Board of County Commissioners mulls legal approach to Peabody bankruptcy, property taxes
Steamboat Springs — The Routt County Board of Commissioners decided June 20 to take another week to mull its legal strategy in the wake of the news that Peabody Energy, which operates Twentymile coal mine and is currently seeking to reorganize under protection of bankruptcy, had missed a second property tax payment and is now delinquent on its property taxes.
The exact amount of unpaid taxes was not known at press time Monday.
Peabody has 125 distinct property tax accounts spread over Routt County, according to County Assessor Gary Peterson, and a portion of the overall 2015 tax bill due the county’s general fund was paid in January. County Finance Director Dan Strand was working Monday to refine the total amount of unpaid taxes.
“Routt County is willing to wait and allow the (bankruptcy) process,” to be carried out, County Manager Tom Sullivan said Monday.
And it’s fairly certain that any future inquiries Routt County might make about the status of Peabody’s property tax delinquency would be through an outside attorney interacting with the federal bankruptcy court after Peabody senior counsel Marc D. Stone sent a letter to County Treasurer Brita Horn and County Assessor Gary Peterson on June 6. Stone wrote that it had come to his attention the county had either begun or carried on a legal proceeding outside of bankruptcy court.
County officials were unaware of the source of his concerns, but Stone threatened to “pursue all available legal remedies against you,” if any similar actions are pursued.
Peabody filed the most current status on its bankruptcy with the Security and Exchange Commission late in the day June 20.
County Attorney Erick Knaus recommended that the Board of Commissioners retain attorney John Bernstein, a partner in the Denver offices of the Kutak Rock legal firm. His practice litigates on behalf of financial institutions and includes representing secured lenders in commercial bankruptcy cases.
However, Horn introduced Denver attorneys Scott Gessler and Steven A. Klenda of the firm Adroit Advocates, to the commissioners Monday. Kessler and Klenda suggested they be hired to sell the county’s delinquent tax accounts to investors in order to get a portion of taxes owed much sooner.
“With respect to Peabody, (yours) is a small claim in a very large bankruptcy,” Gessler said. “It would be hard to walk into court and get any attention, What you have on your hands is a cash flow issue … there is a market for trading and selling bankruptcy claims (as investments).”
Peterson confirmed Monday that the two most impactful property tax funds to the county’s general fund are the taxes on its coal production, $1.01 million, and on its personal property, including the longwall mining equipment at Twentymile’s underground mine, $1.46 million.
He said Peabody’s total 2015 tax liability for operations in Routt County is $2.52 million. Some of Peabody’s smaller property tax accounts here are in the range of $500 and attached to assets including small agricultural parcels and severed mineral rights, for example.
Peterson told Steamboat Today that although Peabody was Routt’s single largest taxpayer, the $536,669 it owed in 2014 taxes was less than 5 percent of total collections in 2014, and those numbers have since declined modestly. The county’s 2015 share of the mining company’s property taxes was $439,525 and represents 3.6 percent of the county’s assessed value.
However, it’s expected that Peabody’s delinquency in paying its property taxes will have a bigger impact on smaller taxing entities from fire districts to water districts (see related story about the South Routt School District on page 1).
Peabody filed for bankruptcy April 13.
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