Lundy Kiger, Vice President of AES Shady Point, met with faculty from both Panama and Spiro Schools this week to provide correct information to set the record straight about AES Shady Point and a dispute with the county assessor on the Fair Market Value of the plant’s taxable value. Over time comments on social media and in the public had moved from a tax issue to the plant not paying their property taxes.
Kiger presented those in attendance with a document from the LeFlore County Treasurers office certifying that AES Shady Point has no due or delinquent taxes. Property taxes for AES Shady Point for the prior year will be due before the end of December 2018, for the first half due just like everyone else in the county. Kiger restated several times that the real issue is the determination of the Fair Market Value of the plant.
Information was provided to teachers showing the plant qualified for a five year manufacturing exemption on property taxes that was paid by the state to the county as an incentive for the plant locating in the county from 1991 through 1995.
In 1996, AES Shady Point began paying property taxes to the county of approximately 1.7 million annually. Each year following for the next 17 years, the plant’s value and annual property tax payment reduced down to approximately $1.2M from equipment depreciation and the plant aging. If the plant added a new piece of equipment a new value would be assessed by the county along with a new depreciation schedule and the value would be added to the total amount owed.
In 2016, AES Shady Point received their annual tax invoice and the county assessor had raised the plant’s property taxes from $1.2M to approximately $1.7M.
AES has done a lot for the community over the past 28 years they have operated in LeFlore County. AES Shady Point built Panama’s elementary school, among many other things, and they have paid their fair share of taxes over the years. But regardless, the plant is obligated to pay our fair share of property taxes but we have a disagreement on the Fair Market Value of the plant, Kiger said.
But when the LeFlore County Assessor raised the plant’s property taxes by over a half a million dollars, this forced the plant to hire an appraiser to try and determine the correct value of the facility. After the county assessor dismissed the protest filed by the plant, it went to the county Equalization Board to be heard.
At the Equalization Board meeting the county assessor came in valuing the plant at approximately $175M, and AES Shady Point’s appraiser valued the facility at $58M. After hearing from both sides the Equalization Board valued the plant at approximately $120M as a final decision.
Both sides tried to reach an agreement on the Fair Market Value at the board meeting with no luck. From the decision by the Equalization Board, AES Shady Point will now have to pay approximately $1.450M in county taxes.
It appears now in the first half payment of taxes due at the end of December 2018, Spiro School will receive approximately $188,000 and Panama School will receive approximately $179,000. For the first half payment to be made both schools will receive more than they received the year prior.
But the big question for both schools will be the payment of taxes for the second half due at the end of March 2019. If the tax dispute cannot be resolved before the end of the year, the second half payment due will be held and froze, and public schools will not be allowed to use the money. Superintendents can apply for a reimbursement, but it would be the following December 2019 before received.
According to Kiger, “The Board of Equalization has overvalued the Fair Market Value of the plant too high. Over the past several years coal fired power plant values have declined and hundreds of coal plants in the US, and some in Oklahoma have closed or soon to be closed to make way for natural gas fired plants and renewable energy.” Because of these changing conditions in the energy industry, this changed the value of the plant, along with announcement that OGE will not exercise their option to renew the remaining five years of the electric contract, ending the Power Purchase Agreement with AES Shady Point at midnight on January 1, 2019.
“The only thing that AES wants to do is get the correct Fair Market Value,” said Kiger. But we have a responsibility as a business not to over pay our taxes, just like each of you here. One person in the audience asked if the additional amount that the plant had to pay on taxes was a large percentage of the profit for the plant. Kiger explained to the individual that no one should have to over pay and values assessed on the plant should be on the Fair Market Value of what a person would pay and what a person would accept for the sale. Kiger stated later that paying based on our income would come under incomes taxes. Here, we’re talking about property taxes.
AES understands the financial impact to schools and county agencies. But with no future possibly of an electric contract the value of AES is drastically reduced as no one is currently available to purchase and operate the plant.
AES Shady Point is working hard to complete the bid application for the OGE Request for Proposals with the hope of being selected and continue operations for the next 25-30 years. If OGE does not award the bid to the plant we will close down in mid-January 2019 and soon after will start demolition of the facility.
About AES Shady Point
It was back in 1987 that the AES Corp announced they were going to build a coal fired power plant in Panama Oklahoma at a cost of $480 million and by 1991 they were fully operational.
From 1991- 1995 they received state manufacturing tax incentives
AES Shady Point produces electricity for OGE and food-grade CO2 for Continental Carbonic.
AES has done a lot for the community and they are the largest tax payer of property taxes in LeFlore County.
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