A new round of property value assessment, conducted by Lowndes County Tax Assessor Greg Andrews, places the actual value of county-based natural gas company Caledonia Energy Partners at $86.5 million — a $20-million jump from last year’s $66.4 million.
Sheldon Alston, attorney for the company, protested the value in front of the board of supervisors during its Aug. 3 meeting, claiming the company should have been valued much lower at $12 million, a figure based on the sale price of the company to ArcLight Capital Partners in October 2018, he said.
“Eighty-some million dollars is obviously way out of whack,” he told The Dispatch on Monday afternoon. “With that, (the company has) no choice but to object to the assessment and file appeals from that point.”
The company, protesting the assessment, also filed a lawsuit against the county in December, which is ongoing, Alston said. On behalf of the company, he said he has argued with the county over the issue for about the past 18 months.
The company, valued at $101 million in 2006, entered a 10-year fee-in-lieu agreement with the county, which generated $500,000 in annual taxes (one-third of what it would have otherwise paid) while the agreement lasted. Following its expiration, the company began paying a full annual tax of $1.1 million in 2017 and 2018 — an amount that factored in the depreciation of those assets over the 10-year period.
Andrews previously told The Dispatch the protest didn’t begin until the company started paying full taxes. His assessment, he said, is based on the company’s own report of its equipment cost.
Additionally, Andrews said, Sempra, a subsidiary of ArcLight, purchased in January a storage facility of similar capacity to Caledonia Energy Partners in Simpson County. The company was sold at $173 million, for a price of $8 million per BCF (billion cubic feet), which is used to measure a facility’s cavity capacity, he said.
“We’ve got 20 BCFs in Caledonia. That’s $160 million, not $11 million,” he said. “You do the math.”
Alston rejected Andrews’ cost-based assessment, claiming it is based on the original equipment cost, which he believes should be lower due to the depreciation over the years as well as a collapse in the natural gas storage industry.
“The costs of the items that were spent years ago … don’t have any correlation to the current day value,” he said. “The natural gas storage market has shifted dramatically, and therefore, it’s now not worth close to what (it used to be worth).”
Andrews’ office investigated the company last year for under-reporting its assets for 13 years and found out documentation discrepancies between the company’s federal and county reports. For example, the company’s asset list in 2018 shows it owned 10 wells, instead of the nine wells it had been reporting to the county since 2006, The Dispatch reported.
Alston said he is unaware of any underreporting and does not believe that has ever happened. Andrews declined to comment further on the issue, citing concerns about the ongoing lawsuit.
Yue Stella Yu was previously a reporter for The Dispatch.
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