HOWLAND Golf course is taxing problem

An assistant law director recommended the city sell the golf course in 1997, calling it 'one big headache.'
HOWLAND -- A dispute between the city of Warren and the man contracted to run its golf course has been allowed to drift year in, year out, without much of a resolution.
Figures from the Trumbull County treasurer's office show that Anthony F. Joy Jr., president of Avalon South Management Inc., owes $49,254 in real estate taxes for the 131-acre Avalon South Golf Course in Howland, which is owned by the city.
Joy, contracted by Warren to run the course, is obligated to pay the property taxes, though he and the city are disputing who's responsible for some payments and for a few parcels of land included in the complex.
The land on which the 18-hole course sits along Warren-Sharon Road was given to Warren in 1917 by Judith Henn and was leased by Warren Chamber of Commerce for 62 years, ending in 1988.
Warren has paid Joy's tax bill a few times in the past, after he failed to do so.
Treasurer's office records show about $7,400 is due in back taxes for three other parcels that make up the property and a special assessment for sewer system upgrades.
Altogether, the taxes on the Avalon property are about $10,237 every six months. About 60 percent of property taxes goes to school districts, with the balance divided more or less equally between the counties and the communities in which property sits.
Joy was put on a payment plan in August 2000. He made one payment and has since defaulted.
Latest agreement: After the county threatened foreclosure, he agreed this past May to another five-year payment plan that requires him to make twice-yearly payments of at least 10 percent of the taxes without interest or penalty charges.
The payment schedule protects the property against foreclosure. If a payment is missed, the full amount, plus interest and penalties, is immediately due.
Sam Lamancusa, an administrative assistant in the treasurer's office, said Treasurer Christ Michelakis has put pressure on the city and Joy in recent years, sending a few letters that threatened foreclosure if payment were not made.
The treasurer said he thinks both sides are to blame for the delinquencies, noting Joy is making an effort to settle up.
The bills at one time were being sent to the city and weren't being forwarded to Joy, Michelakis said. They go directly to him now.
Though they've said it's never good to sell an asset in a time of financial constraints, city officials have said they are seeking professional appraisals on the property in case the decision is made to sell.
Joy said last week that Ron Klingle, CEO of Avalon Holdings, which runs Avalon Lakes Golf Course in Howland, has indicated he's interested in buying or securing a long-term lease to run Avalon South.
Mayor Hank Angelo said he's also been contacted by three private interests, as well as Howland Township, about buying the course, but, "My opinion is that I don't want to see the golf course sold."
David Daugherty, an assistant city law director, is concerned about Avalon South.
Here was situation: On May 2, 1997, he told then safety-service director Richard Thomas in a memo that Joy had never paid real estate taxes, despite the county's threat to foreclose on the property.
"I have looked at this matter and have come to one definitive conclusion and that conclusion is that this whole matter is one big headache," Daugherty wrote.
"No matter how you look at it, there are serious problems with the city's agreement with Avalon South Management Inc., both legal and practical."
At that point in the memo, Daugherty tells Thomas that Thomas could be found guilty of dereliction of duty if he does not enforce Joy's contract, which says he has to pay property taxes.
In March 1998, Daugherty, in a letter to Thomas and city auditor David Griffing, said Joy again defaulted and, "Therefore, it is in the best interest of the city of Warren to pay said taxes at this time to forego foreclosure proceedings."
Six months later in September, Griffing put out a memo, saying Joy's 1996 rental payment to the city, for $69,363, was not paid. It also said Warren paid Avalon's property taxes for $34,603 in 1998, $50,710 in 1996 and $97,977 in 1995.
In a memo dated this Sept. 4, Griffing tells the city Joy's 2000 rental fee was not paid. The rent is due Feb. 1 each year.
The city estimates that payment at $70,000 to $80,000.
Daugherty said he now has the same concerns he did in 1997, but the situation is worse because it hasn't been resolved.
