By Donald Rodrigue
For Hometown News
MARTIN COUNTY -- Martin County Commissioners voted 4-1 on June 17 to settle the legal morass with the city of Stuart caused by property tax errors input more than 10 years ago.
With District 4 Commissioner Sarah Heard dissenting, the majority of the commission voted to accept an agreement negotiated last May that left neither of the parties completely satisfied. It requires the county to return $700,000 of the $1.4 million it held in community redevelopment area funds to the city of Stuart and $300,000 to Gulfstream Natural Gas System LLC, but allows Stuart to keep $1.2 million in gas utility taxes it mistakenly received from Gulfstream, one of the largest owners of taxable land in Martin County.
Calling it one of the most confusing legal matters he's ever experienced, Stuart City Attorney Michael Mortell says the confusion resulted, in part, from a tax error on condominiums developed on the northern bank of the St. Lucie River just east of the Roosevelt Bridge. That area forms part of the county's community redevelopment area, but the taxes on the individual units were not designated as being in the CRA. Another clerical error, he explained, placed the Palm City-based Gulfstream on the city of Stuart's tax rolls by mistake. Mr. Mortell filed a lawsuit late last December to preserve the statute of limitations on the amount owed the city by the county.
"All the correct taxes were collected in the CRA but they were dispersed incorrectly," Mr. Mortell said. "In addition, Gulfstream improperly paid the city of Stuart for its intangible tax when it owed none [to the city]."
Martin County Property Appraiser Laurel Kelly explained that incorrect tax codes were manually input several years ago and only discovered in 2013 after a purchase of high-tech computer software.
"We found the error as we were doing our normal quality control checks, and it was a coding error," Ms. Kelly said. "The values were correct, but the error was in how the taxes were allocated to the taxing authorities. We now have quality control steps in place to prevent this from happening again."
Martin County District 3 Commissioner Anne Scott represented the county in the May 22 negotiations and says county officials settled out of court because they didn't want taxpayers to pay for a prolonged legal battle.
"Does the county think this is a fair solution?" Commissioner Scott rhetorically asked. "No, the county thinks the fair and right thing to do is put everyone in the same position they would have been if the errors had never been made. The city refused to consider that."
Mr. Mortell defended the city's position, saying the county couldn't ignore that four different entities were involved in the fiasco.
"They try to treat the city of Stuart and the CRA as one entity, but it's not," Mr. Mortell explained. "Once you sat down and separated the entities and followed the law, everybody had to leave something on the table and take a haircut but everything got resolved."
Martin County Attorney Michael Durham, who previously served as attorney for the city of Stuart, concurred with Commissioner Scott on the problem of municipal litigation.
"I think at the end of the day, like in many settlements, all the parties are not totally satisfied," he said. "But it beats the alternative, which is to litigate; it would be spending public money to get public money."
The parties involved agreed to make restitution within 60 days of the ratification of the agreement by the Martin County Commission on June 17, and Stuart officials agreed to dismiss the city's lawsuit.
"It's complicated," Commissioner Scott added, "but the bottom line is the county has a net loss, Gulfstream has a net loss and the city has a net windfall."