Atlanta mayor got special treatment from tax chief

Atlanta Mayor Kasim Reed’s real estate investment company has been chronically late paying taxes on a vacant warehouse south of the city. And when one overdue bill got turned over to a collection firm, Fulton County Tax Commissioner Arthur Ferdinand — another prominent Democrat — intervened personally to get it back.

Ferdinand’s intervention, which spared Reed potential public embarrassment, runs counter to the aggressive tactics the tax office typically uses in selling liens on delinquent properties.

The chain of events, exclusively documented by The Atlanta Journal-Constitution through open records requests, left a bitter taste in the mouths of some who have battled with Ferdinand’s office over the years.

“It must be nice to have the ability to handle something like that without eight to 10 years of litigation,” said attorney Frank X. Moore, who has represented more than a dozen property owners pitted against debt buyers and the county tax office. “I would say, it sure pays to have friends in power.”

Reed’s lawyer, Robert Highsmith, denied that Ferdinand gave Reed special treatment. “He didn’t make an exception,” Highsmith said. “If the tax commissioner had not agreed with us (that the debt was sold in error), they would not have withdrawn the lien.”

Neither Reed nor Ferdinand consented to the AJC’s requests for interviews. Reed’s representatives pointed out that the company is now current on its tax bills.

His camp reiterated what Ferdinand himself had said in legal filings: that the lien should never have been sold, because the mayor’s company had already paid the taxes.

However, on that and other crucial points, their explanations do not square with records obtained by the AJC. The check for the tax bill was dated months after Ferdinand’s office bought the debt back from the collection company.

An investment that stalled

Reed’s tax problem had its roots in 2006, when he formed Cascade Investors with four other men to purchase property near his home in the southwest corner of the city. Reed was listed as managing member of the investment group until 2012, according to personal financial disclosures filed with the state and city.

According to the mayor’s spokeswoman, Sonji Jacobs, the partners also include Atlanta lawyers Lawrence and Robbie Ashe, father and son, respectively, of former Democratic state Rep. Kathy Ashe. The other partners are Aldrin Davis, a rap artist and producer better known as DJ Toomp, and Darrell Anderson, a longtime friend of Reed who owns a limousine company.

At a foreclosure auction in November 2006, Cascade bought a vacant warehouse on Fairburn Road, paying about $1 million. Seven months later the partnership purchased a 3.5-acre wooded parcel adjacent to the warehouse for another $425,000. Both properties lie in unincorporated Fulton County, a stone’s throw from the Atlanta city line.

The plan, Anderson said in an interview with the AJC, was to create retail space and loft apartments, akin to the development taking place on the north side of the city.

“We wanted to do something and create investment on the south side, where there wasn’t anything of that level going on,” Anderson said.

But their timing was off. The real estate collapse in 2007 stalled their plans, Anderson said, perhaps indefinitely. The warehouse sits empty. And since 2006, county records show that Cascade has repeatedly been late in paying its taxes, ultimately paying $15,000 in interest and penalties as a result.

Ferdinand takes a hand

During the 2009 mayor’s race, rival Mary Norwood blasted Reed’s failure to pay taxes on time. Reed narrowly beat Norwood.

When he became mayor in January 2010, Cascade Investors owed about $16,000 in overdue 2009 taxes.

Records show that in May 2010, the tax commissioners’ office sold that debt to Vesta Holdings, the county’s biggest buyer of tax liens. Vesta could have eventually auctioned off the warehouse to settle the account.

A week after the debt was sold, Ferdinand’s administrator of delinquent taxes, Terry Noble, sent an email to Richard Robinson of Vesta.

“Based on my conversation with Dr. Ferdinand,” Noble said, “I am requesting that you transfer the referenced parcel … back to to Fulton County as soon as possible.”

Reed’s lawyer, Highsmith, told the AJC that he did contact the tax office on behalf of Cascade, seeking to have the lien reversed. But he said no political favoritism was involved, because he did not mention that Reed was among Cascade’s partners.

