Letter suggests $100,000 cash gift part of deal
A $100,000 cash gift from Nemacolin Woodlands Resort and Spa owner Joe Hardy to Uniontown Area School District was not part of the official settlement of a tax assessment dispute between those parties. But it was part of the deal, according to a confidential July 18 letter from school district solicitor Gregory C. Melucci to resort attorney John E. Garippa. Copies of that letter were sent to Uniontown Superintendent Charles Machesky and school board president Harry Kaufman, and to solicitors for the other three taxing bodies affected by the settlement: Fayette County and Wharton and Henry Clay townships.
Although the $100,000 donation from Hardy was widely publicized in mid-August, when he posed with Machesky for a newspaper photograph to mark the occasion, school officials basically have been mute on details involving the Nemacolin case.
Last week, Machesky said he had no knowledge of a letter mentioning the $100,000 being sent to school officials, but he pledged to try to track it down through the school district solicitor. Earlier, he said that the contribution from Hardy was not part of the settlement that staved off a civil trial in Fayette County Court.
However, the Melucci letter makes clear mention of the cash gift, along with setting the resort’s property values for 1999 through 2003 and giving the resort eight years’ worth of tax credits. While the other two components were crafted into the official settlement approved by the school board, the cash gift was purposely left out at Hardy’s request.
“I recommend that we address the terms of our arrangement into a settlement agreement which I will prepare; however, as your client requested, we will not state the cash gift,” wrote Melucci. “Nevertheless, as discussed, we would like some formal written acknowledgement by Mr. Hardy that a gift will be made in the amount of $100,000. He may determine what program or fund he wishes to benefit.”
Last week, Machesky said he had no knowledge of the school district receiving such an acknowledgement letter from Hardy. He again pledged to check with the solicitor to confirm its existence.
Machesky could not be reached for comment about the $100,000 on Tuesday.
The four-page settlement agreement approved by the school board in August, about the time that Hardy announced his cash gift, amounted to school district approval of negotiated assessed values for Nemacolin Woodlands from 1999 through 2003.
Those reductions were as follows: $4.8 million to $3.3 million for 1999, $4.8 million to $3.5 million in 2000, $16 million to $9.8 million in 2001 (the year the county changed its assessment ratio from 35 percent to 100 percent), $16 million to $10.8 million in 2002, and $68.5 million to $39 million in 2003.
Sources familiar with the case say that Nemacolin has $75 million to $100 million worth of real estate, based on building permits. But the resort based its appeal on the income/expense approach available to owners of commercial properties, which basically uses the financial bottom line to determine an assessment.
According to a worksheet in the school district office, at the agreed-upon assessment figures Nemacolin Woodlands was owed a $962,721 tax refund from the school district, a $218,379 refund from the county and a $34,017 refund from Wharton Township. Those refunds cover tax years 1999 through 2002.
Floyd Geho, school district business manager, said the school district did not keep an escrow account for the taxes that Nemacolin was paying in protest since 1999. As a result, the district faced the possibility of a one-time payback of nearly $1 million had the eight-year tax credit of $120, 340 per year not been part of the settlement.
“If all of it had to be paid back in one year, it would be devastating … we would have had to have an enormous tax increase,” said Geho. Based on 2002 figures, paying back Nemacolin in a lump sum would have added 6.41 mills to the district’s 52.15-mill tax rate.
Geho said one mill generates $150,000 in taxes for the school district, which didn’t have a large enough cash cushion to set aside the possible Nemacolin repayment in an escrow account.
“First of all, you don’t really feel that you’re going to lose these type of cases,” said Geho. “And if you escrow that amount of money, you’re going to have a tax increase (in those years) to make up the difference. That would be very difficult to do, based on the premise that we may lose.”
Geho said the school district paid $50,000 to James A. Lignelli for an appraisal report on Nemacolin Woodlands. Fayette County has agreed to pay a proportional share of that cost.
James A. Hercik, CPE, the county’s chief assessor, said the county also did not escrow its Nemacolin taxes and has agreed in principal to a four-year tax credit to pay back the $218,379 it owes. Hercik said it’s his understanding that Wharton Township plans to make a lump sum repayment of the $34,017 it owes.
The Fayette County commissioners have yet to sign the settlement agreement, preferring to wait until the county’s Tax Assessment Appeals Board hears the resort’s 2003 tax appeal at 4:30 p.m. today before taking any official action. Sources have said the commissioners don’t want to preapprove next year’s tax rate for the resort before it goes through the same appeal process as thousands of other properties.
According to a separate Feb. 7 letter to former Superintendent Darrell Uphold written by school district solicitor Melucci, Nemacolin Woodlands rejected a proposal to grant a Local Economic Revitalization Tax Assistance (LERTA) program for Wharton Township “in exchange for an agreed-upon valuation.” The stated reason was that Garippa said that no construction is anticipated at the resort in the next 10 years.
Kara Dolphin Beem, government affairs specialist for the Pennsylvania Newspaper Association, said that the school district had an “obligation” to hear from the public on the settlement agreement before approving it, and as such should have provided the public with a chance to “scrutinize” the terms.