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Published August 07, 2009, 06:22 PM

Crystal ordered to pay more taxes

American Crystal Sugar Company will pay higher property taxes for their East Grand Forks and Crookston plants for the years 2005 and 2006 than had originally been assessed, according to rulings handed down Aug. 5 by Judge Kathleen Sanberg of the Minnesota Tax Court.

By: Matt Bewley, Grand Forks Herald

American Crystal Sugar Company will pay higher property taxes for their East Grand Forks and Crookston plants for the years 2005 and 2006 than had originally been assessed, according to rulings handed down Aug. 5 by Judge Kathleen Sanberg of the Minnesota Tax Court.

Polk County Assessor Robert Wagner had assessed the value of both properties at a total of $75.4 million for the two years.

American Crystal filed two suits, one in April 2005 and one in March 2006, to have the amounts lowered, contending that the valuation process should have been based on sales, not cost. As the petitioner, American Crystal had the burden of proving that the market valuation of the properties was excessive.

According to Paul Bakken, expert witness for American Crystal, the total value for both properties for both tax years should have been set assessed at a total of $23.6 million.

Sanberg found that, given certain problems in valuing the properties based on sales or income, the proper method would be the cost approach. With this method, more than 50 percent of the cost of replacement of each property was deducted for depreciation and a quarter to a half of the remainder was deducted for “functional obsolescence.” The value of the land was added in to arrive at the final market value of each property.

In both cases, Sanberg found in favor of the defendant, Polk County, valuing the two properties at a total of $111 million for both years.

“These tax court cases have been pending for some time and were very complex, involving many days of testimony and thousands of pages of exhibits,” said Polk County attorney Greg Widseth.

He and Polk County officials and attorneys are in the process of reviewing Judge Sanberg’s decisions and “are optimistic that these decisions will provide the framework to resolve the remaining tax court matters pending between ACS and Polk County,” he said.

Polk County “only seeks a fair and accurate valuation of these properties,” he said.

Citing additional tax court cases yet to be litigated before Judge Sanberg, Widseth declined further comment.

It is unclear whether American Crystal intends to appeal the decisions.

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