Terra Nitrogen believes its taxes are too high, and it is taking Rogers County to court.

County Assessor Melissa Anderson told county commissioners at the Board meeting Monday she wants to engage Price, Waterhouse, Cooper, LLC for an appraisal of Terra’s Verdigris plant.

“It’s a unique property,” said Anderson about Terra Industries, Inc. “The loss of revenue if we don’t do our job could be tremendous.”

Terra Nitrogen has paid $985,928 toward its 2006 ad valorem taxes. In dispute is an additional $239,272.

The manufacturing facility is protesting the value assessment of their property. Ad valorem taxes are based on these assessments. For every million dollars in valuation, Terra would pay around $100,000 in taxes.

“There is a lawsuit pending,” said Assistant District Attorney Barry Farbro, who added that the impact on ad valorem taxes would be significant. “We need a valid professional evaluation.”

Anderson’s office establishes the value of property. Tax scales based on the location are then applied and the county treasurer bills the company for the taxes. The assessor’s office does not establish the tax rate, but does set the value of property.

Farbro has advised Anderson to seek further references for PricewaterhouseCoopers, LLC and to get details on charges for out-of-pocket expenses before Chairman Kirt Thacker signs the Letter of Agreement with the professional appraisers.

“They (PricewaterhouseCoopers, LLC) know the fertilizer industry,” said Anderson.

Pricewaterhouse will do a value appraisal which is an income and cost approach. Previously, Tax Management Associates, Inc. had done a personal property audit of Terra for the county.

“I put it in my budget,” said Anderson. “It goes into the visual inspection budget.”

Anderson explained this means 80 percent of the cost will come back to the county with those agencies such as schools, the fair board, and the health department paying a fair share. These are the entities that benefit from ad valorem taxes.

The evaluation is estimated to run between $55,000-$80,000, a large amount, but “peanuts” according to Anderson considering the millions at stake in the long run. She said a professional evaluation of Terra has not been done since the 1980s. In 1992 a negotiated settlement value was established and that is what Terra had been paying.

Taxes had not gone up, but the company thinks it is being overcharged.

Terra Industries, Inc., aka Agricultural Minerals Ltd. Partner, protested the taxes before the Equalization Board.

According to Equalization Board minutes from May 11, 2006, the “Board of County Commissioners on behalf of the Assessor’s Office entered into a contract with Tax Management Associates, Inc. to assist the Assessor in the performance of an audit...” of personal property.

Woodson Partners reviewed the manufacturing plant’s value on behalf of Terra.

Anderson told the Equalization Board that the “difference in value between the Assessor’s Office and Terra Industries, Inc. was around $45 million.” She believed Woodson Partners, LLC put too low of a value on the property.

A motion was made and approved for the value to remain the same until an agreement could be reached between the Assessor’s office and Terra.

At the Jan. 18 Equalization Board meeting the protest continued.

Lauri Poe, a certified appraiser said Woodson had done a real property and personal property assessment and “found errors in the historical classifications of the real and personal property...”

Poe told the Equalization Board that “between 2001 and 2003, eight U.S. nitrogen fertilizer manufacturers permanently closed their plants and a ninth has not operated since 2001.”

Equipment was shipped overseas where the product could be produced at lower cost, in part due to increased costs of natural gas in the United States.

“Production in the United States has declined by 45 percent” according to Poe.

Terra’s claim, said Poe, is that the “worldwide market situation diminishes the value of this equipment,” but that “Terra’s desire is to continue operating in Rogers County and contributing its fair share to the community.”

The total assessment of the Verdigris plant for 2006 was $115,667,078. Woodson’s estimate of Terra’s proposed value was $89,737,353.

Poe told the Equalization Board that “they are not building any more of these plants in the United States.”

Technology in this industry is changing.

“Fortunately for the United States, in 30 years from now when we can compete with other nations, maybe we can build them again,” said Poe.

At that Jan. 18 meeting, the Equalization Board, after hearing both sides, voted that the assessment remain $115,667,078.

Anderson said her office had negotiated with Terra after that and “had gotten close” but could not agree on an amount.

Terra filed a lawsuit appeal Jan. 26.

“We want to be in Rogers County. We want to be good corporate citizens,” said Joe Ewing, vice president of Industrial Relations for Terra. “The dispute is a minor part of the overall tax. The majority of the taxes, we’ve agreed to. We’ve released the majority of the funds for payment to the county. It’s only the disputed portion that we’ve not released.”

Ewing said the company is not considering moving.

“I would never want to imply that we’re about to pack up,” Ewing said. “It’s very profitable for us. We have a good employee base there. Currently the environment for our business is quite good in the United States.”

“I want to get the value right,” said Anderson. She said a fair evaluation needs to be done by someone who knows the industry and can be fair to the county and fair to the company.

“There’s not that many of them (plants like Terra) in the nation,” she said.

Located on the Verdigris River near the Port of Catoosa the facility is a “world-scale” nitrogen fertilizer producer and one of the largest shippers from the Port. In 2006, Terra moved over 515,000 tons of urea ammonium nitrate (UAN) down the river. They produce around 2.2 million tons of UAN, and over a million tons of anhydrous ammonia yearly.

Terra Industries is the largest nitrogen fertilizer producer in the United States with four plants here and one in Canada in addition to other locations worldwide.