Professional appraisal concludes Duke Energy owes money to county

Citrus County Property Appraiser Geoff Greene is representing the county in Duke Energy's lawsuit over property taxes

Citrus County Property Appraiser Geoff Greene is representing the county in Duke Energy’s lawsuit over property taxes

Citrus County Property Appraiser Geoffrey Greene today released the results of a professional appraisal of Duke Energy’s assets in Citrus County.

Not surprisingly to some, the appraisal indicates that Duke still owes the county taxes on property it holds here, despite the company’s legal position in its lawsuit that it doesn’t owe anything more.

When Duke Energy – DBA as Progress Energy AKA Florida Power Corp. – filed suit in November 2012 and, the county said, underpaid its property taxes by more than $15 million, Citrus County said it had little choice but to take emergency action to respond. That response included conducting a major in-depth appraisal of the companies’ assets. That has just been completed.

Greene, who has had to defend the county’s legal position, said that the team of highly qualified experts who performed the appraisal of the real estate and tangible property included engineers and appraisers with GAI, Inc. and Vista Appraisal Services, Inc.

He said that, given the massive data involved and the complexity of power plant operations, transmission lines and substations, there was a need to search for the right combination of expertise to perform such an appraisal. The team had to fairly and equitably deal with technical issues, engineering issues and thousands of acres of real estate. Sound methodologies and preparation of hundreds of pages of analysis are needed for complex properties, especially where litigation is involved, and expert testimony would be required by the courts.

“Given the complexity, history and dispute over the last year’s assessment of Duke Energy’s property,” Greene said, “an ‘independent’ appraisal team was needed and tasked to arrive at a fair and just value.”

The appraisal is comprehensive, and will provide the groundwork for future assessments, Greene said. The appraisers inspected all of the plant’s generation complex, transmission corridors, distribution systems and sub-stations. The research took five months with work which began in early January of this year. Duke provided access to the property; but unfortunately, Greene said, the company refused to provide requested information on the equipment and buildings. Greene also said, “On several occasions, our office requested specific data and documents needed for a valuation project of this magnitude. My office has responded in a timely manner to all requests for information from the power company, and I wish I could say we received the same in return. “

In spite of Duke Energy’s lack of cooperation, Greene said, the work proceeded in good faith with the best information available from public records, aerial photography and published reports.

Appraisal findings

The appraisal report indicates a Jan. 1, 2013 appraised value of $3.692 billion. This more than supports the 2012 value ($2.3 billion) being disputed by Duke in the Citrus County Circuit Court. Greene also said, “With the receipt of this critical analysis today, along with the 2013 tangible tax return filings from Duke Energy, my office can now move closer to establishing a value for this company’s assets along with all other properties in our County for inclusion in the 2013 tax roll.

“I also want to recognize the Citrus County Board of County Commissioners and School Board, who provided the funds to complete this undertaking, an effort for which these officials should be congratulated,” Greene said. He added, “In the end, they are helping to maintain uniform and equitable assessments for all taxpayers in our county.”

The pending litigation stems from Duke Engery’s challenge of its assessment in 2012. This is no small disagreement. In late November of 2012, the county maintains the company underpaid its taxes owed by $15 million. Within days, they filed suit against the Property Appraiser (and, by extension, the citizens of Citrus County), claiming the company’s assets had been over assessed.

“Duke is seeking to reduce their valuation by approximately $1 billion for last year in the pending lawsuit,” Greene said.

The company paid $16.033 billion for Progress Energy of Florida. Citrus County’s four operational generating plants now contribute 23 percent of the power to their grid, even without CR-3 (the company’s nuclear power plant in Crystal River). Yet, Greene said, Duke alleges its assets in this county are worth approximately $1.3 billion.

“After my team’s sound demonstration of value, it would seem to make Duke’s claims to such a low valuation at best self-serving, and certainly not supported with any actual asset accounting for fair value, which has yet to be provided,” Greene said.

Greene said that, judging by statements made by Keith Butler (Duke Energy N.C. headquarters) and Alex Glenn (CEO of Progress Energy of Florida), Duke Energy may well continue to underpay its taxes in 2013, by as much as $15 million and, Greene suggested, perhaps more.

At this point, the county’s new appraisal serves to challenge such a move, Greene said, and court action would be met with a sound and very defensible, fair and equitable assessment. Greene also cautioned county residents, “such disputes can only be resolved with two willing parties. Remember, the power company sued the County, not the other way around. I stand ready to work with Duke, and hope they are willing to do the same. Now we can begin meaningful debate.”

This comprehensive appraisal by independent experts should form the basis for an agreement on a valuation framework going forward, Greene said, “that would provide financial stability for all concerned – the taxpayer, the taxing authorities, and the taxpaying citizens of Citrus County.”

 

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