By Tim Farley
Managing Editor
Choctaw residents are experiencing an increase in their 2010 property taxes because of a lawsuit settlement between the city and an area developer.
The two sides reached a $1.7 million settlement in August 2008 after an Oklahoma County jury found in favor of developer Jorco II, LLC and its owner Tom Jordan, of Midwest City. The jury sided with Jorco and found the city had conspired to impede Jorco’s proposed development. The jury also determined that City Manager Robert Floyd and City Councilman Roger Malone acted in a fraudulent manner in connection with the 40-acre development along Anderson Road between NE 10th and Reno.
The city appealed the verdict to the state Supreme Court but dropped the appeal when the settlement was reached. Choctaw’s insurance carrier, Oklahoma Municipal Assurance Group, paid $250,000 toward the settlement and the city borrowed the remaining $1.45 million to pay Jorco immediately. In return the city took possession of the 40 acres, which is a legal requirement in an inverse condemnation case.
Floyd said city officials took advantage of a 1905 state law that allows municipalities to issue judgment bonds in order to pay legal damages. The judgment bonds allow the city to repay the $1.45 million plus interest over a 20 year period. However, the law requires that judgments in excess of $10,000 be placed on property tax rolls, which is the reason for the increase in 2010 property taxes. The judgment bonds were not obtained in time to be placed on the 2009 tax rolls.
The city will attempt to sell the 40 acres sometime in the spring or fall of 2010. Proceeds from the sale will be applied to the $1.45 million loan. Once the loan is repaid in full, Choctaw property taxes will decline, Floyd said.
The lawsuit was filed in November 2007 after a rezoning battle between the city and Jorco. The developer had purchased the 40 acres when it was zoned rural residential and was not serviced by water or sewer lines. The city later granted the developer’s request to rezone the property to single-family residential subject to the completion of a Planned Unit Development plan.
Jorco submitted a preliminary development plan but the PUD failed to address a flood plain issue and did not provide engineering plans for sewer and water line development. As a result, the city council declined to take further action until those issues had been addressed. The city’s attorneys argued at the trial that Jorco did not complete the PUD application process as requested by Choctaw officials.
Instead of complying with the city’s requests, Jorco and its owner filed the lawsuit in Oklahoma County District Court.