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Boise, tax appraisers urged to try and settle '07 tax bill differences Amid a lot of complicated and confusing discussions over accounting techniques and depreciation schedules, economics and market conditions that are the basis of a $200 million difference in the value of Boise's Clarke County operations between the company and the county's tax appraisal department, a member of the Clarke County Board of Equalization suggested a simple solution. "There's got to be some wiggle room and [some] negotiations on both sides," said Eddie Slayton, acknowledging that neither party had sat down together to go over figures and see if they could find some common ground. Equalization board hears complaints Slayton and Joe Merida, as members of the equalization board, charged with hearing property tax disputes, urged an effort to try and work out the differences following a half-day hearing at the Clarke County Courthouse in Grove Hill last Thursday. Boise has disputed its 2007 tax bill, just as it did the one for 2006. The first step in a property tax dispute is before the equalization board. The board upheld the 2006 valuations and Boise appealed to Clarke County Circuit Court where Judge Thomas Baxter has recently ordered mediation, basically the same thing that Slayton suggested last week for the 2007 dispute. Tax bill of up to $1.4 million At stake is an annual tax bill worth as much as $1.4 million to the county's general fund and the public school system. The full amount isn't in dispute but because the matter is in litigation the entire bill for 2006 remains unpaid and now it appears that the 2007 bill may take the same course. Until the matter is resolved between Boise and the county, or until the court system makes a decision, every yearly tax bill could follow the same scenario. "I think there has got to be some negotiating…if we don't hear anymore than we heard today…we have to rely on the existing testimony from both sides," Slayton said. George Perala, property and sales tax manager for Boise, said that when Boise was sold to Madison Dearborn in 2004 for nearly $4 billion for several paper and sawmill operations and thousands of acres of land, the nationally known accounting firm of Ernest and Young was brought in to value different operations. A value of $210,607,905 was put on the Jackson mill and related operations. State and county revenue department appraisals have valued the properties at more than $400 million. 100 percent variation not acceptable A variation of 5 percent is acceptable but a 100 percent variation isn't, Perala argued, saying Boise's value is a "fair market price" and should be used to appraise the mill. He and counsel Wendell Allen of Birmingham talked also about the market conditions in deciding value too. The major dispute is over machinery and equipment in the mills- "personal property." Land values are not that far off, both sides agreed. The county is using a depreciation schedule based on initial purchase prices as well as the productivity value of the equipment. The newest paper machine, for instance, J-3, was installed in the early 1990s and was considered a "state of the art" machine then. When a state appraiser questioned Joey Blount of Boise's Jackson operations, she said the machine is producing only slightly less paper than it was when it was installed. Sawmill sale given as example Perala offered the sale of Boise's sawmill to Gulf Lumber in 2007 as an example of the company's values being on the mark. Boise had valued the sawmill at $1.5 million after the 2004 sale. The county had valued the mill and inventory at well over $7 million. Boise sold the mill and its inventory to Gulf Lumber for $3.2 million in 2007 and that price included $1.8 million in inventory. The $1.4 million price of the sawmill was "essentially in line with the values set in 2004," Perala explained, calling it a "stamp of approval" of the valuation method. ""We would have liked to have gotten $7 million for it but we did not get anywhere near that," he observed. Perala added that no state or local tax agency across the country had disputed the values assigned by Boise except Clarke County. Local tax employees later said they did not believe that to be true. Local tax appraisers offered itemized examples of how little Boise valued the operation. A price of $14 million was placed on buildings in the complex. Office equipment details valued desks at as little as $5 each and computers at $600. Slayton agreed that some of the valuations seemed extremely low. Slayton echoed the complaints of the local tax people in that they only have Boise's assigned values to go by, not an official appraisal. "We have what they have allocated but not their appraisals," said appraiser Dickey Hall. Stalemate must be resolved Slayton observed that the stalemate needs to be resolved. "How long does it go on? A year, a year and a half, three years?" he asked, with the county and the school system not receiving any revenues. He said he understood that the board should not be concerned with the financial side of the conflict but from a practical standpoint it had to be a consideration. "I want to do what is right for the county and for Boise," he added. Revenue Commissioner Chris Beverly, who sits as secretary for the board, and the appraisers pushed for a decision that day but Slayton suggested time for the two sides to negotiate, perhaps for several months. Beverly said that he must by law settle last year's taxes by June 30 and a lot of preliminary work must be completed well before then. "To bring the 2007 protest to a shorter conclusion than the 2006 protest, it behooves us to take a few weeks" and try to resolve the matter, Slayton countered. He and Merida agreed to an April 15 deadline to rehear the matter.
"[You either] get to a stall point or hopefully you come to a negotiated settlement [and] you come
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