WHEN THE HOUSE BLOWS DOWN (OR UP)

Homeless in LA

The economic reconfiguration of the planet confronts us with rows of homeless people sleeping on sidewalks in the cities at the same time that Detroit and other cities are bulldozing streets of abandoned once-impressive homes.  But it is the individual story that makes the point.  In March, 2012, a Kalispell man named John Parsons, 57, exploded his house with himself in it rather than lose it to the company that had become owners by paying the delinquent taxes.  At the time I think most people just felt his reaction showed he was unstable and extreme.  Now it’s clearly part of something much deeper and more widespread.

Parsons' property is now a park.

The deeper part is the emotional identification people have with their homes, ranging from a kind of entitlement and marker of class to our centuries of assumptions about land ownership.  “House” stands for family, protection, and love.  But land ownership involves the European seizing of a continent from the original tribal occupants as well as smaller historical events like the Highland Clearances in Britain when land owners realized they could make more money if they fenced their land to raise sheep and therefore threw off the peasant tenants.  The more compassionate landed classes paid their tenants’ passage to America, pushing harder on the indigenous people there as they suffered military Prairie Clearances to make way for homesteaders.  Reservations were also divided into individual allotments.  The whole idea of “owning land” rests on boundaries arrived at through war, guarded by kings and governments with documents and maps.  The ultimate authority in Western countries always goes back to God, which means Rome.  Empire.

Another dimension of this complex is the practice of assessment, estimating the value of property.  Assessors are trained and certified, which does not mean they are immune to political manipulation or bribery, but they are necessary because government is based on funds provided by taxation and the taxation is proportional to value, which cannot be entirely determined by objective measurements.  I own some Scriver bronzes: their value goes up and down according to the popularity of his work, understanding of what he was doing, and a grasp of the over-all field of Western bronzes.  These can be manipulated which attracts speculators.  They are not good collateral for loans because they can be hidden too easily and because bankers don’t “get” art.

Pondera County Courthouse

In an effort to help citizens, Pondera County is open to requests for re-assessments of property.  A few years ago I used this to reduce the taxable value of my own house, partly because it has deteriorated since it’s original valuation and partly because the assessments are normally based on “drive-bys” rather than thorough inspection.  The curb appeal of this house exceeds its internal problems.  Also, the property includes a workshop originally built to be the temporary shelter for the rebuild of Swift Dam after the major flood of 1965.  It was minimal in the first place and, in the second, had no foundation.  I had planned to exploit it with something like a firewood business or cement castings for yards.  Instead I sat down to write and never stood up again.  The assessor did reduce the value of the property.  Also, the county provides a reduction in the rate of taxation to allow for the low incomes of elderly people.

None of this helped Mel Sheeren of Flathead County when the Montana Land Project paid his overdue taxes and took ownership of his house valued at $175,000.  

http://www.krtv.com/news/unpaid-property-taxes-translate-into-opportunity-for-mt-business.

In Flathead County Montana Land Project invested nearly a million dollars in more than 280 properties.  In Lewis and Clark County  it was the version called “Investment Properties Finance Group” that invested more than a million dollars in 200 properties.  An economic contraction often catches people who had stretched in order to build or buy a house at the outer limits of their financial capacity.  If I had been more realistic about my earning capacity, esp. given the surprising collapse of publishing, I probably would not have dared to buy a house, even one so modest as this one.

Another couple Marnee Banks interviewed was Tony and Ruth Rucinsky in Great Falls.  In general, the people whose property has been attached by these speculators are unable to get a response from the companies or even to find them.  But the Rucinskys were approached by a Great Falls lawyer, Jon Kudrna, who came to the house on behalf of Montana Land Protection and offered to let them rent their own house back so they could keep living there.  They have two sons.  

Another lawyer, Stephanie Oblander, has been the organizing manager of the company, and Brion Lindseth, also a GF attorney, has signed some of the tax deeds.  All of these names have disappeared from the state records, but both lawyers are evidently still practicing in Great Falls and show up on Google.  All these machinations are entirely legal but have major flaws in terms of justice, which is always the problem with law.

At one time in history citizenship was based on being a landowner, the assumption being that persons resourceful enough or lucky enough to have property would be more responsible and thoughtful as citizens.  As soon as I owned a house, the bank and insurance company liked me much better.  Taxes are an emotional issue and being “delinquent” in paying has implications of deliberate criminality.  Certainly the county officials, like Paulette DeHart, the Lewis and Clark County treasurer, felt that the threat was necessary.  In fact, she said, “It reduces our delinquencies by about 1%.  When you look at annually when we bill out $72 million and you look annually at what we take in on assignments or delinquent properties, it’s a little over a million, so it’s not a whole lot . . . but every nickel helps.”

Lewis and Clark County Courthouse

Today’s young adults, who don’t seem to be exposed to Civics classes anymore, probably don’t feel much guilt about not voting or not paying bills, judging from the additional fees for being late.  Instead they seem to think they are entitled to live where they want to, as my brain-damaged brother thought -- even after the family house was sold and all the furniture removed.  At one time, awareness of consequences and fear of community judgment kept people motivated to fulfill all obligations.  For people who still feel that way, coping with something like a sudden notification that a mysterious company has paid your delinquent taxes and may get title to your house is made more difficult by the waves of emotion -- guilt, fear, confusion, and shame.  Emotion may keep them from seeking advice and help.  This is helpful to the LLC's who like to deal with paralyzed people.

Michael Schestedt

Michael Schestedt, chief legal counsel for the Montana Association of Counties, put the problem dramatically.  “If you don’t have some way to enforce the payment of taxes, taxes don’t get paid and government grinds to a halt, and after you get done saying what a swell idea that is, the police don’t come or the Sheriff doesn’t come, the roads don’t get plowed.”  

Evidently no one has thought to ask whether the taxes on these millions of dollars of property are paid after they are acquired by the LLC’s.   At least I see no studies so far, but I'm just beginning to figure all this out.

According to Wikipedia, “A limited liability company (LLC) is a business structure that combines the pass-through taxation of a partnership or sole proprietorship or with the limited liability of a corporation.  An LLC is not a corporation; it is a legal form of a company that provides limited liability to its owners in many jurisdictions.” 

A flow-through entity (FTE) is a legal entity where income "flows through" to investors or owners; that is, the income of the entity is treated as the income of the investors or owners. Flow-through entities are also known as pass-through entities or fiscally-transparent entities. Depending on the local tax regulations, this structure can avoid dividend tax and double taxation because only owners or investors are taxed on the revenue. Technically, for tax purposes, flow-through entities are considered "non-entities" because they are not taxed; rather, taxation "flows-through" to another tax return.”

"Fiscally-transparent" evidently means invisible.  In short, there’s nobody there.  And no “there” there either.  So how does a home-owner deal with them?  Hire a lawyer?   Run for the legislature?  Contact the media?

Carl Suta, new sheriff of Pondera County