WAXAHACHIE — The Ellis County commissioners court recently approved to refund an almost $150,000 in over valuated property taxes to Holcim Inc, which is just the beginning of monies headed back to the cement provider.
The number comes after Judge Bob Carroll of the 40th District Court in Ellis County sided March 6 with the Midlothian-based cement plant in Holcim Inc. v Ellis Central Appraisal District (ECAD). As a result, the ECAD, City of Midlothian and Midlothian ISD will have to adjust their respective budgets to meet the court-ordered property tax refund.
Ellis County Auditor Mike Navarro said the refund-system could occur, among other ways, by increasing tax rates for any of the three entities. He explained, for instance, Ellis County could increase its tax rate of $0.413599, which is based on a $100 valuation, just as Midlothian ISD or the City of Midlothian could increase their tax rates of $1.54 or $0.65, respectively.
“These percentages would change up until the point that the refunds are made," Navarro explained.
While the two Midlothian entities have not yet disclosed to the Daily Light how their respective officials plan to address the returns, Navarro is confident that Ellis County can refund the difference with the use of its reserve and will not have to increase its tax rate.
The different tax rates do however suggest that each party’s refunds will differ. Midlothian ISD, for instance, will have to repay almost $600,000 to Holcim.
The Ellis County commissioners recently voted to refund the cement plant $146,975.30 — a number reached after Holcim sued the appraisal district following its 2012 appraisal, which executives with the cement plant thought to be too high and unfair.
The commissioners approved the refund during a regular session of the court held June 27 at the Ellis County Courthouse.
According to court documents filed in the 40th District Court, the original valuation of roughly $75 million was ruled to be too high and should have reflected an approximate property value of $63,700,120 after subtracting two exemptions — $13,207,500 Pollution Control Exemption and $2,566,700 Ag Special Valuation Productivity Cost.
Under chapter 42 of the Texas Property Code, Holcim contended, “the appraised value established for the Property, as a result of an Appraisal Review Board protest determination, exceeds the appraised value required by law and therefore is illegal and unlawful.”
The plaintiff’s original petition then claimed that the property had been appraised “unequally” in comparison to the level of appraisals of other property in the appraisal district.
In response, a jury ruled in Holcim’s favor, agreeing that the $75 million valuation placed on the plant by the ECAD was too high.
Ellis County Chief Appraiser Kathy Rodrique expressed “disappointment” in the March court ruling in a statement issued last week. Rodrique also suggested a potential for an appeal to be filed by the ECAD.
“The Ellis Appraisal District understands the financial implications to Ellis County, the City of Midlothian and Midlothian ISD and is diligently working to minimize the impact through all available venues,” Rodrique stated. “The Ellis Appraisal District is still considering its available legal options including a possible appeal of the outcome and thus cannot discuss further strategy at this point.”
One of the largest manufacturers and suppliers of cement and mineral components in the United States, Holcim was founded in Holderbank, Switzerland in 1912 and has since expanded to numerous locations across the US. The Midlothian plant, located at 1800 Dove Lane, has helped turn Midlothian into the “cement capital of Texas” after being built in 1987.
Jocelyn Gerst, head of US Communications for LafargeHolcim, issued a statement noting the company is “pleased” with the court’s ruling.
“LafargeHolcim wants to pay its fair share of taxes in all communities we are apart of,” the statement reads. “We were pleased with the court’s ruling regarding the tax assessment for our plant in Midlothian, Texas. We believe the plant property had been valued above fair market value.”
Regardless of the court ruling, Gerst added that Holcim has always planned to pay its "fair share" of property taxes in Midlothian and Ellis County.
“The Midlothian plant has provided a significant tax base for the town and surrounding communities,” Gerst stated. “We are committed to paying our fair share of taxes based on this assessment.”
In a dissenting opinion filed in the 10th Court of Appeals in Waco on December 12, 2013, Chief Justice Tom Gray stated the initial ECAD valuation was configured after comparing the cement plant in Midlothian with a separate plant in Bloomsdale, Missouri. Such comparisons are often made in determining valuations because it requires an appraiser to start with the costs to build a similar plant that would have the same valuation as the one being valued.
In this instance, Gray suggested that comparing Missouri’s Ste. Genevieve Plant to the Midlothian plant is problematic because “first-time designs” will inevitably cost more than future units because of an added “development cost.” Therefore, the two plants are not fit to be compared, he explained.
Gray also suggested that such a comparison is not only “not relevant” but the two plants are “different” in capacity, terrain, seismology, distance to quarry, location and design.
“All the development cost of the first Boeing 787 Dreamliner makes the first one off the assembly line very expensive when compared to the second one,” he said.
Although the Midlothian and Ste. Genevieve plants are similar in nature, using one as a reference for a valuation is unreliable because the price behind each of the two plants was vastly different.
“These are both plants that produce cement,” Gray said. “That is about the only truly comparable feature of the two plants. It is like using the cost of Trump Tower in New York to value a four-story office building in Waco, Texas. The number, type, and amount of ‘adjustments’ needed to make a valuation comparison are too great to yield a reliable result."
The refund must now be factored into the budgets for Midlothian ISD, the City of Midlothian and Ellis County. But, because the money had already entered the local budgets, Navarro explained that these entities must now deduct money out of future budgets in order to pay the amount back.
“What normally happens in a refund situation is they’re typically made from proceeds coming in,” Navarro said. “But with a refund this size, that amount of proceeds is not going to come in before this amount is ultimately due. Now governing bodies have to make payments for it from other funds because we can’t offset collections because there won’t be enough coming in.”
Midlothian ISD Superintendent Dr. Lane Ledbetter also voiced the district’s “disappointment” in the recent ruling, adding that such scenarios take away from what is really important to the district, such as small class sizes, competitive pay for teachers and student opportunities.
“When courts grant tax appeals, such as Holcim’s, it hurts our community schools,” Ledbetter said. “Instead of a district receiving those dollars to invest in educating a high-quality workforce, it places that burden on homeowner property taxes, which has been an issue at the state level for many years.”
As a result, the district was forced to subtract $595,494 out of its budget.
“That’s the equivalent of 11 teacher salaries,” he said. “While we recognize the need to increase profits, we encourage businesses to view tax dollars as an investment in their public schools and their future workforce.”
The City of Midlothian declined to comment and did not provide an exact dollar amount that will have to be refunded to Holcim. Court documents filed in the 40th District Court of Ellis County also show Holcim is contesting the plant’s valuation in each year from 2013-16.
The remaining four cases are still pending as of press time.