Homeowners Lose Views
To a Suspect Investor

July 5, 2002 -- Richard and Chris Mucciolo like to spend their evenings watching the fading sunlight shimmer on the small lake behind their home in Palm Harbor, Fla. "The lake is mesmerizing; it's the main reason we bought this house," says Mrs. Mucciolo, who with her husband retired here four years ago from Westchester County, N.Y.

But the prized view, the couple learned recently, isn't really theirs.

A local real-estate investor, Donnie C. Connolly, snapped up the four-acre unnamed lake and a sliver of land that surrounds it for $848 at a county "tax-lien sale" in November. In February, he wrote the dozen homeowners with views of the lake, offering them the slice of land behind their homes for $30,000 a piece. When some objected, he began building a fence and painted it glittering pink in some sections to block the water views, the homeowners say.

The Mucciolos and numerous other families in central Florida suddenly find themselves ensnarled in the world of tax-lien sales. Local governments routinely use such sales as a way to force property owners to pay delinquent taxes. First, a lien is slapped on the property. Then, periodically, the liens are sold to the public. Anyone willing to gamble that the property owner won't pay the taxes by a specified date can end up owning the property, typically for a fraction of its true value.

The business has gained some notoriety over the years when low-income families lost their homes. In the Florida cases, though, the well-off are the ones getting squeezed. Local officials now believe Mr. Connolly has bought about 300 properties in several counties at tax-lien sales, many of them slivers of land at the edge of, and sometimes beneath, area lakes or other properties in higher-priced neighborhoods. Typically, the slivers of land were overlooked by the developer of the neighborhood due to errors in platting or surveying, and ended up having delinquent taxes owed on them.

Mr. Connolly isn't the first speculator to try to turn a small tax-lien investment into a handsome profit. "He's just the first to do it in such an organized fashion," says Jim Smith, a former state legislator who now is the Pinellas County Property Appraiser.

Mr. Connolly, 44 years old, who lives in Valrico, near Tampa, didn't return calls and e-mails seeking comment. His attorney, Norman Cannella, in Tampa, says only that Mr. Connolly's dealings are "all above board."

Geoff and Tammy Apthorp learned about Mr. Connolly's meticulous ways in May, when they were closing on the purchase of their dream waterfront house in the Pasadena Golf Club Estates, near St. Petersburg. Mr. Connolly called the Apthorps' title attorney to say that he owned the dock behind the home because he had purchased the submerged land. "He said pay me $100,000 and you can have it back," Mr. Apthorp says his attorney reported. Later, Mr. Apthrop says, Mr. Connolly called to lower the price to $5,000. "It's legal extortion," he says.

Legal could be the key word. Beyond the demands for money, the most shocking news for homeowners is that Mr. Connolly could be within his rights to make such demands. In Florida and many of the 28 states that conduct tax-lien sales -- estimated to be a $5 billion business -- speculators can buy irregular parcels of land, including small lakes and canals that are in private hands and have tax liens outstanding.

"We can only follow the statutes," says Mr. Smith, the property appraiser. "And as such, there isn't much we can do."

Some homeowners embroiled in the controversy blame local officials for not notifying them. "I don't understand why they couldn't inform us; we're the only ones who could be affected by this," says Alice Beehner. Her home of 17 years in Tarpon Woods, where the Mucciolos live, ended up facing the pink fence last month after she balked at Mr. Connolly's $30,000 price tag. The developer of the subdivision originally owned the lake, which was somehow forgotten when the individual lots were sold. The taxes on the lake and sliver of land around it were last paid in the 1980s, Ms. Beehner says.

Local officials say they complied with state regulations by publishing notices of the properties in tax sales in newspapers.

Homeowners and local officials are trying to fight back. In the case of Tarpon Woods, officials are considering using eminent domain, forcing Mr. Connolly to sell the lake for public use since it serves as drainage for the lots that surround it. Recently, officials did succeed in pressuring him to take down the fence.

At the Pasadena Golf Club Estates, homeowners are boning up on real-estate law in a bid to trump Mr. Connolly's rights to water-submerged land in picturesque Boca Ciega Bay. The land runs beneath the docks of 61 waterfront homes. As owners of "upland property" adjacent to submerged land, the homeowners have certain rights under Florida law, says Tim Johnson, a real-estate attorney in Clearwater, Fla., who has consulted with, but doesn't represent, the property owners involved. They can "swim on it, fish on it, put a dock on it."

Mr. Connolly has had some personal experience with delinquent taxes and other financial difficulties. In 1989 and 1998, he filed for Chapter 7 bankruptcy protection, according to U.S. Bankruptcy Court records in Tampa. In 1997, Mr. Connolly entered a no-contest plea to a charge of theft of state funds in connection with $848,000 in taxes owed by his business, a car dealership, according to Hillsborough County circuit court records. He was placed on 15 years probation and agreed to pay $134,000 in restitution to the state.

Diane Nelson, the Pinellas County tax collector, says Mr. Connolly likely wouldn't have attracted notice if he hadn't set such a high price for the parcels he was trying to sell to homeowners. "What has made the magnitude of this blow up is this gentleman's greed," she says.

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