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 than half of a $13 million downtown public parking garage without the city’s knowledge —thanks to a bureaucratic snafu.
The city failed to pay a $2,411 Wayne County tax bill when it bought the structure, located between Cobo Hall and Joe Louis Arena, and nobody caught the error for four years. With the taxes delinquent, in September 2002 the county auctioned the half-garage to the highest bidder. Now, the city and county are fighting together in court to nullify the sale.
“The city screwed up. They’re imbeciles. They’re in denial,” says Casab, who expresses no compunction about his plan to reap a multimillion-dollar profit 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 Kelly 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 Cobo Center for $3 million from a private company. At that time, the lot technically consisted of two separate tax parcels.
Detroit, like other governments, is generally exempt from paying property taxes. But government agencies do have to pay taxes owed during the year of the purchase, as well as any back taxes.
Shortly after the purchase, the city merged the two properties into one, and 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 structure on the site.
Though city records from 1998 onward failed to indicate the existence of 612 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 auction 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 property, the city realized what happened and sued the county, claiming government property can’t be foreclosed on.
A month after that, in November 2002, the county tried to cancel the sale by allowing Detroit to pay its outstanding bill. The county also tried to refund 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 the 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 much. 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 county did notify that agency, court documents show. A county official also visited the garage, but nobody was there, according to the documents.
Casab’s attorney, Barry Steinway, says the problem was the city’s record keeping.
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 back, Steinway says. In July 2002, the county sent a certified letter to City Clerk Jackie Currie and to Mayor Kwame Kilpatrick, listing tax-delinquent city 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 investigation showed that the city’s tax rolls are peppered with errors and inconsistencies, 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 former Mayor Dennis Archer, the city paid $3 million for a new computer system to modernize the city’s tax and assessment rolls.
City Treasurer Clarence Williams said recently the new software should greatly 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 garage occurred during the data conversion from the city’s old computer system 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. “We 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 Investment, 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 she allowed the city to file another motion arguing the sale was illegal because 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 paying 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 central business and planned expansion of the central business districts.” They 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 living 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 [email protected]