Duke Energy property tax appeal headed to Commonwealth Court
Following the denial of a property assessment appeal in Fayette County, attorneys for Duke Energy Fayette II, LLC on Thursday filed notice of appeal to Commonwealth Court over what they characterize as a spot assessment of property in German Township.
In July, Fayette County Judge Nancy D. Vernon determined that there is no statute of limitations on a reassessment arising from the construction of improvements to property, and that the county Tax Assessment Office was acting within the law when it re-assessed the 400-acre property in 2011, several years after the company constructed a gas-fired electric generation facility.
According to court documents, the last county-wide property tax assessment was conducted in 2001, the same year Duke Energy acquired the property. The land was subdivided, and a 60-acre tract was designated for building the power plant.
At around the same time, Duke Energy applied for enrollment as a Keystone Opportunity Zone (KOZ) and, upon approval, was granted real estate tax abatement from 2001 through 2011, records state.
The power plant became operational in 2003, and the county was made aware of the improvements to the property. Because an appraisal of the property following the construction project would have cost the county between $25,000 and $50,000, it decided to wait until Duke Energy’s KOZ status was near its expiration. The stated reason was that it was more practical to wait until the property was eligible to be taxed, therefore offsetting the cost of the appraisal with the revenue generated by the assessment, according to court records.
The property was assessed initially at $1.8 million before the improvements, and in 2011, the revised assessment came to $35,181,260. A month after the new figure was released, Duke Energy appealed to the county Board of Assessment Appeals, which determined that no change would occur in the new assessment.
Frank Hoegen and Richard Bower, representing Duke Energy, argued in a hearing held before Vernon in March that other properties that enjoyed tax-exempt status under the KOZ program were assessed according to one methodology, while the assessment of Duke Energy’s property amounted to a departure from the county’s standard methodology.
Hoegen argued that the assessment board had an obligation to issue its assessment when it was made, not wait years until the expiration of the company’s tax-exempt status.
John Cupp, solicitor for the county assessment board, contended that the assessors typically use worksheets to conduct research for their assessments, but that simply doing the work to arrive at a figure did not equate to being required to send notices to landowners about the research itself.
Vernon stated in her ruling that the county’s method of re-assessing did not constitute a spot assessment.
“When the parcel became eligible for taxation, an assessment was performed and the valuation was appropriately added to the assessment rolls,” Vernon wrote.
“The county of Fayette was not statutorily or otherwise required to make the reassessment only in the year of completion of the improvements, especially in light of the KOZ status.”