A man of the House

“Charlie Taylor, wherever you are — pay your taxes.”

Stinging words, indeed. And U.S. Rep. Charles Taylor must have been keenly aware that they were being uttered not by a political opponent but by a prominent fellow Republican — and at the state GOP convention in 2000, no less. But that’s what former House Majority Leader Dick Armey had to say, as reported by the Congressional Quarterly in a profile of Taylor. The magazine used the quote to illustrate the frustration some GOP members were feeling at the time, when Taylor was dogged by tax problems during his hotly contested race against Hendersonville Democrat Sam Neill.

Jackson County tax officials even garnished Taylor’s congressional salary in connection with a dispute over agricultural tax breaks Taylor had claimed for land he owned there. The resulting four-year legal battle eventually ended last February, when the N.C. Supreme Court denied Taylor’s request that it consider his case.

But 2004 is another election year — and Taylor may have another tax problem to contend with. This time, however, the question isn’t whether Taylor paid his taxes, but how.

After reviewing the quarterly reports the Taylor camp filed with the Federal Election Commission, Xpress learned that the Brevard resident, who represents the 11th Congressional District, appears to have repeatedly violated federal election law by claiming property-tax payments for a house he owns in Asheville as a campaign expense. The campaign-finance reports, which must be filed by all candidates for federal office, detail the donations made to a campaign and how the candidate spends the money. Strict rules govern what is and isn’t considered a legitimate campaign-related expense.

The report Taylor filed with the FEC on April 15, 2004 lists a $2,761.46 payment to the Buncombe County Tax Department. Although the tax office would not reveal who made the payment, it did confirm that the payment was made with a check drawn on a Blue Ridge Savings Bank account (Taylor is a majority owner of the bank), and that the money was credited to property taxes on a house Taylor owns at the intersection of Hillside and Liberty streets in Asheville. It remains unclear whether the campaign paid the taxes directly, or whether Taylor paid the taxes and was reimbursed by his campaign.

At issue is whether the property was actually being used as Taylor’s campaign headquarters. FEC rules prohibit using campaign funds for personal expenses, and if the agency disallows the tax payment, Taylor could be facing a fine — and questions from constituents who have to find a way to pay their own property taxes.

Asked about the disbursement item, Deborah Potter, the congressman’s communications director, responded (via e-mail): “The house at 104 Liberty Street is owned by Charles Taylor personally. The tax payment you referred to was a bookkeeping error. Congressman Taylor has already reimbursed the campaign and we are amending the FEC forms as advised. Congressman Taylor would like to thank Mr. Sarzynski for bringing this error to our attention.”

Meanwhile, the house also stands at the center of a still-unresolved dispute with the city concerning the property’s use and its failure to complay with the city’s minimum housing code.

A troubled history

The same bookkeeping error has cropped up in every April report the Taylor camp has filed with the FEC at least since 2001 (which is as far back as the federal agency’s online archive goes).

If the property had been used as the congressman’s campaign headquarters during those years, it could be a legitimate campaign expense under FEC rules. But Taylor bought the house from his campaign committee in March 1998, in the midst of a continuing dispute with the city concerning the status of the property. And though his attorney said at the time that Taylor intended to rent out the house, there’s no record that he ever did.

The Charles Taylor for Congress Committee bought the house at 104 N. Liberty St. back in 1997 and was based there until neighbors complained to city officials about the number of cars parking at and near the property. Neighbors also questioned whether the property could legally be used as an office. According to documents obtained by Xpress, a representative of the campaign submitted an application on Sept. 23 of that year — signed by Charles Taylor — for a permit to operate a home-based business. But after a series of communications between the Taylor campaign and city officials — and amid mounting complaints from neighbors — the Planning and Development Department concluded that the property’s use as an office violated the Unified Development Ordinance. The permit was denied on Dec. 8, 1997.

Among many other things, the UDO (the city’s comprehensive zoning document) spells out the legal uses of houses in residential neighborhoods. A property owner can operate a business from home as long as he or she meets certain requirements — principally that the property be used first and foremost as a residence. According to Planning Department documents, both the water bills and several inspections of the property indicated that it was being used solely as an office.

