Financial watchdog John Marshall Lee writes about a court case that’s received little attention involving regional trash-to-energy plant Wheelabrator’s challenge of its appraised value. This could have implications on the city budget. From JML:
The City of Bridgeport has a number of issues in the Court system winding their way to judgment, settlement or other conclusion. By consulting the Comprehensive Annual Financial Review, June 30, 2012, you can read about one of the cases presented by Wheelabrator (operating the municipal waste to energy plant on the former CRRA site) against the City regarding appraised values of land, structure and personal property taxable in the course of business. (Page 50.) A case decision came down on June 28, 2013 regarding claims filed in 2009 and 2011.
Some good news for the City arrived in the form of the Court indicating that the plaintiff, Wheelabrator, had no standing to dispute the assessment in 2007 and 2008 because the actual property owner was the CRRA who leased it to the taxpayer.
Some distressing news for City taxpayers relates to the valuation differences of the City appraisers and those for the Plaintiff, Wheelabrator. The City has maintained most recently that the fair market value was close to $402 Million while the Plaintiff argued using similar methods but entirely different assumptions for a more realistic value of nearly $202 Million. The Court came down around $314 Million.
What does that mean to the City? The City can appeal this decision as can the Plaintiff but continuing the legal fight is expensive. Time will tell the choices by each party.
However, one might expect that the City will adjust its Grand List valuation downward in light of this opinion which would be a major hit to the Net Taxable Grand list as well. A drop of $88 Million leaving aside land and personal property valuation calculated at 70% would mean an annual decrease of $2.5 Million of property taxes to the City. It probably also indicates a credit to Wheelabrator of several millions for taxes they have paid in recent years at close to the City value.
If the unassigned City fund balance has dropped below $10 Million as reported in the 2012 CAFR and the City faces some $7 Million of payments to Wheelabrator, how will that be handled? With no deficit or surplus comment from the City on its likely closing status on the June 30, 2013 operating budget and no comment on this specific Tax Court decision it is at least troubling to taxpayers to see how close to the edge the Finch administration is coming in terms of dealing with its largest taxpayer. Time will tell.
JML–I have also been following this for a while. This is, as I recall, one of the single largest taxpayers in Bridgeport and this reduction in tax revenue has the potential to cripple the city budget from literally millions lost per year. Looking forward to updates.
As always, thank you for your diligence and keeping those of us interested up to date.
*** LET’S MAKE ANOTHER DEAL? ***
Democrats in Detroit taxed business and people out of the city under the guise of saving it. The only thing saved was gov workers. No more. Brace yourselves, Bridgeport taxpayers.