The property at 51 Albany Turnpike may have a complicated past and an uncertain future, but Canton officials say one thing is certain. They would like the current tenant — the parent company of Mitchell Volkswagen — to resume “rent” payments to a court-appointed intermediary, allowing the town to apply most of the money to a tax bill in excess of $750,000.
The company's attorney, however, contends that the process the town used is not legally sound.
More than 30 years ago, the property along Route 44 was designated a Superfund site due to activity by the former Swift Chemical Co.
Since 1994 the property has been owned by Cadle Properties of Connecticut Inc. In 1995, Mitchell Volkswagen's parent company M&S Associates, LLC, later M&S Gateway Associates LLC, signed a lease with Cadle, according to lease agreements on file at town hall.
The secretary of the state’s office lists Steven S. Mitchell as member and attorney Jay B. Weintraub of BoneeWeintraub LLC in West Hartford as agent for M&S.
The state has not cleaned up the contaminated site, a cost Canton First Selectman Richard Barlow estimated at approximately $4 million.
While the clean-up issue lingers (and may be the subject of a future Patch story) the town in 2011 went forward with an effort that would help it collect money toward the tax bill, which at the time, including taxes, interest and liens, was in excess of $800,000.
In April, 2011, the town petitioned a Hartford Superior Court judge to appoint a “receiver of rents,” who would essentially step into the role of a landlord since Cadle was not active in the property dealings.
By state statute Sec. 12-16a, a court appointed “receiver” can “collect all rents or payments for use and occupancy forthcoming from the occupants of the building in question in place of the owner, agent, lessor or manager. The receiver shall make payments from such rents or payments for use and occupancy, first for taxes due on and after the date of his appointment and then for electric, gas, telephone, water or heating oil supplied on and after such date.”
In June, the court agreed and appointed Boardwalk Realty Associates, LLC of West Hartford and strengthened the order in October. Boardwalk does take fees from the collection.
Craig Yelin, manager of Boardwalk, said he decided to pursue M&S when he learned that they have not been paying any rent to any party for years.
“This is a profit-making enterprise,” Yelin said.
In September 2011, Yelin issued M&S a notice to quit. In October, however, the dealership’s attorney, BoneeWeintraub LLC, filed a motion in court objecting to the action, stating it had not received details of the arrangement and that Boardwalk had "grossly exceeded its authority" and overstepped its boundaries.
In October of 2011, the court modified the receivership and M&S began paying “current” rent, but by March 2012, when it appealed the case to the state appellate court, had stopped doing so, town officials said. The town received approximately $30,000, which was applied to the 2010 tax bill. Of the $750,442.30 outstanding tax bill for the property $319,163.74 is for taxes, $430,966.56 for interest and $312.00 in liens.
The town acknowledges that M&S does not need to pay any back rent during the appeal process but contends the company should be making current rent payments. The issue was clarified by several judges, town officials said.
Funds that come in are first applied to the current tax bill. The town can also only go back 15 years when collecting taxes.
Before appealing, BontreeWeintraub filed several motions related to the receivership, including asking the court to dismiss, claiming Boardwalk “grossly exceeded” its authority. It also objected when Yelin sought to collect back rent, citing the words "forthcoming" in the state statute.
Fundamentally, Weintraub feels that the court erred in applying a receiver to the case.
Weintraub said he feels confident that the receivership itself is being misused and doesn’t apply to the situation.
“We really believe, legally, we’re on firm ground,” Weintraub said. “I think the town has missed the receivership statute.”
Court documents show that the law firm concurred that no lease currently governs the property, but Weintraub declined to comment on the charge that Mitchell’s parent company has lingered on the property rent free for many of the years the dealership has been there.
Although town officials contend M&S was responsible for taxes under the original lease agreements, court documents state that the company is not directly responsible for back taxes.
Still Yelin, who has also proceeded in housing court with eviction proceedings against M&S, said he feels the company is dragging its feet when it should be paying its fair share of rent.
“This is just a way to stretch this thing out,” Yelin said. "I think they’re playing the game of flexing their muscles — anything not to pay rent.”
The receivership appeal is still pending.
Update, Oct. 18, 7:26 p.m.
In a message to Patch on Oct. 18, Steve Mitchell noted that he pays the town of Canton $88,000 in properties that the family owns or leases and has encouraged the state Department of Energy and Environmental Protection to "designate the (Volkswagen) sight a brownfield trying to encourage at least a form of cleanup" but has gotten nowhere.
Mitchell said he has also urged Canton to foreclose on the owners and auction the property but acknowledged that the town doesn't doesn't want to due to the liability.
"We basically have been the custodian of a gateway property that was blight for Canton for years," Mitchell said. "We have provided employment for 25 people and spun off thousands of dollars in sales tax and use tax for the state. Hopefully, with the new interest we will reach resolution."
The 90-year-old Mitchell company employs more than 200 people, he added.