County hopes to negotiate settlement on 3M tax appeal

By Ben Holman

Nevada Daily Mail

On Tuesday morning, representatives from Nevada R-5 schools, the Vernon County Health Department, the Vernon County Ambulance District, Center Township and the city of Nevada met with Vernon County officials to discuss options relating to a 2004 real estate and personal property tax appeal currently under review by the state tax commission.

"We felt like all the entities should meet," said David Darnold, presiding commissioner. He said that there had been some new developments and that the R-5 school district has recently changed its view of the matter.

According to Cherie Roberts, Vernon County assessor, 3M filed a protest of their real estate tax assessment in 2003. At the time, 3M's real estate had an assessed valuation of approximately $9.8 million and 3M argued that the figure should have been approximately $6.3 million. That dispute led all the entities that would have lost tax dollars if the appeal had been successful to hire a firm out of Springfield to perform an assessment. The new assessment figure was $10.1 million and is the number that the county used for the 2003 tax year. The Board of Equalization approved the new valuation and 3M did not take the appeal any further in 2003.

In 2004, 3M conducted its own appraisal and again protested that their real estate was assessed at too high a value -- offering a figure of $6.4 million.

"By statute, re-appraisals are done in odd years," said Roberts. She went on to say that since 3M did not pursue the matter beyond the local BOE in 2003, sothe company cannot protest the valuation in 2004 and will have to wait until the next assessment to protest again.

Nevertheless, there is also the matter of the personal property tax assessment. The county has assessed 3M's personal property at a value of nearly $17.5 million and 3M suggests that the figure should be just under $9.5 million. According to Lynn Ewing, Vernon County Prosecutor, personal property tax assessment disputes are difficult for the taxing entities to win. The state tax commission has a history of siding with the businesses in these cases; but 3M has some unique equipment, so it is difficult to determine values, said Ewing.

The difference in tax dollars associated with the appeal amounts to a total of more than $460,000, with nearly 80 percent of that figure earmarked for the school district.

Roberts' concern was that the entities now do not have all the same goals in the case, so she sought to bring all the entities together to get opinions.

In the end, the ultimate decision for the course of action will be up to Roberts but she said that she wanted to get as much feedback as she could before pursuing any course of action.

"The school has a little different view on it than the other folks and we want to get opinions. If no one can agree then I think that the tax commission should decide," said Ewing.

Recent developments in the state legislature and the slim chances of obtaining the personal property tax dollars have led the R-5 school district to re-think their position on the matter. "If we're certain that we're not going to win, than we're (R-5) better off just dropping the assessment now," said Ted Davis, R-5 superintendent.

Davis said that the new funding formula working its way through the state legislature favors school districts with lower assessed valuations. "If we lose these funds, we can recoup our losses from the state," he said. He handed out some simulations that demonstrated how the funding formula would allow the district to recapture funds lost locally from the state.

It is likely that this legislation will go through, or at least something very similar, said Davis. He also said that the 2004 tax year would likely be used as a baseline for the formula and if the district has to use the higher assessed value for 3M and 3M wins the appeal, the district will suffer -- they will not get the disputed funds and will be stuck with the higher assessed valuation from 2004.

Chris Ellis, R-5 school board president, said, "As a school board member, it's my responsibility to do what's best for our kids. ... to do what Dr. Davis suggested is the best for our school district in the long run."

"If all this comes to fruition, we can hold off on our levy," said Ellis. "We can spend into our surplus and not cut any programs for a while."

A concern raised by Couch is the chance that levies would be raised as a result of the lost funds from 3M, thus spreading out the loss among other taxpayers. Several entities are already maxxed out and cannot raise levies any further.

James McKenzie, director of Vernon County Ambulance District, said he would like to see 3M pay the taxes but added that he supports the school.

"If we can get the money, we'd like to. If not, you're still going to have an ambulance 24/7," McKenzie said.

The ambulance district is one of the entities whose levy is already at the maximum.

Roberts also said that 3M had approached her offering a settlement and said that there is a possibility that some kind of agreement could be negotiated.

Several alternative scenarios were discussed and most people at the meeting seemed to agree that negotiating with 3M may be the best option for all parties involved. "3M has been a great business partner for this community," said Darnold, who added that they aren't trying to sully 3M's reputation in the community.

"All we're trying to do is get something fair," said Ewing.

While the group didn't come to any final decisions, the consensus of the group seemed to lean towards negotiation with 3M. The entities will meet again to discuss the matter further on April 27, at 10 a.m., in the commission chambers in the Vernon County courthouse.