A month after Loudon County Commission put its final stamp of approval on a payment in lieu of taxes agreement with Tate & Lyle to potentially resolve a four-year property tax dispute, the plan has dissolved.
According to terms of the 10-year deal, which was set to go into effect in January 2017, the company was scheduled to make annual lease payments of $2 million for real and personal property at the plant on Blair Bend Drive in Loudon.
Loudon County Mayor Rollen “Buddy” Bradshaw said he received a voicemail two weeks ago from Chris Olsen, Tate & Lyle vice president of community and government affairs, about the company’s intention to drop the deal and proceed with its tax appeal. He said the county has not received formal notification.
“It’s disappointing,” Bradshaw said. “This was not necessarily a very popular deal. I think (in) the big picture it would have been a great deal for the county and for Tate & Lyle. ... It will be hard-pressed for this one to come back around. There’s a lot of folks that stuck their neck out to help them and ensure their presence in Loudon County.”
Revenues from the deal would have been divvied up between the county at 61 percent, with the rest going to the city of Loudon.
Tate & Lyle plans to invest about $66 million into a cogenerational plant that officials have said could substantially reduce air emissions, and the company has outlined plans to construct a natural gas pipeline to provide an additional 16,000 dekatherms of capacity for future industry.
“Both the local governments and Tate & Lyle put in a lot of hard work on the PILOT program, and we are extremely disappointed this agreement will be abandoned,” Olsen said in an email correspondence. “It would have provided revenue certainty for the local governments and an incentive to invest for Tate & Lyle. This opportunity will be replaced with continued court appeals and uncertainty.”
Bradshaw said officials with the company took exception with some property tax figures provided through the Property Assessor Mike Campbell’s office, which Bradshaw attributed to a “key punch error.” Tate & Lyle also had an outstanding environmental certificate that still needed to be filed.
Campbell said an audit finding revealed a net appraisal difference of $9.7 million in the company’s valuation for 2014 and a difference of $6.9 million for 2013.
He said he did not know if the different valuation played a factor in Tate & Lyle’s decision, but that’s a possibility.
“Basically, Tate & Lyle is our single largest taxpayer and has been since they came to town in the ’80s, and we’re talking about hundreds of millions of dollars in assets, so although $9.7 and $6.9 (million) are very large numbers, when we’re dealing with hundreds of millions of dollars, it’s an acceptable range percentage-wise,” Campbell said.
Campbell said as per the agreement with Tate & Lyle, the company had 30 days to withdraw the appeal, and since Tate & Lyle did not withdraw, the county’s resolution to approve the PILOT agreement became null and void.
Olsen said the property tax issue came up after the deal with the county was reached.
“The issue involved how property tax adjustments and appeals over the next two years, prior to the PILOT starting, would be administered,” Olsen said. “The uncertainty over this handling created too much risk for the company. Several attempts were made to resolve this concern, but no resolution could be reached before the deadline for withdrawing appeals.”
Campbell previously said Tate & Lyle was assessed at a property tax value of $55,759,700 this year, and the city and county could stand to lose a combined $727,000 through the Tate & Lyle appeal and another ongoing appeal with Kimberly-Clark.
Bradshaw said he was standing by property tax figures presented in the Property Assessor’s office and was confident in the county’s ability to win the appeal.
“We’ll go before the judge and hear the appeals case,” Bradshaw said. “I’m confident the county is in the right on this. You hate to put it in the hands of one person, but I’m confident that we’ll come out on the good end of it.”
Pat Phillips, Loudon County Economic Development Agency executive director, said in an email that although the entities did not have enough time to resolve the dispute inside the 30-day window, he wasn’t giving up on a potential PILOT deal.
“While an acceptable solution exists to resolve Tate & Lyle’s concerns, ultimately it will be up to the County Commission and (Loudon) City Council to amend and re-adopt a new PILOT Resolution,” Phillips said. “The reasons for entering into the original agreement still exist, and I believe that a modified resolution is in the best interest of all parties.”
Campbell said the county has a court date set for Oct. 8 in Knoxville on the personal property component of Tate & Lyle’s appeal. The real property component is still being heard before the Tennessee Assessment Appeals Commission.
