Chesterton Tribune



Porter County may face lawsuit over disputed lease for child support office

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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 Appeals.

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.”

County Council President Andy Bozak, R-1st, declined to comment on the letter, citing the threat of pending litigation.

Commissioner Jim 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.

Chuck 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.


Posted 12/17/2018





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