Subsequently, the AJC obtained a letter, written by Highsmith, indicating that Ferdinand already knew of Reed’s involvement. That’s because Reed himself had previously spoken to Ferdinand about Cascade’s tax troubles.

According to the letter, Reed met with the tax commissioner in April 2010, seeking to clear up confusion over the address to which the tax bills should be mailed.

Queried about that meeting, Jacobs, the mayor’s spokeswoman, portrayed it as accidental, not an attempt by the mayor to involve Ferdinand in resolving Cascade’s tax delinquency.

“Mayor Reed checked on his tax records,” she told the AJC in an email, “and like any other citizen might do, went to the office in person. When folks heard he was in the building, they apparently told Mr. Ferdinand, who came out to speak with him.”

Jacobs said Cascade failed to pay the 2009 bill because it was sent to the wrong address: the midtown Atlanta law firm Holland and Knight, where Reed was a partner before becoming mayor.

Highsmith is the firm’s executive partner. As recently as 2012, he said in a letter to Ferdinand that the firm represents Cascade Investors in tax matters.

Jacobs said Reed had tried multiple times to change the address. However, the Tax Assessor’s Office, which is separate from Ferdinand’s office, and which maintains the address files, told the AJC it has no record of any attempt by Cascade to change where its mail was sent before 2012.

Highsmith also blamed a mailing mix-up for Cascade’s problems. He said neither the partnership, nor his law firm, received a legally-required notice before the county filed a lien against its property, and that’s why the Tax Commissioner’s Office had to undo the lien.

But records in Ferdinand’s office show a notice was generated well in advance. The AJC obtained a copy, and it bore Holland and Knight’s address.

It is not uncommon for property owners whose tax liens are sold by Ferdinand to claim they were not properly notified; Ferdinand’s typical practice in such cases is to tell the taxpayers to resolve the matter by satisfying the debt with the firm that bought it.

One more twist

In 2012, two years after his initial involvement, Ferdinand took another action that benefited Reed. He filed a document saying the county had erred in placing a tax claim against the warehouse in the first place. And he instructed the Superior Court Clerk to remove the lien from the record..

A stamp on the document said the lien was issued through “inadvertence,” and that “payment processed before lien was filed.”

But Cascade’s check was dated months after the county bought back the debt from Vesta.

In response to questions about the apparent discrepancy, Highsmith said Cascade had tried earlier to pay the taxes with a cashier’s check. No such check turned up in an open records request to the tax office for all checks received from Cascade, dating back to 2006.

Highsmith said he could produce a copy for the AJC, but he did not.

Ferdinand also nullified the only other two claims ever placed against Cascade’s properties despite years of late taxes, according to Superior Court records. The tax chief filed documents telling the clerk to remove both a lien for 2009 taxes against the wooded parcel and a lien for 2011 taxes against the warehouse because of “address change” issues.

Those who have tussled with Vesta and Ferdinand’s office over the years were livid to hear of Reed’s treatment. Moore, the attorney, said some of his clients have been held to a different standard despite having far better excuses for not receiving notice of taxes or liens.

One such client was Rita James, a grandmother in her 70s, who nearly lost her house because of a billing error.

After James paid off her mortgage, Moore said, she paid the tax bills that came to her house in her name.

But her house straddles two subdivision lots. Another bill, as well as notices of overdue taxes and notices of the lien sale, apparently went to Archie James, a person the woman had never heard of, at an address that does not exist.

Ferdinand’s office issued a lien, then sold the debt to Vesta, which auctioned the parcel. The winning bidder put a claim against James, and she had to hire Moore and take the matter to court to keep her home.

Last year Ferdinand’s office placed two liens against Mark Scott’s Buckhead house when he was three and two months late paying his city and county tax bills. A Vesta company bought the liens.

Scott paid $34,650 to settle up. He acknowledges that he was at fault, but he said he wishes he’d had the privilege of dealing with the county instead of Vesta. Taxpayers have long complained that Vesta makes little effort to inform them of debts and can be difficult to contact when they try to pay them off.

“It’s flat-out wrong,” Scott said of the way Reed’s firm was treated. “You need to be held to the same standard as the people that are paying your salary.”