The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A FLORIDA-based company yesterday said it had collected “a considerable sum” in outstanding Bahamian real property taxes amid concerns over the Government’s hiring of a foreign firm.

Kevin Brennan, managing member at Real Property Tax (RPT) Recovery Authority LLC, told Tribune Business it had been working since late 2014 to collect sums due from delinquent foreign owners of Bahamian real estate.

He likened the company’s to that of an “ombudsman” rather than a traditional debt collection agency, describing its role as that of a conciliator that resolved disputes “and collected appropriate taxes” due to the Bahamian government.

However, the Christie administration’s silent hiring of RPT Recovery Authority yesterday provoked disquiet among Bahamian attorneys and realtors when its role was disclosed during a meeting at the Prime Minister’s Office in Abaco. Many of those present at the encounter, which was held to address the “ludicrous” 2018 real property tax billings that many foreign second home owners have been hit with, said they had never previously heard of the company or its activities before.

Frederik Gottlieb, the attorney and former MP, told Tribune Business it was “unacceptable” for the previous PLP government to have hired a foreign company to collect Bahamian taxes that were due and owing in this nation.

“As far as I understand, an American company out of Fort Lauderdale has been engaged by the Department of Inland Revenue to collect real property taxes owing in the Bahamas,” he said, declining to name the firm.

“I find it unacceptable that a foreign company has been engaged by the Government of the Bahamas to collect taxes in the Bahamas.” Mr Gottlieb, who was present at the meeting, said Gaynell Rolle, who chaired it in her capacity as the Department of Inland Revenue’s under-secretary for Abaco, declined to discuss RPT Recovery Authority after the company was mentioned.

“She did not deny it,” he added. “She didn’t want to discuss it. She said it was for the higher ups to deal with.” Ms Rolle did not return Tribune Business’s voice mail seeking comment on the meeting and RPT Recovery Authority before press time last night.

RPT Recovery Authority is based in West Palm Beach, rather than Fort Lauderdale, but Mr Gottlieb said its hiring was especially troubling given that its compensation was likely far greater than that being offered by the Government to Family Island district councils for collecting real property tax arrears on its behalf.

He pointed, in particular, to Abaco’s Hope Town District Council, which has been given permission to collect real property tax within its local government area - and may be allowed to keep a percentage of what it gains.

“What is particularly disturbing about that,” Mr Gottlieb told Tribune Business of RPT Recovery Authority’s role, “is the Hope Town District Council has been given the right to collect real property tax, and it appears they may be allowed to keep a percentage of the tax they collect.

“It would be great for these district councils, as it will give them extra revenue for the benefit of the community. From what I understand, the maximum given is 4-5 per cent of what they collect.

“You can be certain that the company engaged in the US will be doing it for far more than 4-5 per cent. It’s likely to be for 25-30 per cent. Why is an American company being given greater reward than a local district council where the monies would be used for the benefit of the local community?”

Tribune Business sources yesterday said Hope Town’s chief councillor, Jeremy Sweeting, had collected around $700,000 in outstanding real property tax payments from Man O’ War Cay owners alone over the past year.

They suggested he and the council had been given a Memorandum of Understanding (MoU) to perform this function and, based on its terms, may be able to keep between 2-10 per cent of the sum they collect.

Mr Brennan said he was “very limited in what I can tell you” about RPT Recovery Authority’s terms of engagement due to its non-disclosure agreement (NDA) with the Government’s Department of Inland Revenue.

He did, though, confirm that “we’ve been at it since late 2014” in terms of its collection activities, which are focused solely on foreign property tax delinquents - not Bahamians.

“We’ve collected a considerable sum,” he told Tribune Business of RPT Recovery Authority’s efforts, and argued that there was a strong rationale for the Government to hire a foreign company to pursue overseas tax defaulters.

“It makes sense if you think about it,” Mr Brennan said. “We’ve got to be very careful in terms of the way we operate. We try to act basically as an ombudsman. We can identify people, and have the resources to go where people in the US, UK, Switzerland or wherever are. It’s an international scenario.

“We’ve been doing business in the Bahamas for quite a long period of time, know it will and try to be a good corporate citizen.”

He explained that RPT Recovery Authority was created in response to a need identified by his other business interest, Computitle, which operates an electronic database of Bahamian land title information.

Mr Brennan emphasised that the two businesses are “completely separate” from each other, with Computitle’s ‘land registry records’ proving invaluable to attorneys, realtors and foreign developers since 1986.

“This is how this all came about,” he explained. “In the title business, we saw virtually every time there was a transaction involving a non-Bahamian seller there was real property tax outstanding.

“We approached the Government in about 2013, and said we believe we can help resolve some of your issues. It just makes sense from that perspective.”

Mr Gottlieb, though, was unconvinced, arguing that there were many established mechanisms that the Government and Bahamian debt collectors can employ to collect outstanding real property taxes from foreign real estate owners.

“I don’t think that’s the way to go about it,” he told Tribune Business of RPT Recovery Authority. “The mechanisms exist here in the Bahamas to collect real property tax.

“Outstanding real property tax is the first charge on property, and there are methods to enforce that charge. The lawyers have performed a tremendous amount of recovery for the Department of Inland Revenue in getting real property tax paid.”

The Government, though, has made clear that it will no longer wait for property/real estate to be sold to recover taxes owing to it. Traditionally, outstanding real property tax has been paid at the time of sale, as vendors are unable to provide a buyer with clear title until that ‘first charge’ is settled.

The Minnis administration, though, has given every indication it will move to aggressively collect on all outstanding taxes given the need to boost cash flow amid its ongoing fiscal crisis.

But Bill Albury, a realtor with Damianos Sotheby’s International Realty, told Tribune Business that RPT Recovery Authority’s role was “bitterly protested” by many of those present at yesterday’s meeting at the Prime Minister’s Office.

“It was to the dismay of everyone present,” he told Tribune Business of the disclosure. “It was quite alarming to learn that.”

James Albury, the Abaco-based parliamentary secretary in the Prime Minister’s Office, yesterday said he, too, was unaware of RPT Recovery Authority’s existence until it was disclosed at the meeting. “I’ve not had time to follow up on it,” he added.

RPT Recovery Authority appears to have been created solely for the purpose of pursuing foreign tax delinquents. Its website and Mr Brennan’s Linkedin page state: “RPT Recovery Authority LLC has been engaged by the Government of the Commonwealth of the Bahamas to assist in the collection of past-due real property taxes for Bahamian real estate owed by non-Bahamian obligors.

“The mission of RPT Recovery Authority is to assist the Government of the Commonwealth of the Bahamas in the administration of the Real Property Tax Act, with particular regard to non-Bahamian owners of real property situated in the Bahamas.”

Its four tasks are to ensure that the Department of Inland Revenue’s records match public records, and the correct taxpayer/owner is being billed; to assist with providing fair and accurate valuations; advise foreign owners about the need to pay taxes and the consequences for not doing so; and helping them to pay sums owing and avoid forfeiture of their land.

Mr Brennan described the real property tax system as “a mess”, and added: “I know the Department of Inland Revenue has been working hard to straighten out the mess, but it’s pretty significant.

“There are people issues, there are human resource issues that make it very difficult, and a lot of entrenched taxpayers that have land information. In many cases the Department of Inland Revenue doesn’t have the right owner.”

Mr Brennan said cases such as the one identified by Tribune Business earlier in the week, where the wrong person received a $125,000 tax bill for an inaccessible Long Island lot “in the bush”, are “not rare, I’ll put it that way”.

He added: “They’ve had numerous consultants in to unravel the mess. It’s a big one, and has got to be sorted out at some point in time.”