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Garage sale fiasco: Parking structure snafu could cost Detroit taxpayers million

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  • James
    Talk about getting the deal of the millennium at a neighborhood garage sale= .For a mere $370,000, local real estate investor Romel Casab bought more tha= n
    Message 1 of 1 , Sep 10, 2003
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      Talk about getting the deal of the millennium at a neighborhood garage sale=
      .

      For a mere $370,000, local real estate investor Romel Casab bought more tha=
      n half of a $13 million downtown public parking garage without the city's kn=
      owledge — thanks to a bureaucratic snafu.

      The city failed to pay a $2,411 Wayne County tax bill when it bought the st=
      ructure, located between Cobo Hall and Joe Louis Arena, and nobody caught th=
      e error for four years. With the taxes delinquent, in September 2002 the cou=
      nty auctioned the half-garage to the highest bidder. Now, the city and count=
      y are fighting together in court to nullify the sale.

      "The city screwed up. They're imbeciles. They're in denial," says Casab, wh=
      o expresses no compunction about his plan to reap a multimillion-dollar prof=
      it from the cash- strapped city. "They're not going to get away with nothing=
      . They're still trying to fight me. But I'm not giving up. They're not going=
      to win."

      Though the case is still in court, Circuit Court Chief Judge Mary Beth Kell=
      y issued an initial ruling in June that indicates the law is on Casab's side=
      .

      At issue is ownership of the Millennium Parking Garage at the intersection =
      of First and Congress streets.

      In 1997, the Detroit Building Authority — an agency that buys property and =
      constructs buildings for the city — purchased a surface parking lot near Cob=
      o Center for $3 million from a private company. At that time, the lot techni=
      cally consisted of two separate tax parcels.

      Detroit, like other governments, is generally exempt from paying property t=
      axes. But government agencies do have to pay taxes owed during the year of t=
      he purchase, as well as any back taxes.

      Shortly after the purchase, the city merged the two properties into one, an=
      d removed all references to 612 First St. — about half of the garage — from =
      city records.

      The city then spent $10 million to build the 634-car Millennium parking str=
      ucture on the site.

      Though city records from 1998 onward failed to indicate the existence of 61=
      2 First St. (which constitutes slightly more than half the garage, according=
      to Casab), Wayne County showed the address owed $2,411 in taxes.

      In 2001, Wayne County foreclosed on 612 First St. for $4,500 in taxes, fees=
      and penalties. When the city failed to pay, the property was put up for auc=
      tion a year later. Casab, who lives in Commerce Township, outbid four other =
      investors, obtaining the property for $370,000.

      About a month after the sale, as Casab was trying to get the deed to the pr=
      operty, the city realized what happened and sued the county, claiming govern=
      ment property can't be foreclosed on.

      A month after that, in November 2002, the county tried to cancel the sale b=
      y allowing Detroit to pay its outstanding bill. The county also tried to ref=
      und Casab's money.

      "I sent the money back," says Casab. "I'm not crazy. I want the property."

      The city argues in court documents that the sale was illegitimate because t=
      he county didn't notify Detroit before the foreclosure, as required by law. =
      Jim Noseda, an attorney for the city, says the county has acknowledged as mu=
      ch. Wayne County attorneys didn't return calls seeking comment.

      But, the county did give some notice, according to court documents.

      The last known owner of the property was the Building Authority, and the co=
      unty did notify that agency, court documents show. A county official also vi=
      sited the garage, but nobody was there, according to the documents.

      Casab's attorney, Barry Steinway, says the problem was the city's record ke=
      eping.

      The city did not record its ownership of 612 First St. in city tax rolls or=
      with the Register of Deeds, so the county could not notify the city of the =
      pending foreclosure on the property, Steinway argues in court documents.

      In addition, the city missed a "golden opportunity" to get the property bac=
      k, Steinway says. In July 2002, the county sent a certified letter to City C=
      lerk Jackie Currie and to Mayor Kwame Kilpatrick, listing tax-delinquent cit=
      y properties to be foreclosed, including 612 First St. The city paid off and=
      bought back 18 houses, but not the garage.

      The record-keeping problem is haunting the city. A recent Metro Times inves=
      tigation showed that the city's tax rolls are peppered with errors and incon=
      sistencies, a major factor in some $60 million a year in city property taxes=
      that go uncollected ("Dearth and taxes," Metro Times, Aug. 20- 26). Under f=
      ormer Mayor Dennis Archer, the city paid $3 million for a new computer syste=
      m to modernize the city's tax and assessment rolls.

      City Treasurer Clarence Williams said recently the new software should grea=
      tly improve the city's record keeping, but the system "has a long way to go.=
      " Meanwhile, the city has hired a collections firm to pursue tax scofflaws.

      According to court documents, the recordkeeping error with the Millennium g=
      arage occurred during the data conversion from the city's old computer syste=
      m to the new one.

      Whatever the reason for the foul-up, Casab says it's not his problem.

      "You can't sue the person who bought the property," contends his lawyer. "W=
      e want our deed plus damages."

      Casab says he won't drop the suit, despite growing legal bills.

      "We're fighting the city, we're fighting the county, I'm fighting everybody=
      ," says Casab.

      Judge Kelly ruled in June that Casab's company, Michigan Financial Investme=
      nt, is the rightful owner of 612 First St. and that the city lost its rights=
      to the parcel when the county foreclosed. Despite the ruling, last month sh=
      e allowed the city to file another motion arguing the sale was illegal becau=
      se the city didn't get notified. She's expected to make a final ruling soon.=


      Should the courts continue to rule in Casab's favor, the city will end up p=
      aying dearly for its mistake.

      In a recent motion, city lawyers state, "the public has suffered the loss" =
      of a garage that's "crucial to serve the immediate demands of the downtown c=
      entral business and planned expansion of the central business districts." Th=
      ey call Casab a "tax scavenger."

      Casab is unmoved, saying he either wants half the parking revenue from the =
      garage — which he estimates to be about $200,000 a month — or as much as $10=
      million for the city to buy him out.

      Casab says it's only business.

      "Do you feel bad when the city takes houses away from people who've been li=
      ving there for 30 years?" he asks. "The city doesn't worry about that. When =
      someone doesn't pay their taxes, their property gets taken away. That's the =
      law. Why should the city be different? They got caught in their own game.

      "I love the city, I always have. It's my city. I was born there and grew up=
      in the city. All my life, I'm a Detroiter."

      The sentiment isn't going to stifle his chance to turn a huge profit.

      "I own half a parking structure, or a little more. I'm entitled to half of =
      what it's worth, or a little more. This is a business venture. I'm not in it=
      for making friends," Casab says.



      Lisa M. Collins is a Metro Times staff writer. E-mail lcollins@metrotimes.c=
      om.
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