Somervell County prepares for Luminant's lawsuit

Travis M. Smith -- @travis5mith tsmith@theglenrosereporter.com
Somervell County prepares for Luminant to file lawsuit

On July 29, 2015, Luminant, a branch of Energy Future Holdings, issued a statement to address its reluctance to pay property taxes as set by the appraisal districts in the counties where it operates. One of those counties is Somervell County, home of Comanche Peak Nuclear Power Plant, and a lawsuit appears imminent.

The Somervell County Appraisal District values the current value placed on the property where Comanche Peak sits at $2.4 billion – a number that has been publicly disputed by EFH.

“When a county appraisal district disagrees with our rendering of plant value, Luminant files a protest as set out by Texas law,” the company’s press release stated. “We follow the same administrative process as any homeowner or business would by appealing to the Appraisal Review Board. Even as the protest moves forward, our goal remains to work with a county appraisal district to determine the fair taxable valuation for our power plants and mines through negotiated agreements if possible and pay our taxes in January, as usual.”

Not only did the Somervell County Appraisal Review Board on June 30 approve the $2.4 billion valuation, EFH representatives failed to appear. Instead, the wholesale power conglomerate submitted an affidavit that valued the property approximately $600 million lower than that of the county – around $1.6 billion in total, according to court documents.

“They now have to file a lawsuit, or they have to accept our number,” said Wes Rollen, chief appraiser for the Somervell County Appraisal District.

According to Rollen, the county is now having to deal with accountants, or other money executives, who are “vaguely familiar with the process, but do not have the ability to make decisions. There are no property tax appraisers on staff in the [Comanche Peak] office anymore.”

Rollen recently spoke with one representative from the income tax department, another who serves as a local plant operator with no ability to make corporate decisions, and a CFO who “made it quite clear that he was only concerned with one number. He knew his number and what direction he wanted the conversation to go.

“Small districts like us, they know we don’t have the budget to fight them,” said Rollen of companies the size of EFH. “They have done a really poor job at justifying why our value is incorrect.”

There is a two month period after the Appraisal Review Board’s hearing to allow EFH time to file a lawsuit against the appraisal district in order to defend its lower valuation. As the Sept. 4 deadline approaches, Rollen – along with Somervell County Judge Danny Chambers and Somervell County Auditor Brian Watts – are left to prepare for a legal battle. While very unlikely, according to Chambers, if no lawsuit is filed the Appraisal Review Board’s value stands.

“They aren’t just singling us out,” Chambers said, “they are going at all of the plants across the board. We are just the only one I care about.”

“[Due to] the responsiveness requirements and need for public safety, our county is called upon to do a lot more than other counties with power plants,” Watts said. “Take for example our school system. It has to have 14 school buses in order to be able to properly evacuate its students. […] We incur a lot more expenses because of their being here, however, we do not incur those begrudgingly. We would all like to pay fewer taxes. I do not know a person who would like to pay more, but it is [the county’s] responsibility, in the most prudent way possible, to provide the best goods and services for our taxpayers.”

Typically the appraisal district budgets approximately $500,000 yearly for legal purposes, however, Rollen is expecting the seemingly looming lawsuit to cost the district close to $2 million over the next two years. The county has also lost about $600 million over the last two years in valuation, according to its calculations. If Somervell County was to use the EFH’s evaluation of the property, it would essentially have to take $1.2 million right off the top of next fiscal year’s budget and, in doing so, the county will almost certainly be forced to raise taxes to recoup the difference, Rollen said.

However, that does not include the $2.5-3 million loss for the school system that currently receives 89 cents per $100 – more than double of the 40 cents per $100 Somervell County receives, or the $350,000 hit the water board and hospital would take. All things considered, “the actual dollars lost” stands to sit around the $4.5-5 million range, according to Rollen.

“Up until this point, it has been, generally speaking, a good working relationship, and we have typically worked in good faith,” Rollen said. “I think we have done a better job than ever before at establishing a true market value.”

“I cannot express enough that it is not the local plant that is the problem, the problem at hand is with EFH out of Dallas,” Chambers said. “The local employees just do not have the power to make these kinds of decisions, and we have always had a great working relationship locally.”

Multiple calls were placed reaching out to EFH representatives for additional comments. As of press time, the calls have not been returned.