February 4, 2013
Last spring the Luzerne County Court of Common Pleas told Hazle Township businessman James Lagana his properties would get no more reprieve from back-tax auction, with the court order stating no further continuances will be granted in bold print.
But Lagana and his company, Lagana Enterprises, were granted yet another extension from a special tax auction solely for his five commercial properties that had been slated for Wednesday.
Lagana owes a combined $291,185 in school, county and municipal taxes on the five properties dating back to 2009, records show.
Properties are supposed to be auctioned if taxes have gone unpaid for two years. To get out of a sale, property owners must pay taxes owed, file for bankruptcy or convince a judge to grant more time.
According to court records, Lagana provided the following explanation why he should receive one final extension:
As part an ongoing mortgage foreclosure action against Lagana by Community Bank NA, Edgewater Advisors LLC was appointed as receiver last March to manage the five properties.
Since then, Edgewater collected rents but did not pay any of the 2012 property taxes owed, even though some of the tenants were covering real estate taxes as part of their leases.
On Jan. 23, Lagana reached an agreement with Forman Capital LLC and Community Bank to refinance the five properties, which would allow him to satisfy all back taxes and other outstanding liens, including debts to the Internal Revenue Service, Fidelity and Deposit Insurance Co., the Greater Hazleton Joint Sewer Authority and the Hazleton Municipal Authority.
A closing on this refinancing was scheduled for Jan. 29 in an attempt to complete the transaction before Wednesday's county auction, but the parties were unable to resolve some title insurance and survey issues required for closing.
Lagana said a tax sale delay was warranted because the only remaining issues to closing are title matters and the mechanics of bringing a five-parcel commercial real estate financing transaction to final documentation.
The ownership and operation of the five properties amounts to substantially all of Lagana's income, and he said he would be out of business if a tax sale was permitted on the eve of a refinancing.
He also noted some of the properties' largest tenants, including the Hazleton office of Janney Montgomery Scott and Family Dermatology, signed lease renewals allowing them to vacate in March if the refinancing isn't completed.
Lagana said he would have no choice but to file bankruptcy if the court rejected his request.
The county and others owed money would not all be paid if the properties go to tax sale, a mortgage foreclosure sheriff sale or bankruptcy, he said.
Lagana requested a 30-day tax sale postponement.
County Judge Michael T. Vough set the sale for Feb. 27 and said the county's tax claim operator, Northeast Revenue Service LLC, won't be required to spend money and time on another round of advertising and lien-holder notifications.
The tax sale would be free and clear of liens and back taxes because the properties did not sell at a first-stage auction last June. Bids will start at around $3,000 for each property.
Lagana's properties have a combined assessed value of $4.3 million and include commercial office and retail buildings on the Airport Beltway, including the Beltway Commons and Laurel Professional Center.