By Ben Barkley
SDN Managing Editor
A compromise could be in the making between the Scurry County Appraisal District (SCAD), Kinder Morgan and four taxing entities that filed a lawsuit against them in district court last week.
On Tuesday, SCAD representatives and their attorney, Kirk Swinney, met with representatives from Scurry County, Snyder ISD, Scurry County Hospital District and Western Texas College and their attorney, Brent Lemon. The meeting was called by the appraisal district to help settle the issue of reappraising Kinder Morgan properties in Scurry County.
Swinney previously turned down a proposal by Lemon to have the taxing entities pay for a reappraisal, saying that he advised SCAD officials that it would be illegal to accept the terms.
During a closed session held as part of SCAD’s Tuesday morning meeting, Swinney said he reviewed terms of the proposal he presented to the entities later in the day.
The afternoon meeting was held to present that proposal.
SCAD’s proposal included finding a mutually agreed upon independent appraiser to reappraise the SACROC unit for any number of years the entities would like.
“We want to find someone who has nothing to do with this and see if we are barking up the right tree or to see if it already treed,” said SCAD board chairman Fred Cross.
If approved, the appraiser will become a temporary SCAD employee, entitling them to the information deemed confidential by Kinder Morgan. However, it was not discussed which party would pay for the appraiser. The entities will pay the cost of the reappraisals and as part of the proposal, neither side will take any legal action while the reappraisal is being conducted.
As part of the proposal discussed Tuesday, if the appraiser determines that the valuations were 60 percent higher than the existing appraisals, SCAD will “stand down” while the entities attempt to prove fraud through the courts. If fraud is determined to have occurred, SCAD will agree to perform a reappraisal and if the reappraisal is less than 160 percent of the existing SCAD appraisals, the case will be dismissed.
Swinney said the independent appraiser will be charged with “giving an honest opinion of what the SACROC is worth.”
Lemon’s earlier proposal recommended Louis Posgate, an individual valuation consultant with LRP Business Appraisal in Driftwood, to perform a reappraisal. He would have been paid by the entities.
Swinney said it would be better if the two sides agreed upon an appraiser, adding Kinder Morgan officials may be willing to sign off on the independent review. He added that he had not discussed the terms with Kinder Morgan officials.
The entities are challenging the SACROC valuations after learning of a “900 percent difference” in Securities and Exchange Commission filings available online and appraisals from Thomas Y. Pickett and Company.
“Two (oilfield company) filings were pretty close and the other was dramatically different,” said Snyder ISD Superintendent Dr. Eddie Bland. “All we are asking for you to do is show us the numbers.”
John Stewart, who will replace Chief Appraiser Larry Crooks in October, said, “I wish I could,” adding that Kinder Morgan’s operational expenses for the SACROC have been deemed confidential by the company.
Lemon has filed a lawsuit in Dallas County asking a judge to rule on the confidentiality of the records.
“Let the court say to share it. Then you will share it. Then it is out of your hands,” Lemon said.
Cross said he’d prefer to settle the issue among the involved parties.
“I want us to be able to agree on a non-partial appraiser. As a group that lives here, we need to say, ‘Yeah, we need to settle this,’” he said.
After Lemon receives a copy of the SCAD proposal the two attorneys will begin negotiating the terms. The representatives from each entity and SCAD officials said they wanted to have their respective boards review the terms before anything is finalized.
“I want the boards to work together on this,” Snyder ISD board trustee Brad Hinton said.
Things Get Personal
The meeting took a turn when Cogdell Memorial Hospital CEO Ella Helms said that the four entities challenging the appraisals pay 85.5 percent of SCAD’s budget.
Three of the four entities lost a projected $627,000 in budgeted tax revenue in 2016 when an $84 million clerical error by Pickett was discovered by the Comptroller’s office after their rates were set.
Snyder ISD, the hospital district and college were able to recoup some of the budgeted lost revenue after entering settlement agreements with Pickett.
Earlier in the day, Crooks said during a survey of the nine SCAD entities, five of the entities supported keeping Thomas Y. Pickett as the district’s mineral value appraisal company. None of the entities suing SCAD responded to the survey.
Stewart asked if changing appraisal firms would lead to the entities dropping the lawsuit.
“That would be a good start,” Hinton said.
“Am I the other one?” Stewart asked of his being named chief appraiser after Crooks’ retirement.
That led to a discussion of the Texas Open Meetings Act. SCAD’s Aug. 7 agenda only included a closed session discussion of personnel and not specifically voting to name a chief appraiser.
Bland asked if the opening was posted statewide to draw applications.
“I am willing to have the position posted. I want to do what is right for the taxpayers,” Stewart said.
Scurry County Commissioner Shawn McCowen said the public is tiring of the debate and that it was time for everyone to meet in the middle.
“It’s time to get this (done). We are starting to beat a dead horse. If the taxing entities are right, great. If (SCAD) is right, great,” he said. “This is enough.”
Hinton said having the conversation was a good start, but he believed both the entities and Kinder Morgan have a problem with Pickett values.
He was referring to the entities’ lawsuit and the company’s recent mineral value protest, which led to a $54 million decrease in property values.
“People have already lost. Three-quarters of a million dollars was lost by the entities (due to the 2016 clerical error),” he said. “You believe nothing is wrong and from what we see, we believe there were millions of dollars in error. We are color-blind to each other on this. I hope we can reach a compromise.”
Stewart said he wanted the numbers to be correct as well.
“If we are wrong, we will apologize and move forward. I want the numbers to be right, too,” he said.