Despite the denial of the permit, however, the Taylor campaign continued to operate from 104 N. Liberty St. And on Dec. 29, 1997, the city sent a notice of violation. By now the brouhaha was making headlines in the Asheville Citizen-Times (which reported that the city had threatened Taylor with a $100-per-day fine for continuing to break the law), and community residents maintained their vehement opposition to having the Taylor campaign as a neighbor.

Taylor’s attorney, Robert Long, maintained that the congressman hadn’t violated the UDO and was planning to appeal the permit decision to the Board of Adjustment. The wrangling and inspections continued for months, during which time the city also notified Taylor that the house lacked a housing certificate (which confirms that the home has been inspected and meets city safety standards). A current housing certificate is required when a house is sold (in this case, when Taylor bought it from his campaign committee in 1998). In other words, even if the home had been used primarily as a residence, it would still have been in violation.

In March 1998, Taylor withdrew his appeal and bought the home from his campaign committee. A May 3, 1998 article in the Citizen-Times quoted Long as saying the move was “not an admission of guilt but rather a decision based on convenience.” The attorney added, “The congressman made the decision that he was just going to rent the property to be used as a home.”

In a recent interview, city Building Safety Director Terry Summey told Xpress his department has no record of Taylor’s ever having rented out the property. Summey also noted that the congressman still does not have a housing certificate for it, in violation of the city’s housing code. And on Sept. 3, Housing Code Coordinator Jeff Baker told Xpress he was planning to send Taylor a letter recommending that the congressman get a housing certificate.

Curiously, there doesn’t even seem to be agreement on the address of the property. The Buncombe County Tax Department — the local agency figuring most significantly in this investigation — lists the address as 227 Hillside St. But city records show it as 104 N. Liberty St. Planning and Development staffer Joe Heard told Xpress that the city has no record of a house at 227 Hillside St., and throughout the lengthy history of the home/office controversy, all correspondence from the city to Taylor and his campaign — including notices of violation — has listed the address as 104 N. Liberty Street. Even Taylor himself uses the 104 N. Liberty St. address in other required filings (see below). The house faces North Liberty Street, and its driveway and front walk lead there. The number 104 is displayed on the front of the house.

Full disclosure

Members of Congress are also required to file an annual financial-disclosure report with the House Ethics Committee. In every annual report filed by Taylor since 1998, the house at 104 N. Liberty St. is listed as a personal asset with a value of $100,000 to $250,000. The reports also note that the congressman did not derive income from the property during any of those years.

But those reports, too, are at odds with the FEC reports claiming the taxes on the property as a campaign expense. And the long-running, high-profile controversy surrounding the house has caused some observers to question the likelihood of the Taylor campaign’s repeatedly making such a bookkeeping error.

“That seems like a very unusual mistake for a banker to make,” said Tom Coulson, coordinator of the Buncombe County chapter of Common Cause (a nonpartisan, nonprofit organization that tracks campaign spending and advocates for campaign-finance reform). “I’m surprised that a man who owns banks here and internationally, and who is as astute as he is, would make such a mistake.”

According to FEC spokesperson George Smaragdis, his agency will not investigate the matter unless someone files a complaint against Taylor. And even then, the complaint would be reviewed before a decision was made on whether to take further action. If the congressman were found to be in violation of FEC regulations, he could be fined, said Smaragdis, adding that the amount of the fine would be based on the seriousness of offense.

And despite Taylor staffer Deborah Potter’s July 14 assertion that his office was amending the FEC reports, no such amendment had been filed as of Sept. 10, according to Smaragdis, who added that it was possible the amendment could be filed along with the re-election committee’s next report (due Oct. 25). But Smaragdis added that both the reports and any amendments are filed electronically and “can be filed at any time of the day. You can file one at noon or at two in the morning.”

At press time, Taylor’s office had not responded to a follow-up question from Xpress concerning how and when the FEC forms were amended and how much the congressman had reimbursed his campaign.

And when Xpress visited the house recently, it appeared vacant, and the latch on the front gate was covered with spider webs.