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Dave Roepke, Published June 16 2011

American Crystal property dispute settled

MOORHEAD – Settling a long-standing dispute that put hundreds of thousands of annual tax dollars on the line, a deal has been reached on the value of American Crystal Sugar property in Clay County.

The agreement leaves in place assessments set by the city from 2006 through 2011, avoiding the property tax redemption that could have been required on the part of Moorhead and Clay County if American Crystal had successfully argued to lower the values for its processing plant, technical center and headquarters in Moorhead.

But it will also bring big tax savings for American Crystal in coming years, as it reduces the value of its property beginning in 2013.

American Crystal is one of the largest taxpayers in the county. Its three Moorhead facilities were valued at $32.1 million for its 2011 taxes – holdings generating more than $760,000 in property taxes this year, Clay County data shows.

Based on prior tax rates, the reduced valuations set in the deal would lower the annual tax bill for American Crystal by more than $180,000 starting in 2013.

Moorhead City Council and Clay County Commission members, after meeting in private sessions to discuss it earlier this week, signed the deal on Tuesday.

Moorhead Mayor Mark Voxland said it was a relief to get past the impasse.

“That’s been hanging over our head for quite a few years,” Voxland said. “It’s good to have them back as a good corporate citizen of Moorhead.”

Tom Astrup, chief financial officer for American Crystal, was also pleased with the resolution in Clay County. American Crystal started fighting the valuation of its facilities in four counties in the Red River Valley in 2003, and the Clay County matter is the last one settled, Astrup said.

“It’s nice to have this set aside,” Astrup said.

Voxland said he thought it was a fair shake on both ends of the negotiation.

“We gave a little. They gave a little,” he said.

The “gave a little” part for the city and county was establishing set values for the three facilities for 2013 through 2018 at a combined $24 million, making for a 25 percent reduction from the existing assessments.

“That’s basically the settlement,” said Michelle Lawson, an assistant Clay County attorney. “They get stability moving forward.”

Astrup declined to say what sort of reductions the cooperative sought for the 2006 to 2011 tax years, but in its initial challenges, it was asking for a two-thirds decrease, city officials told The Forum in 2004.

American Crystal argued in many of its assessment cases that a sagging sugar industry lowered the values of its properties. Astrup said the disputes were in part spurred by prices other facilities in the industry fetched when sold.

Lawson said the city and county jointly spent about $300,000 defending the case, a legal bill that Voxland said was on the precipice of getting much pricier.

“We would have had to get expert testimony” for future litigation, he said.

Asked what sort of tax savings American Crystal expects to see in 2013 when the new valuations kick in, Astrup directed questions to Clay County officials.

Generally, figuring in its state tax credits and property uses, American Crystal pays about $23,000 for every $1 million of assessed value, Lawson said. So the depreciation of $8 million from 2011 to 2013 translates to roughly $184,000 less in property taxes per year.

Astrup said the agreed-upon values for 2013 to 2018 in Clay County are significant increases from what they were deemed to be worth when the first challenges were made. The Moorhead facilities were assessed at $12.7 million in 2004, for instance.

“There was compromise,” he said.

American Crystal agreed to dismiss its challenges to the valuations in 2004 and 2005 in state tax court last fall, and its 2003 challenge was dismissed in appellate courts because its process server missed, by minutes, a deadline to serve county officials with paperwork.

The agreement also calls for American Crystal to accept city assessments for taxes payable in 2012.

The Clay County deal is similar to ones reached in Polk County (Minn.) in 2010 and in Pembina County (N.D) in 2005, as both saw the sugar cooperative agree to the values set in prior years in exchange for future depreciation, the Grand Forks Herald reported last spring.

American Crystal lost its only other Red River Valley case, when Traill County won a 2006 appeal before the North Dakota Supreme Court in which the sugar outfit claimed its Hillsboro factory was worth only $5.7 million compared to county assessments ranging as high as $27.7 million.

Readers can reach Forum reporter Dave Roepke at (701) 241-5535