Cash donation does not make up for tax loss, Sunnyside tells power plant reps
Sunnyside city officials were peppered with good and bad news Tuesday night as Sunnyside Cogeneration representatives first made a large donation to the city, then went on to explain that property tax payments would most likely continue to decline. Then the council got word that the water level at Grassy Trail Reservoir is ominously low.
The meeting began amicably, as SCG Plant Manager Rick Carter presented Sunnyside Mayor Doug Parsons with a check for $118,885.
"Sunnyside City and Sunnyside Cogen, we believe, have had a longstanding, good working relationship. It has been professional and we would like to continue that relationship," said Carter. "The owners have recognized that the reduction of our property taxes would impact Sunnyside City substantially and in recognition of that we want to do the right thing."
Property taxes on the power plant have gone down as as result of declining valuations. Assessed value went from $47 million in 2011 to about $20 million this year.
"I'm disheartened that we are here today for this reason," stated council member Shari Madrid. "Don't get me wrong, I appreciate the donation. That's great. However, I wish it had never come to that. I wish things were back to the way they were. We're not the only ones who are affected by this." She explained that the county and the school district are also affected. Madrid said the school district had to pay back $107,000 as a result of lowered valuation and the city's hit was $78,000.
According to Carter, the power plant's owners considered the fact that Sunnyside officials did not have the opportunity to raise the revenue needed to replace lost property tax income because no one knew how the appeal would come out for more than two years.
Negotiations concerning city tax rates started between SCG and Sunnyside city in 2005 when the two parties agreed to a lesser property tax increase than the city was proposing in exchange for the plant's promise to not request a tax re-evaluation for five years. As that agreement concluded in 2010, SCG approached the county via appeal in 2011.
Carter stated that the county's original property tax value for Sunnyside CoGen in 2011 was a little over $47 million.
"Our tax appraiser calculated the 2011 value at $27,900,000 and the 2012 value right at $20 million. Big difference there," said Carter.
After a lengthy appeals process, the county and the plant agreed to a settlement of $32 million for 2011 and $27 million for 2012.
"The current property tax rate in Sunnyside city is about .005 and the maximum allowed by the state is .007. This donation of almost $119,000 has been calculated as the difference between the two multiplied by the agreed upon plant value for 2011 and 2012," explained Carter. "We assume that the city will raise its tax rates in 2013 and we are in the process of calculating our value for the current year now."
Moving forward, Carter did admit that the plant would ask for a property tax re-evaluation every year if their appraisers felt there was a "significant" change in plant value. The SCG Plant Manager then explained that the property value is determined by what an individual would pay for the business.
"As the power plant gets closer to the end of its power purchase agreement the value will continue to go down," said Carter. "I know this isn't good news but I laying the cards face up here."
As Carter finished his presentation, Sunnyside City Maintenance Supervisor Mike Marquez addressed what he called a drastic situation at the city's reservoir.
"Our runoff has peaked," said Marquez while showing the council and Carter pictures of Grassy Trail. "Last year we were letting water out of the reservoir at this time. We were going over the top."
With inflow, runoff and snowpack, city officials agreed that the reservoir's level should be increasing.
"Historically, through the winter months we do gain. Not this year," said Marquez. "Basically, the problem is the amount of water being taken from the reservoir all winter long. We should all be scared. We will be on restrictions this year."
The conversation turned to SCG concerning the water being taken from their wells and mine water. According to SCG's Rusty Nets, the plant just increased the water being taken from mine water in Whitmore Canyon from 50 gallons per minute to 100 GPM. The plant is also pulling from Water Canyon One and Two at a total of 270 GPM. In addition to these amounts, city officials contend that the plant is taking more culinary water from the reservoir than ever before.
CoGeneration officials stated that they are pumping as much water as possible from their wells. They also reported that the plant is currently not using any more total water then they have in previous years, a claim that Marquez disputed.
"I can see that you are losing water at your well sites. They are running low but they feed our reservoir during the summer. We aren't going to get that this year," he said.
While Marquez and SCG officials disagreed about where the runoff is, they agreed that the lake is currently at 97 inches below the spillway.
"Since you just upped one of your wells from 50 GPM to 100 GPM, have you cut back our on culinary water?" asked Sunnyside Council member Shari Madrid.
The SCG group had not.
City residents then asked if the reservoir got to a certain level if they would be able to cut down on the amount of water the plant takes. No one had a specific answer and officials agreed that the plant's contract with the city needed to be reviewed by both Sunnyside and East Carbon.
While Marquez stated several times that he felt the plant was using more than the 150 GPM that the plant's meter shows they are using, plant officials commented that he is the one who reads the meter.
According to Marquez, the town is losing 350,000 gallons a day, very little of which he feels is being used by town residents.
City and plant officials agreed to come together to address the water system, possibly to look for problems or leaks beyond what is being recognized by either party.