Legal bills exceed $1M in GCMS's property tax dispute with One Earth Energy

GIBSON CITY — The Gibson City-Melvin-Sibley school district has now spent more than $1 million in legal and other fees in its unresolved dispute over the assessed value of a Gibson City ethanol plant, but the district’s superintendent said those bills may not be growing much more.

To date, the GCMS school district has expended $1,023,954 over the past nine years in trying to keep the One Earth Energy ethanol plant’s assessed value unchanged, according to information obtained by the Ford County Record via the Illinois Freedom of Information Act.

The bills covered everything from legal fees paid to Aurora-based Whitt Law to appraisal fees to hiring expert witnesses.

However, since the 2015 calendar year, when the district spent $423,985, it has only incurred about $100,000 more in expenses related to the dispute.

A lack of activity in the property tax appeal in recent months has kept the bills at bay, Superintendent Jeremy Darnell said Tuesday. District officials, along with One Earth Energy officials, have been waiting, literally, for the past two years for a resolution to the case, and their respective attorneys have, too.

“Both attorneys have said it could be months,” Darnell said, before an administrative law judge appointed by the Illinois Property Tax Appeal Board rules on the appeal.

“So we are literally waiting for the judge,” Darnell said. “With the number of cases they have in the queue down there (in Springfield), I don’t know if we get prioritized or if they take the cases as they come in, but (in any case) we are completely at the Property Tax Appeal Board’s disposal. Until we get something, we just have to sit back and wait.”

Since January 2015, administrative law judge Carol Kirbach has been considering evidence and testimony regarding One Earth Energy’s appeal of its 2014 assessed value, which, if granted, would be retroactive to 2009 and also be reflected on the plant’s assessed value in years subsequent to 2014.
While both sides continue to await a resolution to the dispute, the good news is that GCMS and One Earth Energy are not spending the kind of money on the matter that they had been.

“The attorneys have stated that until the judge renders a decision, there is going to be very limited activity — so very limited costs for us,” Darnell said.

According to information obtained through a Freedom of Information Act request, GCMS has paid 121 separate bills related to the appeal since Sept. 17, 2007. Those included bills totaling $24,448 in the 2008 calendar year, $22,738 in 2009, $13,122 in 2010, $101,575 in 2011, $174,970 in 2012, $142,988 in 2013, $19,720 in 2014, $423,985 in 2015, $99,941 in 2016 and $467 in the first two months of 2017.

Darnell noted that in fiscal year 2017, which runs from July 1, 2016, through June 30, 2017, the district has incurred only about $5,000 in expenses related to the appeal.

“That’s because we are simply waiting for the judge in the case to render a ruling, so there’s no activity going on,” Darnell said. “It’s just a matter of waiting for that process to take place.”

The case went before the PTAB for the first time after the Ford County Board of Review rejected One Earth Energy’s request to have the plant’s 2014 taxable value lowered from $22 million to $6.8 million — marking the sixth time that board had denied the plant’s appeal since it was built in 2009.

Last month, the board of review denied a reduction in the plant’s assessed value for an eighth straight year, after the plant filed an appeal of its 2016 assessed value of $23,202,180, seeking to have it lowered to $6,106,800. One Earth Energy disagrees with the assessment office factoring “process machinery and equipment” into the assessed value of the plant’s property. A less important issue, One Earth Energy says, is what that equipment should be valued at.

Attorneys for both sides — Indianapolis attorney Tom Atherton, representing One Earth Energy, and Stuart L. Whitt of Aurora-based Whitt Law, which is representing GCMS — both said they did not expect any decision by the administrative law judge for quite some time.

Both Atherton and Whitt participated in the board of review hearing via telephone, rather than in person as they had done in the past. Atherton told the board of review that allowing them to do so “keeps the costs down,” adding that “we all know this has been a very expensive process for all concerned.”

Former GCMS Superintendent Anthony Galindo has said that reducing the plant’s assessed value to $14 million — the highest amount One Earth Energy has said it would accept — would mean a loss of about $500,000 a year in property tax revenue.

Under an agreement with the city of Gibson City, $650,000 of the plant’s $2 million in annual property taxes goes to GCMS. And of that $650,000, the $500,000 that represents the amount GCMS stands to lose is being placed each year in a reserve fund and not being spent until the tax appeal situation is resolved, Galindo said.
Galindo said he assumes that if One Earth Energy’s appeal is granted, the district would likely need to pay back all of that money to the company. And the district would lose out on property tax revenue in subsequent years, as well. That is why the district has felt the matter important enough to spend large quantities of cash in contesting the appeal.

By the numbers
Here is how much money the Gibson City-Melvin-Sibley school district has spent each calendar year in legal and other fees in its unresolved dispute over the assessed value of the One Earth Energy ethanol plant in Gibson City:

In 2008: $24,448
In 2009: $22,738
In 2010: $13,122
In 2011: $101,575
In 2012: $174,970
In 2013: $142,988
In 2014: $19,720
In 2015: $423,985
In 2016: $99,941
In 2017 (to date): $467


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