The owners of the SenecaSustainable Energy wood-burning power plant in Eugene, Ore., earned a victory in tax court cutting their property bill on a major facility. If the government doesn’t appeal the ruling by Tax Court Judge Henry Breithaupt, the plant’s annual property tax bill likely would be slashed by about two-thirds from its current level of $560,000.
A key element of Breithaupt’s recent ruling is that in setting the plant’s taxable value, the state must ignore the lucrative contract under which Seneca sells the plant’s electricity to the Eugene Water and Electric Board (EWEB).
The contract is “intangible property” and under Oregon law can’t be used to set a factory’s taxable value, Breithaupt ruled, as reported by The (Eugene, Ore.) Register-Guard.
Breithaupt ruled the plant needs to be assessed based on what it would sell for — without the contract. And because energy markets have plunged since Seneca and EWEB negotiated and signed the deal in 2009-10, the plant is worth — for property tax valuation purposes — only a fraction of what Seneca spent to build it, or what it is worth with the EWEB contract, Breithaupt ruled.
“We are pleased that the court, after hearing extensive arguments from both sides, has agreed with Seneca’s position on valuation,” Seneca said in a statement.
The state said it spent more than $45,000 hiring a New Jersey appraiser to value the plant for the lawsuit. Breithaupt repeatedly criticized the appraiser’s work, saying the appraiser used a “fundamentally incorrect approach,” and that “the quality and quantity of these errors (in the appraiser’s work) renders the conclusions of that appraiser completely without persuasive value.”
“We disagree with the court’s decision, including its conclusion that our appraiser valued intangible property in his opinion of (the plant’s) real market value,” Senior Assistant-Attorney General Marilyn Harbur said.