Asarco’s self-reported value decreases by $10 million
Posted: Wednesday, Aug 27th, 2014
Hayden — The Gila County Board of Supervisors got a huge surprise on Friday, Aug. 15, when the supervisors learned that Asarco’s self-reported value for its Hayden mine property came in about $10 million less than in 2013.
Last year, the company reported a value of about $13 million to the Arizona Department of Revenue. This year, the company reported a value of about $3 million. Unlike homes and smaller businesses, larger businesses such as mines and utility companies do not have their values assessed by their respective county assessor’s office. Instead, they self-report directly to the Department of Revenue.
The change in value will have a major impact on Hayden residents, some of whom will have their property tax bills doubled. Asarco, by far, is Hayden’s largest generator of tax revenue, so the school district, the town, residents and small businesses will have to make up the difference.
“This is going to create a real problem when everybody gets their tax bills,” said Mike Pastor, chairman of the Board of Supervisors. “This caught everybody off guard.”
Hayden school superintendent Jeff Gregorich provided the Silver Belt with a lengthy and detailed response to the news.
"I want to start off by saying there is some good news and bad news," Gregorich wrote. "The bad news is that the Hayden-Winkelman School District businesses and property owners will be paying a significantly higher property tax rate this year. The good news is the District’s secondary tax rate will go away next year, which will reduce the property tax rate by over 50% next year. The district will be making its last payment to the state for a loan to school district in 2004 to help reduce the District’s secondary tax rate.
"The cause of the problem is that the District lost 83% of its net assessed property valuation over the past two years. This was not expected considering that world copper prices have remained relatively high (over $3.60) over the past five years. Any community or school district would struggle if they lost that amount of property valuation in two years.
"It is well documented the struggles that the Hayden-Winkelman School District faced in 2003 and again in 2005. Both years the District confronted potential closure and bankruptcy. The root cause of the issue was the decline in the District’s property valuation and school bonds that were passed in 1992.
"During that time, the district lost 86% of its property valuation over a ten-year period and had over $10,000,000 in bond debt. The decline of 86% property valuation was over a ten-year period, in comparison to the current crises of 83% in two years. Nevertheless, this caused ASARCO to hold back property tax payments, which put the district in fear of closing in both 2003 and 2005.
"In September of 2003 the District was weeks away from running out of money because ASARCO threatened not to pay its property taxes because of the high property tax rate. In fact, Asarco delayed their tax payment, which forced the district to reach out to the state for help. The state advanced the District equalization funding to keep the doors open while the District, Pete Rios and others prepared and passed legislation to pay ($3.2 Million) of the District’s callable portion of the bond debt owed. The last of the payment of the money borrowed by the state is due this year ($830,000).
"Two short years later, in 2005, ASARCO filed for bankruptcy, which created another financial dilemma for the District because ASARCO could not pay any bills, including property taxes because of the bankruptcy litigation. The Gila County Superintendent, Linda O’Dell. intervened and sent a team to testify in Federal Bankruptcy Court in Corpus Christie, Texas, three days before Christmas, and a week before the District would have defaulted on a January 1st bond payment. The Judge allowed the immediately payment of the property taxes to keep the school open and prevent a bond default.
"During these challenging times the District was negotiating with bondholders throughout 2005. Both parties finalized a settlement of less than $.50 to the dollar on the District debt. The District took the agreement to the state legislature in the spring of 2006 requesting a loan for $1.8 million. The state legislature approved a loan, which saved district businesses and property owners more than 2 million dollars.
"It should be noted that the District and community has paid off every dollar loaned by the State with interest.
"Hayden is a small community that has one of the few copper smelters still in operation in the United States with a full cash value of $696,000 million in 2012. The property valuation of the ASARCO mining operation has allowed the school district and town of Hayden to provide a good education and community services for its residents for many years.
"It is just hard for me to understand how the ASARCO properties could have dropped its valuation so quickly and dramatically. It has and will have an impact on the school this year and years to come. I am also very concerned about our community members that are on a fixed income and will have to pay significantly higher property taxes this year.
"This crisis — there was no warning signs as there were in 2003. We knew there would be problems well before 2003, as we saw a yearly, steady decrease in the District’s property valuation from 1992-2003. Also, the price of copper was very low and the industry was struggling throughout the state and world.
"This time it's different; world copper prices have remained relatively high, and there has been no major layoffs at ASARCO or any of the companies through the state, but once again, the Town of Hayden and the Hayden-Winkelman School District face a property tax rate issue challenge which this time is hard to explain.
"Again, the good news is the school district portion of the property tax rate will be lowered by over 50% next year. I know we will not be closing anytime soon. We have a great school district and great community that has always supported our children."