Utah County and Geneva Steel officials say they can live with a State Tax Commission ruling setting Geneva's taxable value at $48.4 million for 1987, but they likely will be butting heads soon over the plant's 1988 value.
Former plant owner USX Corp. and Geneva Steel, which purchased the plant in 1987, appealed to the tax commission last spring for an adjustment of the plant's value on which property tax is based.County commissioners, sitting as the Board of Equalization, refused in December 1987 to lower the plant's assessed valuation from $86.9 million to its selling price of $40 million.
"I can live with the $48.4 million (the State Tax Commission decided on) for 1987, but I have questions over whether I can live with it for 1988, 1989 and 1990," Commissioner Malcolm Beck said.
In light of the plant's profits since reopening, the assessed valuation should be increased for 1988, Commissioner Brent Morris said.
The county, USX and Geneva Steel have 30 days to appeal the tax commission's decision. If no appeal is filed, the parties will begin discussing taxable value for 1988.
Robert Grow, Geneva Steel legal counsel, said plant officials are happy with the adjustment.
"All the questions aren't yet answered, but our feeling is not to appeal it," he said. "Whether or not they'll (USX) appeal it, I don't know."
Grow said Geneva officials feel somewhat vindicated because the $48.4 million figure approximates the $40 million paid for the plant if several million dollars in spare parts is subtracted. "They decided it's worth about what we paid for it."
Plant officials, however, originally hoped to see the plant's value set at about $24 million as recommended in a steel industry study.
During equalization hearings in 1987, County Assessor Ron Smith said the best estimate of the plant's value was based on appraisals setting its price at between $86 million and $105 million. Geneva's 1986 assessed value was $94.6 million.
Geneva and USX officials, however, argued that the plant's selling price or liquidation value of $40.35 million was the best indicator of its fair market value. The tax commission agreed, stating in its decision that "the best evidence as to value . . . is the liquidation value as determined by the appraiser of" Geneva Steel and USX.
Smith said the $48.4 million value means Geneva's 1987 property taxes will total approximately $564,000. Had the $86.9 million figure been upheld, taxes would have been slightly more than $1 million.
"I think it's a reasonable approach by the State Tax Commission," Smith said, considering the plant was idle for most of 1987. But the plant's value for 1988, he said, should be much higher because of profits made from steel sales.
Grow disagrees. He said the plant's purchase price is still the best indicator of its value.
"I don't think it turned a handsome profit" last year, Grow said. But he admitted enough profit was made to allow for some modernization.
"We want to pay our fair share of taxes, but it's worth what we paid for it."