BUFFALO — On Tuesday, Johnson County settled a multi-million dollar property tax dispute with energy companies Carbon Creek and Powder River Midstream that has dragged on for more than three years.
In 2016, the companies claimed that then-Assessor Cindy Barlow overvalued thousands of coalbed methane wells and their associated infrastructure, purchased in a 2015 sell-off from Anadarko, WGR and WPX Energy. Each year since, the companies disputed the assessments and refused to pay millions in assessed tax bills.
Any sort of compromise was a tall order. Under the county's assessed values, prior to the settlement, the companies owed the county more than $7 million in unpaid property taxes. Using the values presented in hearings over the dispute by the companies' tax agent, Kelley Stewart, however, that figure shrank to approximately $700,000.
According to hearing officer Chris Wages, the county assessor's office worked with the companies to come up with a set of valuations and tax liabilities for the years in question in order to make the settlement of $3.4 million. Going forward, and for tax year 2019, the properties will be treated normally by the assessor, and the agreement is not binding on future valuations.
The commissioners and county officials attending the meeting expressed appreciation for the work of County Deputy Attorney Barry Crago and Hearing Officer Chris Wages for their work on the case.
“I think their effort has probably protected all the money we have in hand," said County Commissioner Bob Perry.
“I want to thank everyone for all of their work on this and getting it resolved before we lost that money altogether," said County
Assessor Deb Robinson.
Under a 2018 state law, the county will be able to recoup the $16,706 in outside attorney fees spent on the lengthy legal battle before distributing portions of the settlement to special districts and other entities that receive property tax funds like the library and Jim Gatchell Memorial Museum, all of which were owed a portion of the missing taxes.
Wages highlighted two additional provisions in the agreement for the commissioners. In the event of a bankruptcy, he said the companies could attempt to claw back money from the settlement to be distributed among the company's creditors as seen fit by the bankruptcy court.
Under the settlement signed Feb. 18, any attempt at a clawback would render the agreement void.
That point carries a significant weight in the county, which is fighting an attempted $500,000 clawback from Vanguard Natural Resources.
Although Wages said that there had been no discussion of a pending bank ruptcy, Carbon Creek and Powder River Midstream's sister company, U.S. Realm Powder River, formerly known as Moriah Powder River, filed for bankruptcy in October, owing the county more than $15 million in unpaid mineral production taxes.
Those taxes and any associated liens will be unaffected by this week's agreement.
"It's unfortunate that the price of gas right now is where it is," said County Commissioner Bill Novotny. "It's best that we get this resolved now.”
