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By Stephen J. Lee, Forum Communications Co., Published April 22 2010

American Crystal Sugar, Polk County resolve tax battle

A long-fought tax battle between Polk County, Minn., and American Crystal Sugar Co. over the value of the beet-processing plants in East Grand Forks and Crookston has been resolved, and both sides say they are glad.

“It’s been going on for close to six, seven years,” said Polk County Commission Chairman Warren Strandell, East Grand Forks. “We were trying to keep this whole issue from continuing. We needed some kind of agreement.”

American Crystal’s president and CEO agreed.

“Anytime two parties resolve a long-standing dispute, each side needs to make some compromises,” David Berg said in a news release. “We are grateful that we and the county were able to find a resolution, and we appreciate their willingness to find middle ground.”

The total valuation for this year for the two factories will remain where the Minnesota Tax Court had set it: $56 million, twice what American Crystal had sought. It will fall to $44 million next year and to $40 million by 2015 under the settlement’s terms.

Any improvements to the properties will add to the assessed value, Strandell said.

The settlement, in effect, means no money changes hands. There is no rebate from the county, and American Crystal has kept current on its tax bills, Strandell said.

The long tussle ended at a mediation meeting April 7 in downtown Minneapolis.

It was an expensive disagreement.

“The cost of litigating it was unbelievable,” Strandell said. “We figured about $1.5 million (cost to the county).”

He figures American Crystal spent even more.

The dispute began as a disagreement in 2004 over how to assess for tax purposes the tall tanks used to store molasses: Crystal said they were equipment, which would mean a lower tax rate, while the county said they were real property.

That opened up a reappraisal of both factories. American Crystal’s hired appraiser said the two plants were worth $7 million for taxation purposes. The county’s independent appraiser came up with about $70 million.

Some of the difference came from American Crystal’s contention that the factories should be appraised based on how much they garnered in sales. The county maintained it should be figured based on how much the factories cost.

American Crystal mounted similar challenges with county governments for its plants in Hillsboro and Drayton, N.D., and a factory in Sidney, Mont.

American Crystal is still in litigation with Clay County over the value of its Moorhead plant.

Lee is a reporter with the Grand Forks Herald, which is owned by Forum Communications Co.