RAYMOND – A member of the Raymond Board of Selectmen this week is criticizing the board’s recent sale of tax-acquired property, saying the board failed to “maximize” the sale for town taxpayers.

It’s been a dozen years since the town of Raymond sold off land acquired after property owners refused to pay their taxes.

But after noticing a significant uptick in taxpayers failing to meet their property tax obligations in 2009, the board starting discussing a process by which the town would seek payment. Wanting to crack down on delinquency, it was decided the town would commence the foreclosure process in hopes that property owners would realize the gravity of the situation. And if owners refused to pay, the board would acquire and sell the properties to recoup the unpaid taxes.

After many months of whittling the list from 50 delinquent taxpayers last summer to three, the board voted last Tuesday to accept the highest bid for two of the three properties, one off Valley Road and another on Daggett Drive. The other property’s bid was deemed too low.

Selectman Charles Leavitt, who voted against the two sales, says the town’s taxpayers ended up with a “bad deal” when the selectmen voted 4-1 to approve a $13,000 bid for 15 wooded acres appraised at $18,000 off Valley Road and a Daggett Drive property appraised at $59,000 for $21,000.

“My concern is for the town’s welfare,” Leavitt said. “There was absolutely no need to rush this process, but I feel that’s exactly what happened. The numbers just weren’t good. I think we rushed and didn’t get a good return. I would say however that the bidders got a very good deal.”

One of those winning bidders was Leavitt’s fellow selectman, Michael Reynolds. Reynolds, who makes his living buying and selling properties, posted the winning $13,000 bid for the 15-acre, landlocked Valley Road property, $10,000 more than the only other bid but still $5,000 less than the appraised value.

Leavitt believes the town should have either waited for a higher bid or perhaps held the property for future use, possibly as open space or for the Raymond Conservation Commission.

“Why wasn’t that considered? I’m sure this is a property that would have been appealing to John Rand or others,” Leavitt said.

Rand, head of the Conservation Commission, said he wasn’t made aware of the available acreage, which abuts Morgan Meadow, an 1,100 acre parcel already owned by the organization.

Rand, who admits he bears some responsibility for not knowing about the available acreage, said Wednesday he wasn’t sure the commission would have bought the property. “But, let’s put it this way, it would have been nice to know about it since those are the types of acquisitions the Conservation Commission might have been interested in,” Rand said.

Reynolds said he bought the property to diversify his holdings. He consulted a lawyer and researched the property in order to bid according to the land’s fair market value.

“I was never in a position in the last year and a half to afford something like this,” Reynolds said. “But I find myself now in the position to afford investing in a piece of property. So I called my lawyer and he actually recommended don’t touch it, you’ll never get a clear title.”

The land’s former owner, who now lives in Michigan, had failed to pay the taxes on the property since 2004. In order to sell the property, Reynolds has to track down the owner to have him sign a title, using a private detective in the process.

With legal fees, private detective fees and other expenses, Reynolds said he expects to end up paying $5,000 in addition to his $13,000 winning bid.

“I figured out what my costs would be and subtracted that from the appraised value. That’s how I arrived at the $13,000 bid. I also had a long talk with my legal counsel as well as my family because I felt I needed to justify my bid with logic,” Reynolds said. “So I didn’t have any inside information. Also, the size of my bid, percentage-wise, was the highest of any of the bids received for either property. In my case it was 70 percent of the value of the property.”

Also, Reynolds did not take part in the votes on either property. “I didn’t even talk. I recused myself not only from the vote but also from the discussion,” he said.

Minimal profit

While Leavitt doesn’t accuse Reynolds of profiting from his position on the board, he says the $13,000 the town received for the property isn’t reflective of the actual worth of the property. Leavitt thought the selectmen should have either demanded a higher price or taken ownership of the property and devised better uses for the land, especially once the town received the relatively low bids.

“We’re talking 15 acres of land. The board is supposed to maximize (these sales) to the greatest extent possible for the residents of Raymond,” Leavitt said. “That didn’t happen in this situation, nor with the Daggett Drive property. At the least, there’s lumber to be had on that (Valley Road) property, which is a real asset. There was no mention of that during our discussion.”

