By J. PATRICK PEPPER
DEARBORN — Councilman Robert Abraham says that a brutal real estate market is the reason a limited liability company he operates is in default more than $80,000 for back taxes.
The company, Abraham & Mathews LLC, owns four condominium units on Garrison between Brady and Oakwood and a Michigan Avenue office building Abraham previously used for his CPA firm. Construction on the condos began in 2001 while real estate values were just slightly below record highs. By 2006, when construction was complete, the market was halfway into what has become a historic drop.
As property values fell, potential buyers disappeared, Abraham told the Times-Herald last week, and what originally were supposed to be owner-occupied units were shifted to rentals early last year.
But because the values fell, so did rental rates. With the company’s mortgage note higher than the rental rates, combined with two years of holding costs on all four units, Abraham says he’s “upside down.”
“This was a business decision that I had to make,” he said. “It’s not what I envisioned when I started the project, but I have stuck with it. I haven’t walked away from it, and I’m not going to.”
Abraham also came under scrutiny last week for possibly not registering two of the condo units as rentals. As foreclosures have upped the number of rentals in town, city officials have made a push to get residents in on making sure they’re all rented through a rental registry Web site.
A Times-Herald check of that site showed that two of the Garrison properties were not registered as rentals, but a data entry error in the City Assessor’s Office was found later to have led to the mix-up. Other rental properties Abraham owns on Nash, Waverly and Lodge Lane also are registered.
In order to right the default, Abraham said he would pay the taxes as soon as financially possible, although he declined to comment on when that could be.
Still at issue, however, is whether or not Abraham is in violation of the city charter, which contains a provision stating that elected officials cannot hold office if they are in default to the city. Removal proceedings can be initiated only through a petition bearing 200 residents’ signatures, or if two council members call for a special hearing.
But with the taxes registered to Abraham’s LLC — and not Abraham the individual — the legal specifics remain uncertain. Calls seeking comment from the city’s Legal Department were not returned as of press time Friday.
Council President Thomas Tafelski said he feels bad for his fellow councilman because of the financial difficulties that have beset so many people lately. Still, elected officials should navigate their own legal situations somewhat differently than other residents, Tafelski said.
“We have to hold ourselves to a higher standard, because we are the voice of the public,” Tafelski said. “We enforce the charter and we govern the city, so it is part and parcel with the job.”
Tafelski said he hadn’t considered any potential actions moving forward and would reserve judgment until he receives an opinion from City Attorney Debra Walling.