Desler: Back taxes to be paid

Sean C. Morgan

Of The New Era

Western States Land Reliance Trust has 21 out of 22 of its properties facing foreclosure proceedings for unpaid property taxes, but Managing Trustee Dan Desler said he hopes to have all of the back taxes paid off by the Sept. 15 deadline.

WSLRT owes $249,491.11 for four years of taxes on each of those properties, which are located generally north of Highway 20 between 18th Avenue and Clark Mill Road. Taxes at 401 Main St., the WSLRT office, are paid.

Payments are due by Sept. 15 or the Linn County district attorney will apply to the Circuit Court for a judgment, according to the Oregon Department of Revenue. After that, a property owner has two years to “redeem” the property.

If the property is not redeemed during that period, the tax collector deeds the property to the county, all taxes are canceled and the property is removed from the tax roll. Linn County published a public notice of all properties subject to foreclosure in the Albany Democrat Herald on Aug. 14.

The property is all part of a mammoth residential and commercial master plan throughout most of northern Sweet Home between 18th Avenue and Wiley Creek.

Desler arrived in Sweet Home approximately nine years ago and started purchasing the property, forming his company Development by Design and the nonprofit WSLRT and developing the plan. The various projects associated with the plan have been on hold primarily because of the downturn in the housing market.

In recent years, WSLRT has faced several challenges, Desler said, and that’s why it chose not to pay the property taxes.

“In 2004, when the mill burned down (24th Avenue), it was uninsured,” he said. “It was an uninsured loss of about $2 million.”

The trust also has spent some $180,000 to solve environmental problems and satisfy the Oregon Department of Environmental Quality, he said. “It put a huge financial burden on the trust.”

The trust used its tax reserve to take care of those issues, Desler said. “It was a judgment call we made.”

Every building constructed prior to 1990 has asbestos in it, he said, but he had a Willamette Industries report that outlined an asbestos abatement project that left only floor tiles and roofing material with some asbestos locked inside.

WSLRT is in the second year of demolition on the property, he said. The contractor working on the kilns discovered asbestos in material underneath the roof, which was not included in Willamette’s report. The material was 35 percent asbestos, which was crushed into pieces, releasing what constituted an airborne threat and an emergency cleanup.

The challenges continue, he said. “We will not compromise the public or employees’ health. Our priority is to get that property 100 percent in compliance as fast as possible.”

That includes completion of all environmental work left, with DEQ signing off, on the proposed Oregon Jamboree site, Desler said. “I’ve been spending a lot of money with that site (24th Avenue) there as a top priority.

“In order to appease DEQ, we spent our tax reserves again, to avoid penalty charges and to ensure the public welfare was addressed.”

The question has been, he said, “do you spend your tax reserves to pay taxes or do you solve the DEQ problems?”

This has all been complicated by the declines in the housing markets and the ripple effect into lending institutions.

Desler remains optimistic about his project, he said. While the housing market is slow, he is busy “crossing t’s” and “dotting i’s” in hopes that the market will turn around in 2009 or 2010.

“I think we’re doing a prudent job of managing our cash flow,” he said.

WSLRT has been assured that a credit line will be available, as early as this week, to pay off the tax liability and refill the organization’s reserves, he said. He is confident that the taxes will be paid no later than Sept. 15, but even after foreclosure, WSLRT can still bring the taxes current.

He has no intention of losing the properties to foreclosure, he said. The properties have an investment of somewhere between $11 million and $11.5 million into them already.

Desler, as owner of another company leasing property at 24th Avenue from WSLRT, also is addressing the storage of wood fiber material that he contends is inventory and the DEQ and city are calling waste. As waste, the material violates the city’s franchise agreement with Sweet Home Sanitation and environmental regulations.

Western Renewable Resources, owned by Desler and Jeremy Totman, operated a recycling business at the location. Right now, activities are limited to supplying animal bedding from recycled cardboard, primarily from Weyerhaueser.

Piles of cardboard, which includes plastic fibers, that were originally intended to be burned as industrial fuel are supposed to be removed by Aug. 31, but Desler said he intends to file a lawsuit seeking a determination on whether the material is waste or inventory.

He believes that Asian customers will soon buy the material, which can be safely burned in no-emissions plants instead of oil or hog fuel to provide energy, he said. The Asian markets are ahead of the United States with that technology, which uses a process called gasification, he said.

“I still believe the concept of waste to energy is going to have to happen in this country sooner or later,” Desler said, and he’s been busy working on opening up a local market for the material.