Grant County, REC to negotiate tax assessments

EPHRATA - Negotiations between Grant County and REC Silicon, aimed at resolving a property tax dispute, are scheduled for today.The Moses Lake company is disputing the county's assessment of its property for 2009, 2010 and 2011, with the company claiming it should have been assessed less each year. The dispute involves more than $15 million in taxes distributed to seven entities, including the Moses Lake school district, library, hospital district, the City of Moses Lake and Grant County.

Issues between the company and the county started with the company's expansion in Moses Lake in 2009. The county assessed the new value of the property at $1.26 billion, more than twice REC's estimate of $507 million.

Francine Sullivan, REC Silicon's corporate counsel, stated the company needs to ensure the company continues to be a vital player in the international market.

"We requested that Grant County review its valuation of the Moses Lake facility for property tax purposes," Sullivan stated. "Specifically, we requested that the property tax valuation be revised to take into account the factors required under applicable laws, and therefore provide REC with a fair and equitable property tax assessment."

The company paid its $15 million property tax bill under protest, but missed the deadline to appeal it to the county's Board of Equalization, Assessor Laure Grammer explained. As a result, they filed a lawsuit in Grant County Superior Court challenging the assessment value.

"The first time we ever sat down to talk with REC Solar Grade was September 2010," she said. "So that's the first indication that they had any dissatisfaction with their value."

The company continued to dispute the 2010 value of its property in 2011, believing the county assessed the value about $532 million above the $1 billion it estimated, according to county records. The company appealed the assessment to the county Board of Equalization.

"The Board of Equalization reduced (the value) by $23 million," Grammer said. "Now their reduction ... was based on intangibles. They felt that research and development was an intangible and thereby not taxable. I, of course, feel differently."

REC challenged the 2011 assessment in 2012 as well, claiming the county's assessment was $734 million above the $1.01 billion the company claims the property is worth, according to county records.

When the value notice was sent to REC, Grammer requested the company appeal it directly to the state Board of Tax Appeals, or file it in superior court before the end of the year, she said.

"There is a provision in the law ... that allows if a court of law or a state Board of Tax Appeals case is at issue then I can certify my value at the undisputed amount," she said. "So there is no harm if we lose, there is nothing to pay back. If we win, we would just send them another bill."

Grammer requested the Department of Revenue (DOR) conduct the assessment for 2012, using a provision in state law allowing her to request the department assess any property valued at $25 million or more, she said.

"They would not do it, and they never will, while new construction is going on, so it has to be complete," Grammer said. "REC was finally complete so I could ask DOR to do an advisory appraisal and send one of their appraisers to come and appraise the property. So they have done that and we haven't resolved all of that yet. I have the preliminary, but their are still changes being made."

Grammer's goal is to place the value on the tax rolls by the end of the year so if REC disagrees it can appeal to the state or file a case in superior court, so Grammer can charge taxes based on the undisputed amount.

The advisory appraisal placed the lawsuit and the two Board of Tax Appeals cases on hold until its completed, Grammer said.

If the county loses the lawsuit and the state Board of Tax Appeals case the county and the other entities would have to refund the company the $15 million in taxes they collected in 2010 and 2011, Grammer said.

"The amounts are so huge that they will break many of the taxing districts," she said. "The taxing districts just don't have that kind of money."

Sullivan and Grammer presented different views of the present situation, with Grammer saying the company hasn't presented any evidence of why the value should be different, and Sullivan saying the county failed to take into account relevant factors.

Grammer pointed to a September 2010 meeting with the company, where they tried to come to terms about the items they brought up.

"Of all the points they brought up, not one piece of actual evidence was provided. It was just all, 'This is what it is. Trust me,'" Grammer said. "If I did my job that way as an assessor, I wouldn't be a good assessor, and I wouldn't be here for very long because I have to treat them all uniformly, and that is a requirement of the law."

Grammer made an offer following the initial September 2010 meeting, offering to reduce the 2009 value by $15 million and reduce the 2010 value by $98 million.

"The $98 million is based upon their figure on a single sheet of paper with no evidence, I was just willing to concede that, was the cost of repairing re-welds," she said. "They laughed at me. REC did. They said, 'If you're not going to take us seriously.'"

Sullivan stated the county's response was unrealistic, and it has refused to engage in further discussion or to negotiate a reasonable and fair solution.

"We had little choice but to file proceedings against the county in order to get this back on the table," Sullivan stated. "Our concern is the county has failed to take into account a number of relevant factors required by the law to be acknowledged in assessing property tax on REC's Moses Lake plants, including the impact of recent falling prices for REC's products in international markets and a consequential drop in the income generated by the Moses Lake plants."

Grammer pointed out the amounts she offered may seem small to REC, the property tax based assessed amounts would be redistributed to the rest of the taxpayers in the districts affected. Since the amount of taxes collected won't change, if REC isn't paying the amount, other property owners in the affected areas will pay the taxes.

"Our Legislature never takes taxes away," she said. "They just shift them around ... So instead of you paying $12 per $1,000 (of assessed value) you might be paying $16 per $1,000 (of assessed value,)" she said.

Grammer said the county is lucky to have good corporate citizenship, with only small amount of companies protesting their assessed value every year. She estimated about six companies make their payments under protest.

Grammer and Sullivan are hoping the negotiation leads to a resolution, with Sullivan stating the company wants an appropriate assessment, which is also fair to the county and the community which supports it.

"Such a resolution would enable us to improve our position in selling products in highly competitive international markets while also remaining a valuable economic and job contributor to our Moses Lake and Grant County community," Sullivan stated.

If the negotiations are unsuccessful the state Board of Tax Appeals is scheduled to hold a nine-day hearing on Feb. 26 for the 2010 and 2011 assessments, Grammer said. When its complete it reactivates the lawsuits REC filed.