Town Manager Don Willard said the town was fortunate to receive the bids given the state of the economy and the fact that neither property had a clear title. Despite the assessed value of $59,000, Willard said the Daggett Drive property winning bid of $21,000 was commensurate with the actual value of the property since it has an illegal foundation that the town’s code enforcement officer said needs to be removed prior to development. The cost estimate for removal of the concrete foundation was $34,000.

Poor process

Leavitt also questions the bidding process and advertising campaign the town undertook while soliciting bids. He said they failed to advertise in the major daily newspaper in the region and flip-flopped on whether bidders would be responsible for paying back taxes as well as legal and advertising costs the town incurred while preparing the properties for sale.

Leavitt contends that all bidders should have been made aware in writing – preferably in the advertisement posted on the town’s website and in local newspapers – that they were bidding only on the value of the property, not any added costs and back taxes.

Willard said this week that all bidders were told the same information when they inquired: that their bids were for the value alone.

“What is important is that all bidders got the same information,” Willard said. “It is also important to note that the bid documents were silent on any additional charges so therefore a logical conclusion would be that no such fees were to be imposed on top of any bids received. What perplexes me is why this issue continues to make Charly nervous after town counsel rendered an opinion that to impose such fees on top of bids would not only be highly unorthodox but would likely have also confused and discouraged potential bidders.”

The town’s law firm, Bernstein Shur, developed the language in the request for bids. Attorney Rob Crawford said he used a bid form based on other towns’ tax acquired property bid process and that Leavitt’s contention that bidders weren’t fully informed is inaccurate.

“If you put in a lot of complicating details, that complicates the process,” Crawford said. Crawford said it behooves towns to list few details of the properties up for bid since there may be “any number of liens” placed on a foreclosed property, and that ultimately, the responsibility for investigating the history of a property lies with a bidder.

“The bidder has to figure out if this is a good investment. We don’t want to be the guarantor,” Crawford said.

Willard said Leavitt is blowing the issue out of proportion and that the advertisement, which was drawn up by Crawford, was appropriate. “If it wasn’t in the bid form, it wasn’t something we were asking for,” Willard said.

Compromising

Leavitt’s main contention is that the process could have been compromised since all information wasn’t in written form upfront. He also argues that allowing town employees to present “oral representation” on the properties up for bid when bidders inquired over the phone or in person at town hall could have jeopardized the process by giving some bidders information others didn’t have or didn’t think of asking.

“Is it proper to give oral representation on open bids to one bidder and not all of them? I don’t think so. The process could have been compromised. We need to avoid even the perception of conflict of interest,” Leavitt said, specifically referring to whether some bidders thought their bid should include value plus costs and back taxes, or simply the value alone.

Others, including Willard and Board of Selectman Chairman Joe Bruno, point out that Leavitt never uttered any of these concerns prior to the vote, and if he was dissatisfied with the vote he should have made it known during the seven months of discussions prior to last Tuesday’s vote.

Leavitt counters that he tried to get the process halted last week and that the gravity of the situation didn’t hit him until recently when examining past e-mail discussion among board members and town employees.

Internal memos

Leavitt said Willard answered an e-mailed request by Bruno for clarification on what the bids included by indicating the bids only took into account the value of the property. Leavitt says that if the chairman of the board was confused by the process, then bidders could have been confused as well.

Bruno said his e-mail seeking clarification from Willard was a lapse of memory.

“Frankly, I am human and I just forgot. After I was reminded about it I remembered everything. As you can imagine I am fairly busy and I just spaced it for a minute. Everyone was given the same information so these are all specious arguments trying to discredit a process that passes all legal muster, and everyone was supplied the exact same information,” Bruno said. “Trying to make it seem that I was confused and therefore others were also, is completely false. I was only seeking clarification from a process that extended over months.”

Leavitt, however, believes the e-mails point to a flawed process.

“Basically, this was not an airtight process,” Leavitt said. “In addition to the town not maximizing the return to the town, we’re seeing that the town absolutely didn’t understand the process.”