Duke Energy continues to appeal tax assessment
The Fayette County Assessment Appeals Board will take a few days to determine a 2016 property tax rate for a German Township energy supply company.
On Thursday, the board re-convened from an October meeting to learn the appraised value of the 60-plus acres owned by Duke Energy Fayette II, as determined by its licensed appraiser, John Doyle, of Doyle Real Estate Advisors of Philadelphia.
According to county Chief Assessor Bill Lukatch, in October the Albert Gallatin School District requested the 2011 rate of $35 million assessed value of the property remain intact for the years 2011 through 2015.
Following the nearly 90-minute hearing and a brief executive session, the board advised both sides that neither would be happy with its decision.
Board Chairman Larry Bush declined to reveal the decision. The attorneys — Frank Hoegen for Duke and Anthony Giglio for the school district — also declined to offer their respective views of the board’s likely decision, adding that the matter remained in litigation.
“We are required to issue a written decision and we will do that in the next day or so,” said Bush.
During the hearing, Doyle advised the board that he had determined the appraised value of the property is $17.5 million, not the $35 million assessed in 2011.
Both the school district and Duke revealed that attempts have been made outside the courtroom to resolve the disputes, but a resolution was not forthcoming.
The taxing bodies — the county, German Township and the school district — and Duke, have been long-embroiled in a dispute about the property’s value. The matter is now before the state Superior Court.
In 2002, the Texas-based company purchased 300 acres near the now-closed Hatfield’s Ferry Power Station in Masontown.
At the time, owners and local officials attributed the company’s decision to locate in Fayette County to a joint agreement of the taxing bodies to designate 60-acres of the property with the Keystone Opportunity Zone (KOZ).
The designation would exempt the company from paying property taxes for a 10-year period.
“The (KOZ) set the stage,” said then-Commissioner Vince Vicites during a 2002 interview. “We’ll lose $400 a year in tax revenue for all three taxing bodies for a $420 million investment.”
The 60-acre parcel was assessed at $1.8 million.
The plant was subsequently constructed and became operational in 2003. In 2009, an additional structure was added to store oil and other flammable liquids, as required by the company’s insurance carrier.
Prior to the expiration of the KOZ, then-Chief Assessor James Hercik recommended to the commissioners that the property be reassessed for taxing purposes when the designation ended.
With the improvements, the assessment rose to $35,181,260, said Lukatch.
The new assessment amount was appealed to the Court of Common Pleas where legal counsel for the company argued that the county had the responsibility to notify Duke of the changing assessment amount throughout the course of the tax abatement program.
“They waited too long,” argued Hoegen, who represented the firm during a March 2014 hearing before Judge Nancy Vernon. “As a result of waiting, it constitutes classic spot assessment.”
After Vernon ruled in favor of the county, Duke appealed to the Commonwealth Court.
In the April 2015 Commonwealth Court ruling, Judge Anne E. Covey, wrote that “the assessment of improvements must take place when the improvements are made and not at some artibtrary time in the future, or a board of assessment will be guilty of spot reassessment.
“The taxing bodies argue in their reply brief that even if the county had committed a mistake by not assessing the improved property in 2003 when it as completed, the law permitted the immediate assessment in 2011 of the omitted property,” wrote Covey. “This court finds this argument disingenuous and contrary to the record evidence which clearly reveals that the board intentionally delayed the reassessment until after the property’s KOZ status expired.”
The county was ordered to reduce the assessment value from the 2011 amount to the 2003 amount.
The school district has appealed the matter to the state Superior Court. The court has yet to determine whether it will hear the case.
The stakes are high, said Lukatch.
At the $1.8 million assessed value, the school district receives $23,415 in property taxes. At the $35 million assessed value, it recoups $457,665 at the district’s current millage rate of 13.0088 mills.
German Township and the county would also garner additional revenue if the assessment remained at the $35 million figure.
The township would receive $70,350 at the higher level, compared to the lesser value amount that would bring in $3,600 to the municipal coffers.
At the $1.8 million, the county would bring in about $8,000, while at the $35 million would receive $158,800 in revenue.
Lukatch, meanwhile, said that Duke and/or the school district could appeal the recent decision.