A local landlord is trying to use a lawsuit filed by one of his tenants as leverage in a tax dispute, Mayor David Allaire said Thursday.

Allaire released copies and transcripts of messages in which Bill Dydo, who owns several city properties, offers to have the lawsuit about the city report’s tardiness dropped. The lawsuit was filed by city resident Mark Nowakowski — Dydo lives outside the city — and was thrown out by a Rutland County civil court judge. Nowakowski appealed to the Vermont Supreme Court, and granted Dydo limited power of attorney to settle the case, according to City Attorney Matt Bloomer.

The lawsuit seeks to have the March budget and bond votes invalidated along with the mayoral election. Because it is still pending, the city has been unable to access the bond funds authorized by the voters. At a special meeting held Wednesday, the Board of Aldermen voted to use $1.5 million from the water fund for a portion of one of the bond projects, with the expectation of reimbursing the fund after the bond money becomes available.

“Based on my dealings with the plaintiff and his associates in the last several months, I have come to believe that the principal purpose of the suit is to harass me, cause delay to the bond projects and to otherwise create a nuisance for the City, in order to prove leverage for a City property owner’s unrelated disputes,” Allaire wrote in a prepared statement.

Despite all that, Allaire did propose a settlement — he said he did not want to discuss the terms except to characterize the cost as “negligible” to the city — but he did not win the support of the Board of Aldermen.

Allaire said Dydo had complained at various times about his assessments and tax bills. Dydo left a message for City Clerk Henry Heck, according to a transcript provided by Allaire, saying “if I can’t make a deal with the Treasurer’s Department on these taxes, I am contesting the election ... .”

Dydo also texted Allaire that day.

“I’d like a half an hour of your time, I’m going to make one last effort here to make a deal on these inherited tax bills,” he wrote, according to the transcripts. “I want a stay on the tax sales and I want a payment plan on the taxes ... .”

Dydo goes on to say he is prepared to “contest the election,” but that he hoped to “make a deal” instead.

Nowakowski, representing himself, filed the lawsuit the following week. The complaint noted that the city report had not been published by the Nov. 15 date set out in charter — the report has not come out on time in years — and that its tardiness kept voters from making informed decisions when they went to the polls. The city filed a motion to dismiss, arguing that neither the charter nor state statute tied the election to the city report and that information on the budget proposal and bonds would not appear in the city report.

In late April, Dydo sent Allaire messages saying two lawsuits against the city would be dropped — Dydo has a pending lawsuit regarding one of his assessments — if a list of demands were met. These included abatement of all taxes and water bills at his properties, cancellation of pending tax sales on two of his properties, return of another property taken at tax sale, no taxes levied against that property for a year, and all his assessments changed to “satisfactory valuations.”

“The city of Rutland cannot expect to back me into a corner and not have the quills come out, you guys are trying to tax my retirement, my livelihood, my business ... and I’m going to retaliate,” he wrote, according to the transcripts.

Judge Samuel Hoar held a hearing on the motion in May. Dydo attended, as did Michel Messier, who unsuccessfully ran against Allaire for mayor in March, and School Board member Kam Johnston, who had unsuccessfully sought intervenor status in the lawsuit. After hearing arguments and allowing time for additional filings, Hoar dismissed the lawsuit with prejudice in early June, citing the cities arguments.

About a week later, Dydo again texted Allaire, saying he would appeal if he did not “make a deal” with the city.

Allaire said he learned in August that the litigation had the potential to hold up the infrastructure projects funded by the bonds. One of the bonds was $3 million for bridge and culvert work. The other was $7.4 million for a variety of sewer system improvements including replacement of a force main, which Public Works Commissioner Jeffrey Wennberg characterized as a “ticking time bomb.”

It was also in August, Allaire said, that Nowakowski gave Dydo his limited power of attorney.

“To that point, I had never responded to Mr. Dydo’s texts and had no interest in negotiating with him,” Allaire said. “However, given the potential effect of the litigation on the critical infrastructure projects, I agreed to meet with Mr. Dydo.”

That meeting produced the settlement proposal Allaire brought to the Board of Aldermen during an executive session early this month.

“It’s basically extortion,” Alderman Scott Tommola said Thursday. “There was no way I was going to stand for that. It’s as simple as that. ... What is to stop anybody else who has a grudge against the city to come up with their own lawsuit or join this one? ... It could have been a settlement for a dollar and I still would have said no. I think it’s time for the city to start hitting back when we get hit with lawsuits that are petty or grudge matches.”

Dydo previously raised red flags with a Facebook post that several people in City Hall considered threatening. The post, which Dydo later took down and apologized for, began with complaints about the assessments of properties going up for tax sale — he had recently lost one of his own city properties due to unpaid taxes.

“Criminal conspiracy that the city has been running for over a decade, and it won’t end until blood shed ... until there’s blood and guts lying in City Hall ... when somebody finally snaps because their constitutional rights have been violated and they can’t deal with crooks anymore ... .” the post read in part.

City Police reviewed the post and found it did not legally constitute a threat, but increased security around City Hall, Chief Brian Kilcullen said at the time.

In late July, following the Facebook post, City Treasurer Mary Markowski said Dydo’s delinquent taxes on water and sewer fees on his eight city properties totaled $111,335.

“There have been no payments made,” Markowski said Thursday.

Dydo owned four properties in the city that went to tax sale in the last year, according to Markowski. One — 77 South Main St. — was claimed by the city after no bids were received. Dydo redeemed two — 33 Summer St. and 100 South St. — following tax sales and the mortgage-holder redeemed 19 East Washington St. after it went to tax sale. Markowski said a notice of tax sale went out for another of Dydo’s properties, 119 Park St., this week.

Dydo also owned 75 South Main St., which was the site of a fire May 1. A number of the residents said they resorted to electrical heaters because the furnace did not work — a claim Dydo denied. A check of city records shortly after the fire showed no certificates of occupancy on file for any of the apartments at the building since Dydo had purchased it. New certificates of occupancy are required any time a building is sold or when an apartment changes tenants.

In 2006, Dydo settled a fraud case with the Vermont Attorney General after a Department of Motor Vehicles investigation found he failed to properly submit documents and fees to DMV, submitted documents to banks and finance companies falsely listing prices and other information, given documents to consumers incorrectly listing information in violation of the federal Truth in Lending Act and sold several customers extended service contracts or warranties for their cars, failing to get or make payments on the contracts.

He had to give up his car dealership in West Rutland, not work in auto sales or financing in Vermont for at least seven years and pay restitution and fines totaling $90,000.

Dydo did not immediately return a call seeking comment.

gordon.dritschilo @rutlandherald.com

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