Duke Energy's attempt to slash its Citrus County tax bill might have backfired: A new appraisal says the utility owes more than three times what it paid last year.
An appraisal team hired by Citrus County concluded that Duke did not accurately disclose the value of all its taxable property, according to a report released Thursday. The utility undervalued its land and failed to include some transmission lines, easements, substations and transformers in the value of its assets, the report said.
The appraisers assessed Duke's Citrus County property at $3.47 billion. That's up from the county property appraiser's assessment last year of $2.32 billion, which Duke said was too high.
Citrus County Property Appraiser Geoffrey Green said Duke owes the county $36 million in taxes for 2012 and, based on the new appraisal, would owe an additional $54.6 million in taxes for 2013.
"There were a lot of unreported and underreported items that we found," Greene said.
Duke isn't backing down. On Thursday, the utility again said that Citrus put too high an assessment on its aging and even broken property, such as the now shuttered Crystal River nuclear plant.
"We have our own independent, detailed analysis and will be presenting evidence to the court confirming the value of our Citrus County properties," said Sterling Ivey, a Duke spokesman. "As we have previously stated, we believe we have filed and paid the fair and just value related to our property in Citrus County."
The dispute came to a head in the fall when Duke refused to pay its full $36 million tax bill for 2012. Instead, it paid just $19 million and filed a lawsuit against Citrus County that asks the courts to decide the appropriate assessment. The utility has again asserted the same assessed value of its property for 2013 that it did in 2012.
The refusal to pay the whole bill sent Citrus, a rural county of 140,000 residents north of Tampa Bay, scrambling to make up the difference. Duke's property taxes made up about a quarter of the county's tax base. The Crystal River energy complex alone includes four coal-fired plants and the now closed nuclear plant.
Duke argues that the county appraiser overvalued the broken nuclear plant. The nuclear plant closed permanently in February, and customers no longer have to pay operating and maintenance costs. The utility said that, too, should reduce the property's value.
The utility also said the county overvalued the $1.5 billion pollution control systems on two coal-fired units at the Crystal River power complex. Duke said the county based its assessment on the cost of the pollution control systems rather than their salvage value, as it should have.
The court fight prompted Citrus County to spend $330,000 to hire two outside appraisal firms, GAI Consultants Inc. and Vista Appraisal Services Inc.
The two firms, along with other experts contacted by the Tampa Bay Times, said Duke's assessment is wrong.
The analysts Citrus hired said they took into account that the nuclear plant was out of service. They assessed it a value of $500 million, rather than the $2 billion value the reactor would have received if it were operating.
In addition, the analysts said Duke didn't correctly calculate the value of some of its other assets. They found that Duke used the purchase price or "original cost" of some of its older properties to determine the assessed value instead of calculating the expense of replacing it today.
That, the analysts said, shaved hundreds of millions of dollars off of the value of some property.
"They're reporting on the original historic cost versus the current value," said Gerald Hartman, vice president of GAI Consultants, which conducted the appraisal. "It should be based on fair market value currently. Your house assessment is not based on what you paid for it."
Robert Gorman, founder of the Gorman Group and an Illinois-based appraiser licensed in Florida, specializes in unusual properties, including an Ohio museum, sand dunes, airports, Ronald Reagan's boyhood home in Dixon, Ill., and other appraisals across 30 states.
"There's no question the utility company is wrong" in using original cost for the assessment, said Gorman, who was not involved with the Citrus/Duke dispute.
"They're using accounting-type concepts that don't really have much to do with market value," Gorman said. "That old historic number just doesn't hold anything."
Greene, the Citrus property appraiser, said Duke has tried since 1998 to reduce its property tax bill. He said Duke lacks legal standing for the tax break.
Negotiations with Duke, which bought Progress Energy last year, have been friendly over the years, despite the utility's desire for a lower bill, Greene said. But the court fight over the tax bill could take years.
Greene said he is awaiting a court date in the dispute with Duke, which he hopes will be scheduled in June or July.
Even so, Greene's counterpart in Pasco County is urging him to stand strong against the nation's largest utility. Pasco County Property Appraiser Mike Wells said it's rare for a county appraiser to hire an outside firm, but he said it is an important step to protect the public's money.
Property appraisers, Wells said, should always seek to find the correct value for the property. If a taxpayer can show the appraisal is not correct, the county should change it.
"But if they can't show me evidence, I'll stay into the very end defending my value," Wells said. "And it sounds to me like the property appraiser is doing his job."
Ivan Penn can be reached at [email protected] or (727) 892-2332.