Craig Many publicly funded Northwest Colorado organizations will have to tighten their belts this year after Moffat and Routt County Commissioners both elected not to protest tax abatement requests from Salt River Project, an Arizona-based utility and partial owner of coal-fired power plants in Craig and Hayden.
Though it’s sour news for Moffat County's already cash-strapped school district, college, and others, Salt River’s reduction in assessed value does not necessarily mean Moffat and Routt counties need to brace for decreases in future tax revenues from other power plant owners.
“Is it because of the devaluation of coal? No,” said JoAnn Groff, property tax administrator with the Colorado Department of Local Affairs. “The fact that energy generated from coal is being discouraged at a federal level is not really related to this settlement.”
The coal industry has suffered heavy blows in recent years due to increasingly stringent federal regulations, however an executive order by President Donald Trump Tuesday sought to reverse that trend by dismantling the Obama-era Clean Power Plan.
Whether or not the coal industry will see a revival under Trump’s more coal-friendly administration remains to be seen. Coal’s growth or decline will, of course, affect future values of the utility companies that own and operate coal-fired power plants such as Craig Station and Hayden Station.
“It does have an influence on their value,” Groff said. “If their product becomes less attractive on the market because it’s a non-renewable energy, because it’s coal, and they can’t sell it on the market as they did before, that will influence their value.”
But in Salt River’s case, it’s not industry trends that primarily founded the company’s appeal, which led to a 40- to 50-percent reduction in their assessed values for 2014, 2015 and 2016. Originally valued at $11.7 million in 2014, Salt River’s revised 2016 assessed value is $5.2 million.
The devaluation means $840,725 less in Moffat County coffers this year, affecting six entities and most heavily impacting the county itself and Moffat County School District. Nearly $210,000 represents a reduction in 2017 tax revenues, and the county will cut a check to Salt River for the remaining $631,000 in tax abatements for 2014 and 2015.
Routt County will see $174,000 less in 2016 property taxes from Salt River, affecting nine taxing entities this year, according to the Steamboat Pilot and Today.
"It’s frustrating on my part," said Routt County Commissioner Doug Monger. "They’re still making as much power as they’ve ever made... but saying that same power is worth less money."
The main reason, according to state officials?
Overlooked coal stockpiles, which should have been tax-exempt.
“They were being taxed for something they shouldn’t have been taxed for,” said William Kowalowski, manager of the State-Assessed Section of the Division of Property Taxation.
As to whether others of Craig Station’s five total owners or Hayden Station’s three owners could appeal for similar reductions in their assessed values, both Groff and Kowalowski said no. They already received the proper deductions.
Nonetheless, Salt River Project spokesperson Scott Harelson noted a second reason for the revision: a “calculated obsolescence factor” that was properly assessed to other owners but not to Salt River.
“It reflects the fact that coal plants do not have a ready market if an owner were to try to sell and they have significant economic pressures,” he said in an email.
Moffat County had until March 9 to contest the abatement request, however Moffat County Assessor Chuck Cobb recommended they accept the change.
“My office, in coordination with Routt County, did go out and solicit a third-party appraiser,” to review Salt River’s claim, Cobb told commissioners. “I didn’t see anything in that report that gave me reason to believe we should challenge them further.”
If Moffat County had chosen to contest the abatement requests and lost, they could have owed $107,000 in additional interest that Salt River offered to waive.
“When you look at the possibility of us having to pay interest and attorney’s fees, I don’t think it would be responsible to do that,” said Moffat County Commissioner Ray Beck at the March 7 commissioners’ meeting.
Salt River also offered Moffat and Routt counties the option to pay the tax refunds over several years if necessary, according to Harelson. However Moffat County Treasurer Linda Peters expects to pay the full $631,000 refund this year, and will meet with school district officials next week to determine how the district will absorb its $408,363 portion of the total revenue shortfall.
Contact Lauren Blair at 970-875-1795 or lblair@CraigDailyPress.com or follow her on Twitter @LaurenBNews.