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Renville sugar beet cooperative to take tax case to public

RENVILLE -- After taking its case to the courts and state Legislature, the Southern Minnesota Beet Sugar Cooperative is about to bring it to the public too.

The sugar cooperative charges that its property in Renville County is unfairly taxed by the county. It has filed five separate lawsuits challenging the valuation placed on the property since 2004. The most recent cases are consolidated and slated for a jury trial in late April in district court.

Sen. Larry Pogemiller, DFL-Minneapolis, has also introduced legislation on behalf of the sugar cooperative. It would exempt from taxation as real estate the exterior bins, tanks and silos of sugar processing facilities.

The sugar cooperative's assessed value for tax purposes represents an "absolutely grotesque disparity'' in valuation when compared with other food and agricultural processing facilities in the country or around the state, said attorney Robert Hill, of Robert Hill and Associates in Eden Prairie. His firm is representing the cooperative.

He said the cooperative is planning a public information campaign. Until now, the Renville co-op has declined to comment publicly.

Hill charges that the county's assessed value of the sugar processing facility is so unfair that it puts it in league with the swank IDS Tower in downtown Minneapolis. The sugar beet plant's assessed value at $38.2 million represents a value of $131.74 per square foot, according to Hills. That compares to an assessment of $134 per square foot on the IDS Tower. (The sugar co-op value is $92.23 per square foot if mezzanine is included.)

What sours the sugar cooperative's shareholders most of all is how the company's assessment compares to other food and agricultural processing industries. Hill points to numbers that show assessments ranging from $10.19 per square foot at the AMPI facility in Dawson to $20.79 for the Jennie-O Turkey Store processing plant in Montevideo.

Closer to home, Hill points to Renville County assessments of $8.94 per square foot at the Golden Oval facility and $17.09 per square foot at the Mycogen Seeds facilities in Olivia. The highest assessment at the seven largest plants in Renville County is $18.19 per square foot at the MinAqua Fisheries plant in Renville, according to Hill.

He charges that the county's assessment of the sugar beet property does not reflect the value for this type of facility when it is put on the market. Sales studies submitted to the court by the cooperative make that very clear, he said.

The sugar cooperative has not received a clear answer to its questions on how the assessed value was determined for its property, according to the attorney. He said District Eight Tax Court Judge George Perez essentially "threw up his hands'' on the issue and allowed the county's assessment to remain as the "default" value. In a ruling on the tax court decision, the state Supreme Court remanded the case to the tax court. The state's high court said the tax court was free to maintain or change the value, but in either case, it needed to show the reasoning for any value it may set.

Hill also charges that Renville County wasn't playing fair when in 2006 it started assessing the company's 30 exterior bins, tanks and silos as real estate. These items are part of the plant's processing equipment and should be taxed as equipment and not real estate, he said.

If the bins, tanks and silos and were sold, buyers would most like pop the rivets and salvage the metal shells or move them, he said.

Hill made that point to state legislators just two weeks ago. He purchased a 55-cent egg in the Capitol basement cafeteria and cracked it as he testified at a hearing held by the property tax subcommittee. "How much is the shell worth?'' he asked to make his case against assessing the exterior items as real estate.

Hill said Renville County does not assess the bins and outside equipment at Mycogen or other agricultural processing facilities as real estate. Nor do other counties, he said. The attorney pointed to the large Rahr Malting operation in Scott County as an example. Its exterior silos are not assessed as real estate, he said.

Renville, Clay and Polk counties are the only counties in the state to assess bins, tanks and silos as real estate, and they do so only on sugar processing facilities, according to Hill. Sen. Pogemiller's legislation is aimed at exempting these facilities.

Taxes paid by the Renville County sugar processing facility exceed $500,000 annually. Those taxes are paid by the more than 600 farm families who are shareholders in the company. Most of the shareholders do not live in Renville County, Hill said.

The shareholders are only asking that their property be assessed no differently than other agricultural processing facilities both in and outside of the county.

"We are not asking for something special,'' Hill said.