The Land Bank Commission on Tuesday voted to issue an assessment of $341,884 against Richmond Great Point Development over its refusal to pay the 2 percent Land Bank transfer fee on a recent change of underlying ownership of the company. The Land Bank also placed a lien in that amount on 26 of Richmond Great Point Development's properties, which could prevent it from selling those parcels in its subdivision off Old South Road without first paying the disputed fee.
“They don’t want to pay so much of a fee,” Land Bank counsel Valerie Swett explained when chair Neil Paterson asked why the company hadn’t paid the six-figure transfer tax bill.
The dispute between the company building Nantucket’s largest current housing development and the Land Bank was one-sided: representatives from Richmond Great Point Development were invited but did not show up to Tuesday’s meeting to be heard.
Richmond Great Point Development owner Phil Pastan did not respond to an e-mail seeking comment on the situation.
Nantucket Land Bank executive director Jesse Bell told the commission on Monday that the underlying ownership of Richmond Great Point Development changed in December 2022. Initially, the transfer was reported to the Land Bank.
“They came in with the transfer in February, based on the cash value of the transfer, not the outstanding debt, which was significant,” Bell said, noting they deducted the debt and the obligations assumed by the buyer. Richmond Great Point Development asserted the fee should be only $39,172.
Swett, the Land Bank’s attorney, seemed puzzled that Richmond Great Point was disputing the calculation of the Land Bank’s transfer fee on the underlying change of ownership of the company. Such transfers of ownership were common, Swett said, and paid to the Land Bank regularly.
"There's no question the numbers we're using are the numbers they supplied - the outstanding balances on the mortgages," Swett said. "I think that happens regularly. You take in transfers of this sort on a regular basis and people pay the fee."
The breakdown of the $341,884 lien includes the initial Land Bank transfer fee of $271,696, along with a penalty of $54,339 (based on 150 days elapsing since the date of the transfer without the fee being paid), as well as a transfer interest charge of $15,848.
According to a transfer form that was completed and submitted by the Richmond Great Point Development team - and was ultimately rejected by the Land Bank - there was a transfer of "100% LLC Membership Interest" of 29 properties from JST Nantucket LLC and Joseph D. Prendergast and Arthur J. Epstein 2015 Revocable Trust to The Richmond Company, Inc.
The cumulative asset value involved in the transaction was $20.1 million, but Richmond Great Point Development calculated the Land Bank transfer fee by deducting the total debt and obligations assumed by the buyer. That would reduce the fee it owed by more than $150,000.
During Tuesday's meeting, Swett and Bell emphasized that the Land Bank's statutory definition of purchase price includes "the principal amount of all notes or their equivalent, or other deferred payments, given or promised to be given by or on behalf of the purchaser to the seller or his nominee; the outstanding balance of all obligations of the seller which are assumed by the purchaser or to which the real property interest transferred remains subject after the transfer, determined at the time of transfer..."
In the intervening period between the initial submission of the transfer fee form and the Land Bank's action on Tuesday, three of the properties in question have been sold.
Without Pastan or anyone from Richmond Great Point Development in attendance, the Land Bank Commission members took little time in discussing the situation before voting unanimously to issue the assessment and sign-off on the lien.
"It seems pretty cut and dry," said commissioner Mark Donato.
"The statute is the statute," commissioner Kristina Jelleme said. "There are many examples where the transfer of ownership has happened and the fee has been paid."
Swett indicated that Richmond Great Point Development was likely to appeal the decision.