Agreement tied to oil, gas industry; companies, mineral owners not listed
The Scurry County Local Government Corporation (LGC) approved an agreement with U.S. Consults, LLC, during Tuesday morning’s meeting.
The agreement, similar to the one signed by five county taxing entities, will allow U.S. Consults (USC) to find additional funding sources for the non-profit corporation.
One such source appears to be to enter agreements with mineral owners who the company said have underpaid ad valorem taxes for mineral reserves.
According to one of the exhibits listed in the agreement, one of the opportunities was related to valuations.
“The valuation of reserves has been understated in the past, before many of the owners of the mineral interested or lease interests became public (SEC regulated) companies,” the agreement stated. “Now, the Comptroller has confirmed that the value of reserves stipulated and attested in 10-K and other SEC filings are a proper valuation for ad valorem purposes, and that the value of the reserves of non-public entities holding interest in the same fields should be pro rata based on the public companies’ SEC stipulations. Further, contrary to popular belief, all reserves — proved and unproved, as well as producing and non-producing — are to be taxed (ad valorem). A net result in addition to the under-collection is the fact that ipso facto the other taxpayers are subsidizing these companies.”
The agreement also includes information about oil and gas production.
“County LGC will acquire a real property interest (e.g. cash production payment, etc.) in a mineral estate from a taxpayer who owns a real property interest (including, but not limited to, a working interest, royalty interest or any other form of real property interest) in Texas (including, but not limited to Scurry County) thereby exempting the mineral produced from state and local taxes (including, but not limited to, severance and ad valorem taxes),” the document stated. “The County shall share in the savings represented by the tax exemption.”
The agreement does not list specific companies or mineral owners that it will target.
Scurry County, Snyder ISD, Western Texas College, Ira ISD and Scurry County Hospital District officials have signed agreements with USC. Until Tuesday’s meeting, the details about how the revenue would be generated had not been made public.
Officials from each entity, as well as elected officials, signed non-disclosure agreements with USC.
The three-member LGC board — County Judge Ricky Fritz, Commissioner Terry Williams and County Auditor Angela Sanchez — have each signed the non-disclosure agreement.
Fritz said Jim Allison, with Allison, Bass and Magee, LLP, and County Attorney Mike Hartman both reviewed the agreement.
Tuesday was the first meeting of the LGC board since it was formed last month. The board must hold an annual meeting, which has been set each year for 9 a.m. July 5 in the county judge’s office. The board may meet at other times as necessary, Fritz said, and all meetings must be in compliance with the Texas Open Meetings Act.
Fritz was elected president with Williams elected vice president. Sanchez will serve as the secretary and treasurer. All three board members will vote on action items.
The board will request $50,000 from the county in start-up funds. The money, which will be from proceeds from the sale of the Diamond M building, will be used for legal fees and to purchase accounting software.
Sanchez said she felt more comfortable knowing the LGC accounts will be on a different computer than the county accounts.
As secretary/treasurer, Sanchez has the authority to select a depository. She will talk with local banks before making a decision.
Fritz said the $50,000 will be returned to the county’s account if, and when, the LGC receives its own funding.
The board also approved the corporation’s bylaws.