Bonnie Blue facing tax woes

Owing $4,500 in back taxes and possibly unable to pay it off in their current financial situation, the owners of the Bonnie Blue here may have to close their doors.
Barb Stainke said last week that she and her husband, Chris, may end up seeing their building at 272 Scott St., which also houses the diner/bakery From Scratch, put up for tax sale this summer so the town can claim the taxes owing.
Stainke noted they likely won’t be able to pay those back taxes at this time since they already have significant bank loan payments to make each month in addition to paying current taxes and other business expenses.
While she’s been in contact with the town, and tax administrator Ed Katona and treasurer Laurie Witherspoon did propose a payment plan to her and her husband, Stainke noted it was “unrealistic with our current financial obligations.”
Katona said Monday that while it isn’t town policy to talk about specific taxpayers, generally speaking the town follows the process outlined under the Municipal Tax Sales Act.
“If a property goes three years behind in taxes, it’s eligible for the municipal tax sales procedure,” he noted. “A tax certificate is registered against the property at land titles. The ratepayer, or owner, has a year after that tax certificate is registered within which to redeem.
“And by redeem, that means pay the cancellation price,” said Katona. “The cancellation price is all fees, costs, all taxes, penalties, interest to date.”
If that is not done, the property is advertised for sale by the tendering process.
“We don’t just use that as a hard and fast rule,” Katona noted. “People have the option of paying that third and offending year, with all interests and penalties, and that keeps the property from going into the tax sale process.
“It’s that third year that makes it eligible and that’s the one we like to get rid off,” he stressed.
“We work in that regard with the ratepayers. They’re notified all along the process,” he added.
“Ideally, we’d like to see the ratepayers pay their taxes and keep the property from going into tax sale,” Katona continued. “We negotiate with them and see what we can do to help them.
“But there’s only so far the town can go and is prepared to go.”
The $4,500 is the amount owing for the third year that, if not paid by July, will initiate the tax sale process, noted Stainke.
Ideally, the Stainkes would like to be able to get relief on paying the arrears for another two years, then make up for it, paying a total of roughly $9,000 (the $4,500 plus interest and associated fees) in 2008.
In the meantime, they would continue to pay their current taxes. And if they came across any extra funds, also would use those to pay off their back taxes.
“We’ve been here seven years. We’re not going anywhere,” said Stainke, noting the town would know where to find them if they couldn’t hold up their end of the deal.
“It’s a win-win situation for the town. At any time they could close and get the full amount back, so they’re not chancing anything,” she added. “And the second thing is they do get interest in penalties, so they’re making money off the deal.”
Stainke noted her proposed window of time (two years from now) is crucial because that’s when the couple expects to have paid down hefty loans taken out to purchase the building in the first place, so monthly payments are far more manageable.
That said, Stainke admitted “the town’s in the right and we’re in the wrong,” adding, “It’s very hard for the town do these types of things. There’s policies in place for a reason.
“But I think we’re being punished for other businesses past indiscretions,” she added.
Stainke also felt the town should do whatever it can to keep businesses afloat. If the property does have to be sold, it would be a loss to the downtown area as not one but two businesses (the Bonnie Blue and From Scratch) would be gone.
And that’s not to mention a site for selling break-open tickets for local non-profit groups would be no more.
In the meantime, Stainke said she and her husband are trying to figure out a way to avoid selling the place, but admitted getting the financial help is difficult.
For instance, because the Bonnie Blue sells lottery, scratch and win, and Nevada tickets, it’s considered a gambling establishment, which has made it tough to secure financing, said Stainke.
“There’s some avenues we need to investigate further, but a tax sale is a real possibility,” she warned. “I guess we could always win the lottery.”