MOST OF INCORPORATION DEBT MAY BE PAID - Tucson Local Media: Import

MOST OF INCORPORATION DEBT MAY BE PAID

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Posted: Wednesday, January 29, 2003 12:00 am | Updated: 7:47 am, Thu Mar 24, 2011.

A trustee appointed to determine the validity of debts incurred in the attempted incorporations of Casas Adobes and Tortolita has recommended the payment by residents of more than $400,000 of the nearly $700,000 in unpaid expenses claimed by interested parties.

Susan Boswell, a bankruptcy attorney with the Quarles & Brady Streich Lang law firm, has recommended that Pima County Superior Court Judge Nanette Warner approve $418,000 of the $683,669 sought in connection with the two incorporation efforts.

The expenses, if upheld by Warner, would be paid for by a property tax levied by the Pima County Board of Supervisors against residents within the boundaries of the proposed annexation areas. A Feb. 18 deadline has been set to submit objections to the proposed expense allowances prior to a March 3 court hearing.

In March 2001, Casas Adobes area voters rejected incorporation by a 56 to 44 percent margin after supporters secured the permission of Tucson, Oro Valley and Marana to hold the election in exchange for dropping an appeal to several court decisions ruling that the town was not legally incoporated in 1997. Although voters approved the incoporation by a 51-49 percent margin that year, it was deemed invalid by the court in the spring of 2000.

In November 200,1 the Arizona Supreme Court chose not to consider an appeal of a lower court decision that said Tortolita was not a town. Injunctions against Oro Valley preventing the town from making any improvements in the contested Casas Adobes area that had been annexed by Oro Valley earlier were lifted last year.

The convoluted legal battle posed "unique" problems in the determination of allowable expenses because "there was no existing law that the trustee could find in Arizona that would serve as a guide to evaluate or assess the proper debts of an entity whose attempted incorporation has been declared void," Boswell wrote.

Among the deciding issues in Boswell's Dec. 19 recommendations was whether debts incurred prior to the Board of Supervisors' declarations of Tortolita as a town in September 1997 and Casas Adobes as a town that November should be allowed. Boswell recommended against such allowances and against claims submitted after a July 14, 2000 ruling by the court voiding the two incorporations.

Boswell also recommended that other claims be disallowed because they were invalid or unenforceable. A $16,000 claim submitted by the Pima County Recorder's Office, as an example, was disallowed because the Pima County Attorney's Office had declared that all fees and costs incurred by Pima County relating to the incorporation battle were to be waived.

Salary claims totaling more than $48,000 submitted by Leo Koester, Billie Jane Madden, Peter Schlegel and Peter Tescione, former members of the Casas Adobes Town Council, also were recommended for denial because a May 1998 resolution passed by the council approving the salaries was contingent on the town receiving state shared revenues which it never received.

The largest payments under Boswell's recommendations would be made to the law firms of Gregory E. Good & Associates and Brown and Bain and Arizona Central Insurance Co.

Boswell recommended allowing $191,000 of the $274,604 sought by the Good law firm, all of the $61,509 sought by Brown & Bain and all of the $43,000 sought by Arizona Central Insurance.

In the case of Tortolita, which accounted for $87,234 worth of claims, Boswell referred to a Dec. 1997 court decision enjoining the town, its mayor and others from incurring any debts. As a result, the only claims associated with Tortolita were claims for legal services provided before the December order.

Boswell recommended paying $64,351 of an $84,730 claim filed by attorney William Risner and all $2,503 of a claim filed by attorney Thabet Khalidi for legal services provided to Tortolita prior to Dec. 1997.

Critics of the recommended payments associated with the attempted incorporation of Casas Adobes base their opposition largely on the fact that the Board of Supervisors didn't approve the town's initial incorporation until six days after a court had ruled they couldn't incorporate. The board approved incorporation Nov. 18, 1997, but the court ruled against allowing such action on Nov. 12.

Since there were no valid towns, none of the debts incurred by the two entities should be valid, argued Nick Genematas, general manager of Casa Blanca Plaza, 6010 N. Oracle Road.

Genematas, who is planning to file objections to the recommendations, particularly those involving Casas Adobes, said he became involved in the incorporation battle because of potentially higher taxes tenants in the plaza would have had to pay if they had become part of the new town.

Since these people were working to make Casas Adobes a town, they shouldn't be paid on the basis they were a town, Genematas said. They can't have it both ways, he argued.

Boswell was out of town and could not be reached for comment.

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