Court battle favoring ccounty looms; creditors from '80s still waiting
By TOM JOYCE
Daily Record/Sunday News
York Daily Record/Sunday News

Dr. Pramod K. Mohanty, a Virginia cardiologist, gave a rueful laugh over the phone at the mention of Lauxmont Farms.

He first heard the term back in the 1980s. He can't remember the exact year, or the exact nature of the investment he made.

But he remembers an era when America had seemingly transformed into a giant, can't-lose, open-air casino - crowded with opportunities to lay down a pile of money and see it come back several times its original size. Like many people at the time, Mohanty and several friends wanted in.

They had a number of meetings with an investment broker who assured them that he had an opportunity virtually guaranteed to give them a sizable return. It was a horse-breeding operation along the Susquehanna River in Lower Windsor Township. Mohanty kicked in $52,462.

The promised return never materialized. The owners of Lauxmont Farms declared bankruptcy in 1989, with millions of investor dollars lost in the process. Though he can laugh about it now, Mohanty was pretty upset at the time. He was trying to put his kids through college, and that lost $52,462 really hurt.

"The middle people who administer these investments - they never tell you the truth," Mohanty said. "It was pretty unsettling."

Mohanty gave up that money as lost years ago. He was astounded to learn not only that is Lauxmont Farms still in existence but also that he might still recoup that long-ago investment.

Lauxmont Farms, in fact, is front-page news these days. Last week, two major developments related to Lauxmont Farms came up.

On Wednesday, the York County Commissioners voted 2-1 to start the procedures for taking more than 500 acres of Lauxmont Farms through eminent domain - the constitutional provision that allows government agencies to take private land for public purposes. The county intends to establish a park on the property. The family that owns Lauxmont Farms, the Kohrs, have said they intend to fight that action in court.

On Thursday, a Common Pleas Court judge sided with commissioners in a ruling regarding Highpoint, a 79-acre section of Lauxmont Farms that the Kohrs had sold to developer Peter Alecxih Jr. County officials had already started eminent domain proceedings against Highpoint, and Alecxih was trying to fight it in court. He has about a month to decide whether to appeal.

The Kohrs and the county have been negotiating over Lauxmont Farms since last year, when county officials first expressed an interest in purchasing it. Both sides say the negotiations haven't gone well, although they aren't ruling out future negotiations. And both say the disagreements center on the property's value, although neither side will say exactly what respective figure they're holding out for.

Court fight looms

So what happens now? Different players have different perspectives and insights on the whole affair. But the general consensus boils down to this: A court fight is likely. Legal precedent favors the county. And whoever wins, the creditors such as Mohanty will get their money back sooner or later.

Leon Haller is a lawyer appointed to step in as trustee after a long and confusing series of court proceedings that started with the 1989 bankruptcy declaration and didn't wrap up until years later. Basically, his job is to sell off the land and pay creditors such as Mohanty.

The original bankruptcy agreement calls for the land to be sold off for housing units. But Haller said it doesn't matter if the land is sold for housing or for a park. Right now, creditors still have about $8 million coming to them. And they'll get it even if the county uses eminent domain, because the county would still have to fork over fair market value for the land.

Haller said his beef with the county comes down to two main problems. First, the talk about eminent domain has brought a stop to land sales at Lauxmont Farms, because nobody wants to buy land with that threat hovering around. Second, the county simply won't offer what Haller and the Kohrs insist the land is worth.

Although Haller said his main job is to liquidate the land and pay back the creditors, he says his professional responsibility doesn't allow him to let it go for a fraction of its actual value.

If the county does end up exercising eminent domain, an independent board will eventually determine the value of the land. And even if it turns out to be far more than county officials originally intended to pay, they'll be locked in at that point, Haller said.

"I think the county's taking a huge chance to do something that's totally unnecessary and unwanted," Haller said.

County Commissioner Doug Kilgore, however, said that the county is basing its estimate of the land's value on a previous appraisal.

Although the Kohrs say they want to preserve open space on the land as well, Kilgore said the bankruptcy agreement provides for development and there's no guarantee they won't build on it. If county government wants to preserve the site, he said, it must act now.

"There's a natural beauty here that is significant," Kilgore said. "It's just something we believe needs to take place."

Family has no easy road

If the Kohrs do decide to oppose the county on this, they likely have an uphill fight, according to Andrea Geraghty, a Pittsburgh lawyer who specializes in eminent domain issues. The government's right to take property for public use is firmly established by legal precedent. And parks are firmly established as public use.

Their only chance, she said, might be to find some tactic outside the whole issue of eminent domain - such as showing that the county didn't follow proper procedure.

"You really have a hard time challenging successfully any action for a park," Geraghty said.

D. Benjamin Barros, a professor with Widener University Law School, said the Highpoint ruling gives the county a great deal of latitude in taking other land for the park. The ruling by Senior Judge Lawrence E. Wood of Chester County would make it difficult for property owners to challenge the condemnation.

"This gives the county the green light for this project," Barros said.

Barros said there isn't any burden on the government to prove that a project will end up being completed in the end. In some cases, government has run out of money and the projects don't materialize.

In this case, it could end up just being a small park, Barros said.

Mohanty, for his part, is unfamiliar with the issue of eminent domain and had no knowledge of the struggles and controversy surrounding Lauxmont Farms. But if he manages to get some of that money that he gave up for lost years ago, no matter where it comes from, he'll be pleased.

"Even if I get 50 percent or 30 percent of it, it will be nice," Mohanty said.

Staff writer Teresa Ann Boeckel contributed to this report. Reach Tom Joyce at 771-2089 or tjoyce@ydr.com.