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Carolina Journal News Reports

Questions Still Surround Black Property Settlement

They include actual value, ownership and legitimacy of transfer

Jun. 22nd, 2009
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CJ photo by Jon Ham

A portion of the Rice Road property that Jim Black used to fulfill half of his $1 million fine. Photo taken looking southwest from the north side of Rice Road.

RALEIGH — Wake County officials say imprisoned former North Carolina House Speaker Jim Black satisfied a court-ordered $1 million fine recently by surrendering some Mecklenburg County real estate, but questions remain about the real market value of the property, who owns the parcels, and whether the transfer was legitimate.

As reported Thursday by Carolina Journal, land records put the tax value of the property well below the balance owed by Black. Questions also remain about the ownership of the property at the time of surrender, and whether additional property Black owned should have been used to settle the debt.

Officials used two documents — an offer to purchase (1.9 MB PDF) that fell through and an appraisal — to gauge the value of the parcels, located on Rice Road in Matthews. The documents value the property at more than the $500,000 remaining on a fine levied against Black in 2007.

The most recent property tax revaluations available, however, paint a more modest picture of the property’s value. The records show that the parcels had a combined tax value of less than $150,000 in 2003.

Nevertheless, the Wake County Public School System and District Attorney’s Office accepted the land as settlement in full for the outstanding debt. By law, the property goes to WCPSS.

Wake County District Attorney Colon Willoughby told Carolina Journal that he wasn’t sure what the property would fetch on the open market.

“I believe that there was significant value there,” he said in a telephone interview, “and I believe that under the legal options that the school board had, they found this one to be the best one for them, and I think they were probably correct.”

The school system “felt comfortable that the property was worth at least $500,000,” said Kris Gardner, an attorney with Tharrington Smith LLP who worked with Wake County’s superintendent on the settlement.

“There was some discussion with developers in the area and people in the real estate market,” he said in a telephone interview. “It could go for maybe $700,000. We don’t know.”

With the county and school system’s blessing, Wake County Superior Court Judge Donald W. Stephens approved the transfer in a court order issued May 14, stating that the property “has a fair market value roughly equal to the remaining fines, restitution and court costs to be paid in this case based on previous offers to purchase.”

Property records show the land was deeded over to Wake County public schools the same day, per state law directing such fines to support public schools.

The transaction officially satisfied the $500,000 debt due Wake County.

Questions remain

Black’s fine stemmed from corruption and obstruction of justice charges. In 2007, the Matthews Democrat was sentenced to eight to 10 months in prison, plus a $1 million fine, on state charges, and an additional 63 months in prison on federal charges.

The former speaker admitted to accepting tens of thousands of dollars in bribes from chiropractors to push legislation favorable to them. He also pleaded guilty to charges partly resulting from a $50,000 pay-off to Republican state Rep. Michael Decker to switch parties, which allowed Black to remain speaker.

To compel Black to pay the fine, the court placed a lien on Black’s former Uptown Charlotte office in December 2007. The Tryon Street building has a tax value of $1.1 million. Other Mecklenburg County properties listed in the names of James B. Black Sr. and Betty C. Black include a residence in Matthews valued at almost $500,000, a Central Avenue day-care center building, and several parcels of prime real estate in the commercial center of Matthews. These latter Matthews parcels together are valued at $451,900.

In June of last year, Black paid half of his debt, leaving a balance of $500,000. Due to a sagging economy, Black “has been unable to sufficiently liquidate the remaining assets he owes in order to satisfy these obligations,” Stephens wrote in the court order.

According to Willoughby, the other properties were not available to satisfy the debt since Black and his wife have joint ownership. “The judgment would be against Dr. Black, not against he and his wife, and so the judgment would not attach to jointly owned property,” he said in a telephone interview.

But records indicate that Black and his wife jointly own all of their property, including the parcels that settled the fine. A special warranty deed (653 KB PDF) recorded in Mecklenburg County May 23, 2008, shows that Black transferred nine pieces of real estate into both his and his wife’s names. The parcels on Rice Road were among them.

Asked about the warranty deed, Willoughby said that Black’s attorney, Whit Powell, had represented to him that Black was the sole owner of the property WCPSS received and that it was the only available property not jointly owned.

Willoughby said that he did not run a title search on the property prior to giving his approval to the deal.

Powell did not respond to phone calls and e-mails seeking clarification on ownership of Black’s property. He did reply to an initial interview request Friday.

“Your implication that the Wake County School Board was shortchanged is inaccurate and without basis,” he wrote in an e-mail.

In a follow-up e-mail from his office, an unidentified staff member said that a “tax value is not an indication of the property’s real worth” (emphasis in original).

The school system now has the option of selling the property right away or waiting for the market to improve, Willoughby said.

“Certainly what’s gone on in the last 18 months or two years in our economic times have made it more difficult to place a value on the real estate,” he said, “so I don’t think anyone can tell you exactly what the property is worth today.”

Offer to sell and appraisal

The May 2008 transfer of property from Black’s sole ownership to joint ownership by Black and his wife took place one month before the jailed former speaker paid the first half of his fine in cash to WCPSS.

Stephens initially set a Dec. 10, 2007, deadline for the former speaker to pay the entire $1 million fine. The judge approved extensions of that timeline due to economic conditions and cited the state’s Tryon Street lien as security that Black would pay the full fine.

In December 2007, Black received an offer of $564,295 for the Rice Road property from RT Land Developers LLC, a real estate company owned by developer Thomas Pearson. The contract offering to purchase the parcels was extended in April 2008 due to uncertainty about the availability of sewer service; the deal subsequently fell through.

Days before Stephens approved the May 2009 transfer of the two parcels to satisfy Black’s obligation, John Bosworth & Associates LLC appraised the real estate at $613,000.

Wake County attorneys and officials based their approval of the deal on these two documents.

Gardner said that he had concerns about the deal after learning of the property’s tax value, but that the offer to purchase and appraisal allayed his concerns.

“It would have been ideal to have cash in hand, but that wasn’t an option. So this for us was the next best thing,” he said.

Apparently, the Wake County School Board was never notified of the deal. Ron Margiotta, a school board member from the Apex and Holly Springs region, said that he personally had no knowledge of the transaction before it went through.

“It sounds like the Wake County taxpayers are subsidizing this politician’s fine,” he said.

David N. Bass is an associate editor of Carolina Journal. Additional reporting for this story was provided by Carolina Journal contributor Jeff A. Taylor.