Developer alledges mutual 'mistake' in Carroll

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Developer files complaint with court over ownership of a pump station in Carroll

By Christopher Brooke, Reporter

HILLSVILLE — An alleged “mutual mistake” by Carroll County and Weststar Investments throws into doubt the settlement on ownership of a wastewater pump station, according to a complaint filed in circuit court.
County officials and company owner Marshall Lineberry tried to correct a situation in 2008 that transferred a pump station on U.S. 58 near the industrial park to Weststar Investments.
The Carroll Public Service Authority uses the station to send wastewater through the Woodlawn system to Galax for treatment.
The solution that Carroll officials announced Oct. 6, 2008, involved Weststar Investments deeding the pump station back to the authority at “no cost.”
The pump station was actually on Virginia Department of Transportation property back in 1984, county officials have said. From the time the pump station was built, Carroll had permission to operate it, but that parcel never got deeded to the county.
The property in question was sold to Weststar Investments as part of a transaction that involved much of the hillside on the south side of U.S. 58, between the road and the Parkdale America plant there.
“Through cooperation and no consideration, Weststar LLC has deeded the 50-foot-square pump station property to the [public service authority] along with easements to the current lines and upgrades of the future,” a Carroll County news release at the time of the deal.
“If not for this arrangement, the county would have been forced to take more expensive routes to obtain the use of this property.”
However, an issue appears to have developed with the arrangement, as Weststar Investments filed a complaint against the authority in June.
While the deed of transfer stated the land changed hands for $10 and “other good and valuable consideration,” the court papers filed by Weststar now state that “your plaintiff conveyed the aforesaid real estate with the understanding that he would be able to receive a $40,000 tax credit, as consideration for the transaction.”
Though Weststar has attempted to collect the consideration, the company owner has been unable to get the tax credit, the court filing says. To Weststar that means the company has not received any compensation for the property.
“That both parties were of the mutual mistake, in the assumption that plaintiff would be able to obtain a federal income tax credit of $40,000,” the court papers say. “That the defendant has taken possession of the aforesaid real estate and has failed to pay any valuable consideration according to the agreement.”
Weststar asks the court to void the deed.
“That meanwhile, defendant Carroll County Public Service Authority, be enjoined and restrained from conveying in trust, mortgaging, selling, conveying or otherwise encumbering or disposing the above-described property or any part of it.”
Carroll County Attorney Jim Cornwell told The Gazette that he is in the process in filing a response.
Discussion between Carroll officials and Weststar about the pump station happened when the two parties were in talks about other matters, too, the county attorney recalled. The other topics included a deal between Weststar and the Industrial Development Authority about the Market Village Shops and a sign at Interstate 77’s Exit 14.
Representatives of the Public Service Authority informed Weststar that the department overseeing public water and sewer systems was a tax-exempt agency and that a contribution by the company might qualify for tax credits, Cornwell said. It could be the same as making a contribution to the non-profit Haiti relief fund, for example.
“It was simply, ‘You might be able to get a tax deduction for the contribution,’” Cornwell said. “But just like everything else, it depends on your tax situation.”
There was no promise on the part of the county to give Weststar a tax break or that one would be obtained, he said.
“Weststar says they can’t get a tax credit — I don’t know why. I don’t know what their tax situation is.”
Nor do county officials know what Weststar did to try to get a tax credit, or how hard the company might have tried to get it.
Weststar agreed by signing the deed two years ago that the company received “valuable consideration” for the land transfer, the county attorney said.
The agreement between Carroll and Weststar staved off a lawsuit by the county in order to get title needed for the pump station.
“We were prepared to file an action against him, if the conveyance had not been made,” Cornwell said. “We had a claim to the title.”