The Panther Valley School Board approved the request to refund 2007 and 2008 taxes in the amount of $270,073.59 due to the Kovatch Corp, following the settlement of the reassessment of the Kovatch property.
The district received a letter from Steven M. Cormier, Kovatch's general counsel, which was written in response to a letter to Kovatch from district solicitor Robert Yurchak, in July.
"What we do not understand is the school district's attempt to dictate the terms of payment on the debt due Kovatch," said Cormier in the letter.
According to the letter, the legal rate of interest in Pennsylvania is 6 percent.
"The law provides for the payment of interest on any refunds due the taxpayer for overpayment of real estate taxes," wrote Cormier. He went on to say that the district could pay the amount in one lump sum, but if it did not, would be responsible to continue to pay the interest on the balance until it is paid in full.
Responding to Yurchak's statement that "under the circumstances, it is unreasonable to apply a 6 percent interest rate in this situation," Cormier stated, "I would remind you that it is the district that created this situation by electing to litigate these assessment appeals rather than settle them years ago, despite the uncontroverted evidence that the subject properties were significantly over-assessed."
Cormier also said that the district is only obligated to pay the interest from the date of the court decision onward, "which will fall short of making Kovatch whole in terms of the loss of use of those funds for such a long period of time."
Cormier indicated that the two courses of action facing the district at this point are repayment of the sum in one lump payment, or accepting Kovatch's offer to offset current and future taxes with credits until the full refund amount has been credited, with interest.
Director R. Mickey Angst asked that the letter, which had been addressed to district solicitor Yurchak, be read at the meeting, saying he was "embarrassed by the way the school district beats up on the Kovatch Corporation." During the discussion later in the meeting, regarding the proposed lump sum payment, director Anthony Pondish said that he "did not think that we crucified Mr. Kovatch over this money."
"I think the board slammed the tax assessment board," he explained. "It's not that we have anything against Mr. Kovatch. Who is negligent here? How many times must this group of individuals fail and cost the taxpayers millions of dollars?"
Pondish and President Jeff Markovich said that every month, the district is voting on refunds for people, based on over-assessments.
"This time, it's not $300 or $400, it's over $200,000," said Pondish.
Markovich added that he disagreed with several points in the letter.
"The tax bureau created this situation, not the school district," he said. "We don't send anyone out to look at these properties. We receive the check from Jim Thorpe and we spend it. Now, we have to pay it back, either from other funds or through a tax increase.
"It would be like going to the casino and hitting the jackpot, and then the pit boss comes over and says the machine made a mistake, so give the money back," added Pondish. "Well, here we are with a big whale."
Director Bill Hunsicker said that all of the local government bodies should be disappointed with the tax assessment office.
"It's hard to run a district once you spend that money. They'd better straighten out their act. Something is definitely wrong."
Director Irene Genther added that the additional 6 percent interest was "an ax over our head that we didn't need."
Angst said that he has the "utmost confidence in the office," blaming the differences in assessed values on the poor economy.
"People are asking for their assessments to go down," he said.