. 10, 2010 Vol. 50 CENTS Part I1: Nakoma back taxes PROMISES of a GOLDEN TOMORROW Schoff perspective In a statement submitted to the Portola Reporter Oct. 22 after Part I came out, Michael Schoff addressed issues raised by the Oct. 20 article's recounting of the current status of taxes owing for the Nakoma Golf Resort. Proposals for eliminating penalties and interest accruing had been submitted to the county and are the subject of the accompanying article. The rest of his press release is verbatim. "Instead of taking an ad- versarial position, Schomac believes the county adminis- trators should appreciate the fact that we are trying to make formerly economically unviable properties produc- tive and beneficial to the county, homeowners, in- vestors and the general public. It is our belief that many in the community at large share this opinion. "It is sad to see Plumas County, a place with such natural beauty and unreal- ized potential, remain largely impoverished. Having spent nearly every summer in the Sierras since I was a young- ster, I spearheaded Schomac's investment in Plumas County because I love it here. In 2005, I set out to revitalize the Graeagle area with the acqui- sition of the Feather River Inn, which was on the brink of ruin. Earlier this year the Nakoma Golf Resort, having suffered through almost six years of bankruptcy, was acquired with the same objective in mind. As a direct result of the experience Schomac had with our redevelopment efforts at the Feather River Inn, our investment commit- tee was adamantly opposed to further investment in Plumas County. As an article appear- ing in this same edition (Oct. 20) outlined, the High Sierra Rural Alliance sued the county for its preparation of an environmental impact report for the redevelopment of that historic property. Although it was the county that prepared the report, they told us they would not defend the action unless Schomac paid the legal expense. We agreed to do so. After a process that has gone on for years now, the matter has finally come before the judge. "Regardless of this costly litigation and delay with the Feather River Inn, I per- suaded the committee to go along with the purchase of the Nakoma Golf Resort. Their approval had a condi- tion: I was to come out of a 14-year semi-retirement to personally supervise the project. I willingly did so. "During the six years Nakoma was ill bankruptcy, the county has charged penal- ties and interest on the delin- quent taxes ranging between a low of 18 percent and a high of 28 percent per year. In an interest environment of 2 percent to 3 percent, that appeared to us as unjust en- richment. This exorbitant penalty and interest burden is simply not manageable in the face of the significant deferred maintenance and operational losses Schomac is facing. In our opinion, it is not unreasonable that we are asking the county to accept full payment of all past due taxes, but with some con- sideration of eliminating or reducing the penalties and interest. "There is considerable merit to the county helping Schomac keep Nakoma flour- ishing. The one-time mitiga- tion of penalties and interest we asked the county to con- sider is a small fraction of the future sales, occupancy, property and other taxes that will be generated to the county, year in and year out, not to mention the ripple effect the revitalized resort operations will have on revenue generation for the county (new employment, in- creased tourism, new home purchases, more commercial and residential develop- ment). As a result, we believe the county should be doing everything in its power to help Schomac make our resorts operational. "It is true that Plumas County is a 'teeter' county, meaning that when property taxes are not paid, the county draws from reserves. When the Nakoma properties were brought out of bankruptcy, Schomac offered to pay all of the delinquent taxes in full, without discounts and with- out objecting to the past assessments on the proper- ties, even though they had been overvalued based upon See Schoff, page 9A The Indian Maiden statue (Nakoma), complemented by the Indian Warrior statue (Nakomis), is located in a reflecting pool at the entrance of the drive to the Nakoma Clubhouse inside Gold Mountain. The pair of statues was created by Frank Lloyd Wright to go with the Nakoma architectural design: models of the statues adorned his office desk. The maiden is all curves while the warrior statue is linear and angular. "Nakoma" means "1 do as i promise" in the Chippewa lan- guage, Gold Mountain promotional literature informs us, and the information was repeated in the press announcement is- sued at the purchase of Nakoma by Nakoma Associates LP last April. The announcement looked forward to "a new and milder course" at Nakoma Golf Resort and expressed hopes for a har- monious working relationship and mix of facilities between the Nakoma Golf Resort and Feather River Inn. Photo by Diana Jorgenson More taxes paid Diana Jorgenson before they became delin- Portola Editor , County coffers were recently replenished with a second check in the amount of $235,508 from Nakoma Associ- ates LP (NALP) for the pay- ment of back taxes on Gold Mountain assets purchased from bankruptcy last April. This reduces the outstanding tax bill for the Nakoma Golf Resort to $440,000 and brings the total of Nakoma Associ- ates' tax payments to $440,500, a halfway mark. Along with the reduced as- sessments to clubhouse and golf course, County Assessor Chuck Leonhardt lowered values on the villas based on the relief that was extended to the owners of individual villa interests. That recalculation of five "parcels," which had just been implemented during the writing of part one of this series, resulted in a decrease of $35,263 in their total tax liability. Between the recalculation of timeshares and villas and the lowering of assessment values of the clubhouse and the golf course, a total of about $95,500 has been shaved off the Nakoma tax bill since its sale to Nakoma Associates. But, according to isaac Rothschild, attorney for the Schomac Group, the bulk of NALP's dissatisfaction stems from interest that has been accruing from 2004 and 2005. In a letter to Plumas County Counsel Craig Settlemire, Rothschild suggests a couple of approaches that the county might consider. Although generally constrained from going back further than three years, NALP's attorney found that the county could cancel penalties and charges if the delinquency was due to reasonable causes and circumstances beyond the taxpayer's control. "The failure to pay the taxes as they came due was clearly beyond the control of NALP as it was not the owner of the land at the time the tax became delinquent and continued to incur penal- ties and interest, creating new delinquencies," said Rothschild. County counsel responded, "If we accept your argument that the failure of a predeces- sor in interest to pay taxes quent is beyond the control of the current owner of the property, every purchaser at a foreclosure sale, bank- ruptcy sale, or any purchaser subject to taxes would be entitled to a waiver. It is our understanding that your client knowingly bought the property from the bankruptcy trustee as to the accrued taxes, penalties, and interest and undoubtedly received a lower price giving credit for such encumbrances." The second proposal, wrote Rothschild, would be for NALP to pay the entire tax liability, if there were an agreed-upon settlement with regard to future tax credits or agreed-upon refund in place prior to payment. Settlemire responded that in regard to seeking a refund based on an alleged error in the assessment, the Plumas County assessor had already lowered values on the club- house and golf course as well as the villas. "The assessor does not expect to make any further changes." Settlemire then reviewed the process that the county follows: first the taxes must be paid in full, then an appeal for a refund can be filed with the Board of Equalization (i.e., Board of Supervisors). NALP should provide any facts showing any errors in assessment and provide that documentation for staff review. "While the decision to issue a refund and enter into a settlement is for the board alone, staff may evaluate the evidence and determine the recommendation that may be made to the board," he finished. In a follow-up e-mail writ- ten prior to Piumas County's response, Rothschild de- clared, "At this time, the Schomac Group is prepared to pay all unpaid taxes regard- less of whether any future agreement is reached; hope- fully, this will provide some relief to the county." There was a big "however": "However, the payment of all the taxes and especially the accrued penalties and interest will deplete the working capital for Nakoma Golf Resort. If an agreement cannot be reached with See Taxes, page 9A With a brilliant 38-0 victory at home against Portola last Friday night, the Quincy Trojans reclaimed the perpetual trophy and won first place in the Mid-Valley League. For the full story, see page 1C. Photo by Shannon Morrow Rll[!![!lklll!l!l!lJliJ[l00 To subscribe to the Bulletin, call 530-283-0800