The city of Clinton and several local taxing bodies unexpectedly learned recently that they are facing an unanticipated loss in property tax revenue because of a recent settlement that lowered the assessed value of LyondellBasell’s buildings by $2.45 million.
While the loss is the result of a May 31 settlement between Equistar Chemicals, the wholly owned subsidiary of LyondellBasell, and the City of Clinton Board of Review, officials with the city and Clinton, Clinton school district and Camanche school district are saying they have not been notified of the settlement or tax loss and have yet to know what the full effect will be on the fiscal year 2013 budget.
The process leading to the settlement began a year ago, when Lyondell filed a petition to appeal the 2010 property tax assessments in June 2011. The stipulation of the settlement states this will affect the property tax assessment years beginning Jan. 1, 2013 through and including the property tax assessment year beginning Jan. 1, 2017. According to court documents, the original assessed value was $12,050,920 and was reduced to $9,600,920 as a result of the settlement. City Assessor John Moreland said this assessment affects the 2010, 2011 and 2012 property tax years. This will impact the city’s Fiscal Year 2013 budget that went into effect July 1.
In an interview with the Herald last week, Moreland said the city and other taxing entities affected by the lower assessment would have been informed through a letter from the Board of Review’s attorney, Drew Chambers.
Attorney John Frey, who represented Lyondell in the case, said the letter had been sent to those entities. Court documents stated the notice of the stipulation for the compromise settlement being served on the Mayor of Clinton, Clinton City Council, the Clinton Community School Board and the Clinton Board of Supervisors as required by Iowa Code 441.44, along with an affidavit of mailing notice would be included as an exhibit in the case file. However, no such form or affidavit was in the case file. Frey said the notice would be filed per conversation he had with Chambers on Friday. Chambers did not respond to multiple attempts for comment by the Herald.
Clinton Mayor Mark Vulich said as of Thursday the city had not received any formal notification of the settlement. City Administrator Jeff Horne and City Finance Director Jessica Kinser also said they have yet to see the letter relating to the settlement that occurred nearly two months ago and were unaware of the lowered assessment until it was brought to their attention as a result of the Clinton Herald’s investigation.
The Clinton School District received a letter from Moreland in June of 2011 notifying them that Lyondell had filed on their property tax assessment in District Court. Superintendent Deb Olson said she had not seen a letter informing the school district the settlement had been reached, but added Jerry Van Scoy, the attorney for the school district, could be aware of the letter. Van Scoy was unavailable for comment.
Business Manager for the Clinton School District, Jan Culbertson, said she also was not aware of the settlement or a letter.
The City Assessor’s office is a separate entity from the city of Clinton and acts under the direction of a separate Board of Review. Horne said the city is not informed of every lowered assessment because most of them occur on residential properties and do not have a large impact on city finances. The only other comparable assessment decrease is the ongoing case with Archer Daniels Midland, Horne said. In that case, Horne said the city of Clinton was informed by the City Assessor’s office in January of a projected outcome so the budget could be drafted accordingly.
Moreland said his role in the assessment change process is to record the changed property assessment and inform the County Auditor of the change because the county is the entity that issues property tax bills. The County Auditor then informs the County Treasurer, who then informs the County Board of Supervisors.
According to Warren Jenkins, Chief Deputy Auditor of State, if the lowered assessment is done through a court order — such as in this case — the County Auditor is responsible for getting assessments correct on tax bills. Without reviewing the specifics of the case including the whereabouts of the letter, he said the process happened as he would expect it to, but added that doesn’t mean the process itself couldn’t be improved.
“The city needs to know the assessed value because it affects their revenue, but they are not in the chain of issuing property tax bills,” Jenkins said.
Moreland said he contacted the County Auditor sometime between May 31 when a final agreement on the settlement was reached and June 28 when the Board of Supervisors passed a resolution agreeing to pay a $99,599 property tax refund for property taxes already paid from 2010.
The refund, which was also unknown to the city, was apportioned among the different taxing entities based on their share of the revenue. This was reflected in the statements those bodies were issued on July 15, according to County Treasurer Rhonda McIntyre.
Business Manager for the Camanche School District, Rox Aude, said she was not aware of a letter about the lowered assessment, and learned only about the property tax refund when she received the statement from the county. The Camanche School District lost $21,858 through this refund. Aude felt the district’s cash reserve would be able to absorb the refund. The Camanche School District was not named in the case file as a taxing body that would be notified of the assessment.
While Vulich, Horne and Kinser would not comment on the specific amount of revenue that would be lost as a result of the settlement because they had not seen the letter from Chambers, the tax rate for the city in fiscal year 2013, which began July 1, is $16.26 per $1,000 of assessed value. Based on the FY13 tax rate and the loss of $2.45 million in assessed value, the loss could potentially be $39,837. This amount would come from various city funds.
“The impact is next time Lyondell pays their taxes, they’re going to pay less than we anticipated,” Kinser said. The next property tax payments are in October.
If Clinton city officials need to amend the budget to reflect the lowered assessment, it will be done in May when they make other amendments.