TO: Mayor and Members of City Council
THRU: Kristoff Bauer, Deputy City Manager
FROM: Cynthia Blot, Economic & Community Development Director
DATE: February 25, 2019
RE:
Title
Consideration to Waive Interest Penalties
end
COUNCIL DISTRICT(S):
Council District(s)
2
b
Relationship To Strategic Plan:
Goal 1: Safe & Secure Community
Goal 2: Diverse and Viable Local Economy
Executive Summary:
The property, 442 S. Eastern Boulevard, is located in an Opportunity Zone and has attracted investment for redevelopment. The City’s current assessments on the property totals $290,463.77, which includes $87,554.77 in interest penalties.
The current owner, Lender RH Fund XIV, LLC, has contacted the City with a request to waive the accrued interest totaling $87,554.77.
The Lender has an interested buyer and acknowledges the original assessment amount cannot be waived or reduced, but that the City has discretion in reducing interest penalties.
Total investment from borrower is reported to be $1,400,000.00
Investment includes: acquisition of property, site improvements, and construction of a new 5,000 sq. ft. facility. A total of 8-10 new FTE’s will result in the development,
Buyer agrees to pay the City of Fayetteville’s original assessment amount, all back taxes, and outstanding liens.
Benefits to the City:
The property has sat abandoned for several years and is an eyesore on a major commercial corridor. The property will become revenue producing and create 8-10 FTE.
Purchase contract has been executed.
City will collect assessment fees, and back taxes.
Property Address: 442 S. Eastern Boulevard, Fayetteville, NC
Parcel# 0437-90-7308 See attached Schedule “A”
a/k/a Budget Inn Tract I & II
Lender/Owner: RH Fund XIV, LLC
c/o Bell Davis & Pitt
P.O. Box 21029
Winston-Salem, NC 27120
Background:
Budget Inn was owned and operated by Prakash Patel and Daxaghen Patel.
Prakash Patel and wife Daxaghel Paten owned and operated the Budget Inn located at 442 S. Eastern Boulevard, Fayetteville, NC since acquiring the property in 2005.
In 2010 a number of violations occurred, resulting in a multitude of Notice of Violations.
*2010-102012- Zoning; Dumpster screening: NOV issued 6/4/2010, Compliance on 7/8/2010
*2010-102012- Zoning; Dumpster screening: NOV issued 6/4/2010, Compliance on 7/8/2010
*2010-102016- Zoning; Sign Maintenance: NOV issued 6/4/2010, Compliance on 7/8/2010
*2010-102011- Solid Waste: NOV issued 6/4/2010, Compliance on 6/25/2010
*2010-108385- Sub-standard Building: Blight Hearing Notice issued 9/30/2010, Hearing Order issued 10/11/2010, Compliance 9/2/2011
*2012-105419- Sub-standard Housing: Dangerous Hearing Notice issued 1/14/2013, Hearing
Order issued 1/28/2013, Demo Ordinance issued 7/22/2013, Demo Completed 5/23/2014
*2012-108216- Zoning; Sign Discontinued: NOV issued 8/30/2012, Compliance on 9/13/2012
*2013-006728- Solid Waste: NOV issued 6/25/2013, Citation issued 8/7/2013, Non-Abated
Notice issued 8/27/2013, Compliance 4/3/2014
*CE20150112-00311- Solid Waste: NOV issued 1/12/2015, Compliance on 4/9/2015
*CE20180927-11141- Solid Waste: NOV issued 12/12/2018, Citation issued 12/31/2018
The City has levied 5 assessments against this property totaling $202,909.00, more specifically described as follows:
1. Account # 20317 for a lot cleaning and demo in the amount of $36,900.00 plus interest.
2. Account # 20703 for a lot cleaning and demo in the amount of $78,650.00 plus interest.
3. Account # 20704 for a lot cleaning and demo in the amount of $78,199.00 plus interest.
4. Account # 20711 for a lot cleaning and demo in the amount of $1,050.00 plus interest.
5. Account # 20712 for a lot cleaning and demo in the amount of $8,110.00 plus interest.
The 5 assessments have amassed interest against the liens in the amount of $87,554.77, totaling $290,463.77.
Additional encumbrances to be paid at close of sale.
Cumberland County Collections Division Manager
P. O. Box 449
Fayetteville, NC 28302
2018 Taxes - 2018 taxes are due in the amount of $2,331.11.
2014 taxes past due in the amount of $5,923.15, this amount includes interest and fees through 1/31/2019.
2015 taxes past due in the amount of $2,851.48, this amount includes interest and fees through 1/31/2019.
2016 taxes past due in the amount of $2,681.62, this amount includes interest and fees through 1/31/2019.
2017 taxes past due in the amount of $2,598.08, this amount includes interest and fees through 1/31/2019.
Foreclosure Judgment - On March 15, 2018, a judgment was filed in file no. 17 CVS 6532 in favor of RH Fund XIV, LLC, Plaintiff, against Prakash Patel and Daxabahen Patel, Defendants, in the amount of $282,124.36 plus $92,664.01 costs and fees, plus interest.
Issues/Analysis:
The property has sat abandoned since 2010, and is an eyesore on a major highway corridor into the City.
Budget Impact:
The City will collect assessment fees totaling $202,909
Options:
Approve the Consideration to eliminate interest fees at 442 S. Eastern Blvd.
Deny the Consideration to eliminate interest fees at 442 S. Eastern Blvd.
Recommended Action:
Approve the Consideration to eliminate interest fees at 442 S. Eastern Blvd
Attachments:
Property Assessment Information
Police Data
Pictures of current conditions