Portsmouth auction of 3 seized downtown properties stalled by lawsuit: What's next

Jeff McMenemy, Portsmouth Herald

PORTSMOUTH — An ongoing court battle is at least temporarily stopping the city from selling three downtown properties it seized because the owners owe unpaid property taxes.

Appledore Associates LLC, which stated in court documents it represents the owners, previously filed a lawsuit against Portsmouth’s former tax collector, seeking the return of the properties.

Appledore says it is “the former property management company for these three properties,” according to Deputy City Attorney Trevor McCourt.

After the company filed the lawsuit, the city responded by filing a motion to dismiss contending Appledore Associates LLC “is not registered to do business in New Hampshire,” McCourt said.

This property in downtown Portsmouth, located at the intersection of Richards Avenue and South Street, was taken by the city by tax deed and may be auctioned off.
This property in downtown Portsmouth, located at the intersection of Richards Avenue and South Street, was taken by the city by tax deed and may be auctioned off.

The court issued a stay in the lawsuit until Monday to give Appledore “an opportunity to register with the secretary of state’s office,” McCourt said.

McCourt said Appledore did file “a notice of registration with the court,” stating they are a “foreign LLC.”

They filed that notice before the Monday deadline, he said.

Appledore stated they are registered to operate as an LLC in the state of Wyoming, and are continuing to try to move forward with their lawsuit, McCourt said.

“The court has taken no other action,” since the stay was issued, McCourt said.

“We’re evaluating our next steps to take,” he added.

McCourt believes Superior Court Judge James W. Kennedy will next take up the city’s motion to dismiss.

But it’s unclear when that will happen, McCourt said.

Taxes not paid; city waiting to take action

The city seized the three properties in downtown Portsmouth — where property values have soared over the past decade — after the owners failed to pay property taxes for at least three years.

The properties are 508 Richards Ave., 150 Bartlett St. and 323 Islington St.

McCourt previously stated “there is a significant amount of equity in each of the properties.”

This property at 150 Bartlett Street in Portsmouth is one of three taken by the city that may be auctioned off.
This property at 150 Bartlett Street in Portsmouth is one of three taken by the city that may be auctioned off.

The city’s appraisal values of the properties are $647,000 for 508 Richards Ave., $576,000 for 323 Islington St., and $497,000 for 150 Bartlett St., according to city records.

McCourt further noted in his memo to Conard that while the court order “does not explicitly prevent the city from taking any action on this matter, in an abundance of caution, and to avoid any potential for violating a court order, the (city) Legal Department recommends the City Council avoid taking up this matter until such a time as the stay is lifted.”

“Therefore, the Legal Department will bring this item back to the City Council for further consideration at an appropriate time,” he added.

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During Monday’s City Council meeting, Conard referenced McCourt’s memo and asked the council “to hold on this matter until we have an update from court.”

“We don’t know when that will be but we hope it is soon,” she added.

The council at Monday’s meeting did not vote to take any formal action on the matter.

Planning Board recommendation

The council previously voted to refer the issue to the Planning Board to ask for its recommendation on what to do with the properties.

The board in April recommended unanimously the council should hold a public auction and sell the properties to the highest bidders.

This property at 323 Islington Street in downtown Portsmouth is one of three taken by the city for failure to pay property taxes.
This property at 323 Islington Street in downtown Portsmouth is one of three taken by the city for failure to pay property taxes.

McCourt told the board that before the property owners stopped paying taxes, each property was owned “by different partnership entities.”

City officials have not been able to reach the former owners, McCourt said previously.

The properties have now been deeded to the city, he said.

“These properties are on our books, they’re on our insurance,” McCourt explained. “Things that go wrong will be our responsibility to fix. If we’re going to auction the properties off, I’d definitely recommend that be done as soon as possible.”

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If the properties are sold at public auction, the city can recoup the unpaid taxes, a “statutory penalty” of 10% of the assessed value, interest and other costs related to their upkeep and management, McCourt said.

“Anything above that must be returned … to the prior owners,” he said.

The actual takings of the properties by tax deed “is a very unusual thing here in the city of Portsmouth,” McCourt said. “I don’t believe it’s been done by the city within living memory."

This article originally appeared on Portsmouth Herald: Portsmouth NH auction of 3 downtown properties stalled by lawsuit

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