, Muskogee, OK

August 28, 2013

County approves port's plan to buy factory

Commissioners air concern about loss of property tax revenues

By D.E. Smoot
Phoenix Staff Writer

— Port officials have taken the first steps necessary to secure a million-dollar community development block grant to help fund its acquisition of a Fort Gibson manufacturing site.

Muskogee County commissioners approved plans that are part of the grant application process: a citizen participation plan and an anti-displacement and relocation plan. But they questioned how the proposed acquisition would affect stakeholders who depend on the ad valorem tax revenue the property now generates.

If the port acquires the former Simmons Metal Container plant, the property would be taken off the property tax rolls because it would be owned by a public trust. That would result in the loss of more than $22,000 a year in ad valorem taxes, more than half of which is designated for public education.

“The phones started ringing pretty early when this deal became public,” District 1 Commissioner Gene Wallace said. “I think it is positive this is being done, but stakeholders have a legitimate concern about what might happen as a result.”

Dave Davis, special projects coordinator for the Muskogee City-County Port Authority, told commissioners steps are being taken to ensure that ad valorem tax recipients would lose no money. He said Whitlock Packaging, which would lease the Simmons site from the port authority for a warehouse if the deal goes through, has agreed to make payments in lieu of ad valorem taxes.

Port Authority Director Scott Robinson also offered assurances, saying that if Whitlock Packaging is unable to honor its future obligation, the port will step in to fill the void. Under the proposed arrangement, he said, Whitlock would reimburse the port authority for the ad valorem taxes that would be due if the property were on the county tax rolls.

But District Attorney Larry Moore questioned the legality of such an arrangement when there is no present obligation to pay property taxes. The issue is whether a tax-exempt public trust has the legal capacity to enter into a contract such as the one   proposed by port officials, he said.

Robinson said he believes there is a legal precedent for such an agreement. He offered as an example a similar agreement with Capella Healthcare, which makes payments in lieu of ad valorem taxes on property it leases from the city.

“Whitlock is going to reimburse us, and we are going to make payments in lieu of ad valorem taxes,” Robinson said. “We are going to pay just as if we were a tax-paying entity.”

Fort Gibson Schools Superintendent Derald Glover, whose district could stand to lose nearly $13,000 a year if the port acquires the former Simmons facility, said he is confident an arrangement will be worked out.

“We’ve been in consultation with the port and with Gene Wallace, and we have been assured the port would replace that lost ad valorem tax revenue,” Glover said. “We had a representative at the meeting. We trust they will do what they need to do.”

The port authority’s plans to buy the former Simmons plant is contingent upon its ability to secure a community development block grant for $1 million. If the grant is approved, the City of Muskogee Foundation has agreed to lend $2.25 million to the port authority to fund the $3.25 million land deal.

Whitlock would lease the former Simmons plant from the port, freeing space at its facility “for a new line of business.” The deal would result with Whitlock investing $9 million in new equipment and creating 31 jobs that pay above-average wages.

The foundation loan, if needed, would be repaid by the port authority over 13 years at an annual interest rate of 4 percent.

A public hearing regarding the port authority’s grant application is scheduled during the county commissioners’ Sept. 3 meeting.

Reach D.E. Smoot at (918) 684-2901 or