Response: Atty. Thomas LaPolla, who represents Joy, said his client is doing "the absolute very best he can" to make payments but he's "on the edge of financial disaster" because he's struggling to make ends meet.
"He works like a horse and takes very little money out of it for himself," LaPolla said.
Joy was assured the property would not become taxable when he first took over, LaPolla said, explaining that the issue could be resolved if the city hired Joy and paid him as an employee to run the course.
Joy said he's not making money on the course, and although he's taken annual salaries home of $40,000 to $48,000 in past years, he has put $150,000 of his own money into it -- money he says he'll never recoup.
He admits he's looked into the possibility of walking away from the contract, but he doesn't want to do that.
The city has talked for some time about refinancing Joy's loan to make his payment lower. Joy says the bank lowered the loan's variable interest rate to about 7 percent, which he considers good.
In September 1989, city council passed an ordinance authorizing then-Mayor Daniel J. Sferra to advertise for bids and enter into a lease agreement for operation of the course for 10 years.
The city at the time was calling Joy's contract a "management agreement," but the Ohio Department of Taxation in 1994 reviewed the matter and said it is considered a lease agreement, for profit, and therefore, can be taxed.
Joy said he was assured by a prior administration that he'd never have to worry about paying property taxes.
The city could lobby for tax exemption if it allowed Joy to offer residents of Warren a discount on golf, he added.
Joy's lease agreement requires him to make improvements to the course, at his expense. In exchange, it allows him to pay the city a low-percentage annual payment of the gross profit.
Joy signed the contract in 1993, agreeing to pay property taxes and to pay the city 13 percent of greens fees, 10 percent from food and beverage sales, 12 percent from cart rentals, 10 percent from golf club storage, 10 percent from locker room fees, 10 percent from golf club rentals and 12 percent from driving range fees.
Bids accepted in 1988 for management of the course included Joy's company and American Golf Corp. of Santa Monica, Calif.
The city's engineering department recommended Joy, even though American Golf promised a slightly higher annual return to the city.
Officials at that time said American Golf's bid did not address some specified capital improvements, namely a fully automated irrigation system.
In February 1995, city council authorized Sferra to enter into a loan agreement between Avalon South Management Inc. and Second National Bank of Warren for improvements at the course, making the city responsible for paying off the loan if Joy didn't.
Griffing said the bank indicates that Joy has been delinquent in the past with loan payments but has always called to say when he would be able to pay.
The lease agreement says Joy was to make improvements at the course, including building a new clubhouse and restrooms and making roof repairs, not to exceed $425,000.
Records show the city did not seek bids before it chose T & amp;J Construction of Warren to build a clubhouse for $230,000.
Joy said he was told the city didn't have to seek competitive bids because he was paying for the clubhouse.
In 1992, Joy installed a sprinkler system with the help of M & amp;I First National Leasing Corp. for nearly $400,000. The city also agreed to back that loan. When Joy did not make prompt payments, M & amp;I took him to court.
That matter was settled for more than $170,000.
Joy contends these extra financial burdens make it difficult to operate the course and not take a loss.
There was also a storm a few years ago that took out a large number of trees that LaPolla said cost around $50,000 to clean up.
A city ordinance from 1995 says Joy had been performing adequately under the terms of his leasing agreement, which states that any default on payments or other obligations could void his arrangement with the city.
Joy's contract with the city ends Dec. 31, 2008.
Griffing said the city has talked numerous times with Joy and LaPolla, regarding payment and reimbursement. He said Joy has been cooperative.
The auditor's office has audited Joy's files to verify payments for several years, Griffing said, noting they all checked out.
Sferra, now a state representative, said that because Joy didn't know up front that he'd eventually have to pay taxes, the city should help him out.
From the city's standpoint, Avalon South has always been a good deal for the city because it makes money without spending any, Sferra said.
Angelo said the city has met with Joy twice in recent months and turned over information that the law department needs to look at before the matter can be resolved.
"I understand he owes us a lot of money and that's not going to be forgotten."