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BusINess » Business Government » ‘Land baron’ takes on Lake County’s tax system

‘Land baron’ takes on Lake County’s tax system

This abandoned industrial building at 2800 E. Dunes Highway in Gary is one of approximately $10 million in properties that Andrew L. Young, an Illinois investor, owns in Gary and surrounding areas. (Photograph by Dan Shelton/The Times.)

This abandoned industrial building at 2800 E. Dunes Highway in Gary is one of approximately $10 million in properties that Andrew L. Young, an Illinois investor, owns in Gary and surrounding areas. (Photograph by Dan Shelton/The Times.)

Most Northwest Indiana residents line up and pay their taxes annually without a whimper.

The few thousand who put up a fight must play by the taxing authority’s rules—troop to its office, fill out its paperwork and plead their case to its hearing officers.

Not Andrew L. Young.

The real estate investor said he no longer will put up with what he alleges are systematic errors and what he suspects is politically motivated sabotage of his real estate interests, which center in Gary but extend throughout Lake County and parts of Porter County.

He is suing Lake County officials in federal bankruptcy court and appealing to the court of public opinion, saying he is only one of many victimized taxpayers in Gary.

Young said he was forced into bankruptcy in 2009 by a combination of the nationwide economic recession and “the sea of errors” by the county. Young claims officials “blinded by greed and political ambition” have rigged the property assessment system to boost property values “anywhere from 25 percent to 4,000 percent” in Gary, a city where real estate prices should be trending downward.

He said many investors who borrowed money to buy Gary property “have since lost everything. Were it not for this, my bankruptcy filing would not have been necessary,” he stated in an e-mail to The Times.

“These problems are in no way unique to me,” his e-mail said, explaining his litigation, which has county officials working to defend themselves and their assessment procedures.

Lake County Attorney John Dull said of Young’s suit: “He is trying to get the bankruptcy court to reduce the assessments. A bankruptcy court will end up doing the assessing.”

County officials privately refer to Young as a “problem child.”

Young owns about 1,800 parcels worth millions of dollars that he has purchased over the years in county auctions of tax-delinquent properties. How many millions is at the heart of his dispute with county officials.

Lake County officials have denied his allegations in court and are working feverishly to reassess his holdings to build their case that Young is just another delinquent taxpayer.

Some officials privately wonder if Young was shopping at county tax sales at the same time he had stopped paying taxes on many of his previous purchases. That shouldn’t have happened under the county’s tax sale rules, but officials speculate he evaded notice by using his various corporate avatars to make the purchases.

Conflicting views

Young stated, “This allegation is ridiculous. Everything I did requires me to have direct personal contact with them. I was on a first-name basis with everyone that worked for SRI (a county vendor conducting the sales), from the president of the company on down the ranks. I also have a normal working relationship with everyone in the Tax Sale Department and the treasurer’s office and the county attorney.”

Young said he kept buying despite mounting tax problems and hopes to reorganize and return to investing in the future because, “I had to take a stand. I could not just walk away like so many others did.”

County Treasurer John Petalas said Young was barred from the 2010 tax sale because of his tax delinquencies. He said he doesn’t know of any tax delinquencies that took place before that.

The county hasn’t recently calculated Young’s past-due accounts, since the bankruptcy proceedings halt all efforts to collect from him. A glance at the seven thick binders in the treasurer’s office holding tax bills under Young’s name range from $972 for a vacant commercial lot near the Interstate 94 interchange with Burr Street, to $58,987 on a warehouse in the 800 block of Clark Road in Gary.

Young said his tax liability on one parcel alone exceeds $825,000.

Young said his mission is to buy and help develop land into successful businesses that would generate taxes Gary needs.

“I am just amazed that I continually find the local political leadership to be the biggest obstacle in allowing its natural resurgence to happen. There are real and definable problems . . . due to a series of deliberate actions and inactions. Everything that happened was done for a reason. Most of these ‘reasons’ were done to serve some crony or friend of some elected official,” Young said.

Young estimated his myriad parcels probably were worth about $10 million about six years ago, but the government now is claiming they are worth closer to $16 million—despite the national and local collapse of property prices in recent years. Young insists, “In today’s market, $10 million is probably high.”

A vision of opportunity

Young, a resident of Chicago’s far northern suburbs, said he became fascinated with Gary’s potential when visiting on business 16 years ago.

“I have always loved a challenge. Besides that, it seemed like a deal too good to pass up. Let’s just say the verdict’s still out on that one! But seriously, I am still dedicated to the original challenge of seeing Gary turn around,” he wrote in his e-mail.

He first bought properties through his used parts store, Andy’s Truck and Equipment Co., of Gary, in 1999. Over the next decade, he increased his holdings under a number of corporations and partnerships, including: Surplus Management Systems LLC, Gary II LLC, DAY Investments LLC and Gold Coast Rand Development Corp., as well as in his own name.

Lake Treasurer Petalas said many land investors shop at his office’s tax sales, but few with the intensity of Young.

“Corporations tend to target certain properties. He’d buy almost anything,” Petalas said.

Heather Georgiadis, a deputy treasurer who frequently deals with Young, said, “He’s friendly. He dresses in T-shirts, jeans and work boots. You wouldn’t know he was a land baron. But when he comes to pay his tax bills, we have to round up the staff because of the size of his properties.”

He said his investments began going sour during the recent recession, but “the primary reason that I was forced to file for bankruptcy protection was due to the sea of errors created by the county and the Calumet Township assessor’s office.”

Deflecting blame, responsibility

Young is not alone in his criticism. The state briefly took over the township assessor’s duties in 2010 to make an annual adjustment of property tax assessments because of untimely and error-riddled work by the township. Even Booker Blumenberg, the former township assessor, is appealing his home’s tax assessment, which was done by the township under his administration.

Young said Gary City Hall doesn’t help matters by taxing property at a higher rate than the rest of the state and sitting on 17,000 formerly private properties that now pay no taxes. He said it shifts the city’s tax burden to its few remaining businesses.

“The evidence of this is overwhelming; just pick up a copy of last week’s paper, and the section listing properties up for tax sale in Gary and elsewhere in the county is thicker than the entire rest of the paper! There are nearly 12,000 properties listed for sale in Gary alone, and this is after several thousand were sold at last year’s sale,” Young said.

County officials said Young’s properties won’t be sold at future tax sales until Young’s bankruptcy litigation is resolved, but Young cannot participate in future tax sales, since county rules forbid anyone owing back taxes to participate.

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