Vulcan Materials, located in Newberry on County Road 235, successfully appealed its 2012 tax assessment, leaving the City of Newberry in a financial bind.
NEWBERRY – The City of Newberry must deal with a $312,297 loss in tax revenue as the budget year comes to an end in September. The blow came when the taxable value of a major industrial taxpayer, Vulcan Materials Co., formerly known as Florida Rock, was cut nearly in half.
“The difficult part for the city is the timing,” said City Manager Keith Ashby.
“The money is important, and we will have to consider how we make up the amount of money that we have lost, but if we had known at the beginning of the tax year we could just adjust.
“When I’m told three quarters of the way through the budget year, there’s no way to recover.”
While the tax collector mails tax bills at the end of November, that bill represents the year that was just completed, said John Power, the chief deputy tax collector. Newberry, like all other cities, creates its budget months before they receive this bill, acting upon a summer-time preliminary tax roll calculation.
But the devaluation of the Florida Rock property came late in the budget year because it was the result of an appeal by the owner, not the initial valuation by Alachua County Property Appraiser Ed Crapo. The lower value came down from the value adjustment board, a third party that can adjust the property appraiser’s taxable values for properties.
“It’s not that the date is so important,” Power said, but the county’s value adjustment board changed the taxable value of one of Newberry’s largest tax contributors from nearly $174 million to $88.35 million, and Newberry found out in June that it lost about 20 percent of its tax revenues on which it was already operating.
“You know, they say not to put your eggs all in one basket?” Power said. “This is a big egg for Newbery, and it just got cut in half.”
Vulcan Materials approached the county’s value adjustment board because it believed the facility’s taxes were too high, said Crapo.
The major devalue came from how the value adjustment board evaluated the Florida Rock property and the board’s magistrate will present the reasons behind the devaluation.
Crapo believes the magistrate’s recommendation to devalue Florida Rock was “misapplying both the law and appraisal theory.”
Crapo said as an example, the law requires pollution control equipment to be valued a certain way and believes that in 2011 and possibly in 2012 as well, the magistrate misapplied the process.
“The magistrate called such equipment an exemption, and it’s not,” said Crapo.
The appraisers have access to a list of equipment that is appraised differently from the facility, he said. “I think it was done wrong.”
Another aspect involves a tax representative hired by the company who works with the board, and is the same person who approached the same magistrate to lower the 2011 value, said Crapo.
“There are a number of different errors that have been made in their arrival at this evaluation,” he said.
“It’s not right that the rest of us have to pay their share of the taxes, because they are unwilling to do so,” said Crapo.
Crapo has already filed litigation against the company, Vulcan Materials Co., for the year 2011 when the property was devalued by $47.7 million.
He promises to file suit for 2012 because the property was devalued $85.38 million.
It will begin a “huge two year process of working through the court system,” he said.
“I’m asking the courts to determine what’s right and what’s wrong because I believe what the value adjustment board is doing is grossly wrong.”
Further complicating the situation, the city isn’t usually involved in filing suit for tax values, so the appraiser must support the set tax values in front of the board to give taxing authorities, like Newberry, “some bit of stability,” he said.
Crapo had discussions with the city last summer when the 2011 devaluation occurred referencing the possibility that it may occur again in the future.
A refund of tax revenues is problematic for a municipality because of the timing of the appraisal appeals process.
“It’s a hardship; it’s a very difficult place to be in.
“But the litigation would solve the question for many years going forward,” said Crapo.
Ashby says he wishes the appraisal appeals process could be pushed back so that municipalities could be informed as soon as possible after budgets have been set.
“Then I would have 10 months to recover,” said Ashby.
Now the only viable option is the city’s reserves, he said.
“The truth of the matter is Newberry’s reserves are in good shape – probably in the best shape of any city in the area.
“But the fact of the matter of is, that is where the money will come from.”
Losing more than $300,000 is about 21 percent of the city’s $1.3 million in ad valorem tax revenue, and the city won’t know the full picture of consequences until the end of the year.
“When I build a budget for the next year I’m going to put a delta in the budget that says ‘I think I’m going to take another hit.
“And at least that way even if I get bad news at least I am prepared,” said Ashby.
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