Goliad County loses about $500K in revenue after valuation settlement

Nov. 30, 2012 at 5:30 a.m.
Updated Dec. 1, 2012 at 6:01 a.m.

Goliad County lost more than $500,000 in revenue after a legal settlement Thursday with Coleto Creek Power reduced the value of the power plant by about $100 million from the 2011 value.

The county had budgeted for more than $550,000 in cuts after the company, which generates about 40 percent of the tax revenue for the county and the school district, filed the lawsuit in District Court on Aug. 16, said County Judge David Bowman.

Despite the cautionary cuts, county officials did not know how accurate the budget was until Thursday.

"It is a relief to get that issue settled so we can move on to some other things. You can't do a whole lot of planning when you have a big question mark hanging over your head," Bowman said.

Bowman said they should have a slight cushion in fiscal year 2012-13 because of the cuts and from raising taxes from 65.65 cents per $100 of assessed valuation in 2011 to 69.84 cents.

"It shows your vulnerability when you have a single, big taxpayer. And if something happens to that big, single taxpayer, then it affects the whole operation, not just the county, but the school system also," Bowman said.

Julie Vitek, vice president of communications for GDF Suez Energy North America, which owns the plant, said the tax issue has been settled.

"We're pleased to report that the litigation is being dismissed," she said.

Christy Paulsgrove, Goliad ISD superintendent, said they were glad to have the matter resolved relatively quickly.

The school - which approved a tax rate of $1.2165, up 3.15 cents from 2011-12 - lost about $1.1 million in revenue from 2011.

"Fortunately for schools, we do get some help because when we lose tax value, then we go down with the state. ... The state is not going to ask us to pay as much back as a Chapter 41 school," Paulsgrove.

In the annual Appraisal District notices, the plant was originally valued at $355.3 million, down almost $7 million from 2011, said Pat Brennan, the county' chief appraiser.

The appraisal work was conducted by Pritchard & Abbott Inc., a Fort Worth valuation and consultant company.

After the power company contested the county's valuation, the Appraisal Review Board lowered the value of the plant $26.7 million to $328.6 million on June 20.

Brennan said the two sides, including legal teams and the separate appraisal companies, met on Sept. 29 to negotiate a new value.

"They were very forthcoming with information with respect to some of their concerns and some of the external factors they were dealing with, such as the price of coal, the transportation of coal ... that affect their profitability and their ability to remain competitive in their market," Brennan said.

"Once we sat down and discussed all those issues, we determined what the new value would be ... but both sides compromised somewhat to reach an agreement," Brennan said.

Brennan said the looming possibility of an expensive and lengthy legal battle contributed to the county's decision to settle.

The judgment was signed by Judge Stephen Williams and filed Thursday.

Bowman said the situation highlights the county's need to diversify its tax base. He said the commissioners will look at a possible tax abatement for DCP Midstream, an energy company, at its Dec. 10 meeting.

"That is the whole purpose of an abatement, not only to provide some tax relief to the company that is coming in now but also to make it attractive for other companies to come in. ... We are trying to create a pro-business environment in Goliad County," Bowman said.



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