Treasurer explains legal constraints that complicate acceptance of Peabody’s property taxes | SteamboatToday.com
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Treasurer explains legal constraints that complicate acceptance of Peabody’s property taxes

Taxes bound up in the interest

Routt County Treasurer Brita Horn says she cannot accept Peabody's overdue taxes without the interest.
file photo

Peabody’s overdue taxes by account

Routt County government, $458,161; South Routt Regional Library, $30,438; South Routt School District, $1.309 million; Oak Creek Cemetery District, $4,548; Colorado River Water Conservation District, $6,492; Upper Yampa Water Conservation District, $48,624; South Routt Medical Center, $55,403; Solandt, $5.38; Steamboat Springs Area Fire Protection District, $1,493; West Routt Fire Protection District, $120,828. Total: $1.77 million

Source:Routt County

Read the original letters

Print readers of Steamboat Today may read public documents related to Routt County’s handling of Peabody Energy’s/Twentymile Coal’s unpaid portion of 2015 taxes, including Treasurer Brita Horn’s three-page letter and e-mails between the Board of Commissioners and Horn’s attorney, including some strong criticism, at the bottom of the digital version of this story at SteamboatToday.com

— More than three weeks have passed since a federal bankruptcy judge in St. Louis cleared Peabody Energy to pay its overdue property taxes, and the Routt County Board of Commissioners has been urging County Treasurer Brita Horn to explain why she has declined to accept the second portion of 2015 property taxes due in January 2015 from Peabody’s Twentymile coal mine.

Commissioners Cari Hermacinski, Tim Corrigan and Doug Monger signed a letter that was delivered to Horn Aug. 9 asking her to explain her position to the community and 18 local taxing entities owed a collective $1.77 million.

Peabody’s overdue taxes by account

Routt County government, $458,161; South Routt Regional Library, $30,438; South Routt School District, $1.309 million; Oak Creek Cemetery District, $4,548; Colorado River Water Conservation District, $6,492; Upper Yampa Water Conservation District, $48,624; South Routt Medical Center, $55,403; Solandt, $5.38; Steamboat Springs Area Fire Protection District, $1,493; West Routt Fire Protection District, $120,828. Total: $1.77 million

Source:Routt County

“Let us be clear that we are not trying to usurp your statutory authority or in any way interfere with your duties as treasurer,” they wrote …”We understand that Twentymile is attempting to pay their taxes, and we would request that you clearly explain to our community, all the local taxing entities and the Twentymile representatives (your) position regarding the status of the property taxes due from,” the coal mine.

Read the original letters

Print readers of Steamboat Today may read public documents related to Routt County’s handling of Peabody Energy’s/Twentymile Coal’s unpaid portion of 2015 taxes, including Treasurer Brita Horn’s three-page letter and e-mails between the Board of Commissioners and Horn’s attorney, including some strong criticism, at the bottom of the digital version of this story at SteamboatToday.com

Late on the afternoon of Aug. 12, Horn answered, in detail, issuing a three-page letter detailing why she and her attorney believe Peabody’s offer to pay its overdue taxes did not include an offer to include interest on the $1.77 million, which accrues at 1 percent per month. Horn added that Colorado treasurers are only authorized to waive interest or fees of less than $50.

“Even if I were authorized to do so, waiving the interest and fees for a powerful and politically-connected company like Peabody would be unfair to other Routt County taxpayers,” she wrote. “Equality before the law requires the same rules and procedures to apply to all taxpayers … Bankruptcy law requires Peabody to pay all taxes that accrue while Peabody is in bankruptcy. This applies to Peabody’s 2016 and later taxes, in full. Thus, those future taxes will be paid on time, as part of the bankruptcy.”

A link to the full text of Horn’s letter, with a detailed explanation of the process of selling tax lines, can be found at the conclusion of this story.

Horn suggested that Routt County advance the property tax shortfalls to affected entities from its reserves, while her attorney — Steven Klenda, of Adroit Advocates — pursues a plan he first described in June to sell the property taxes to investors in the form of tax liens. The upside for investors is that they would claim interest that accrues after the sale.

Horn said Peabody’s bankruptcy lawyers offered to pay the original tax bill only if she agreed to an unsecured claim (as opposed to a claim secured by hard assets) to cover the interest and fees. Horn wrote that, all too often, that results in the creditor receiving pennies on the dollar.

In response to a request for an interview with Twentymile General Manager Pat Sollars on Aug. 10, Peabody Vice President of Corporate Communications Beth Sutton replied: “We have court approval authorizing payment of $1.8 million in Routt County property taxes and look forward to reaching agreement with the treasurer’s office on the process, as we have already done with most jurisdictions where we operate.”

The company announced that its “debtor-in-possession” lenders had approved its finance plan.

Earlier, Horn responded to repeated requests for interviews or responses to a list of questions with only a brief statement: “My office is treating Peabody Energy like any other tax payer that has delinquent taxes due. I welcome Peabody to pay their delinquent taxes with all the interest accrued and fees. To date, Peabody is unwilling to do so. “

Peabody’s bankruptcy and Routt County

Peabody, faced with a mountain of debt, filed for bankruptcy April 14, creating uncertainty in the communities that depend heavily on the the energy giant for jobs and the payrolls that recirculate in those communities, both in the United States and abroad. Peabody officials confirmed Aug. 9 the company employs about 300 people at Twentymile.

In Routt County, Peabody has historically paid its property taxes in two installments, and it was the second installment of the 2015 taxes that were tied up in bankruptcy court.

Steamboat Today reported June 20 that the $1.04 million in property taxes due the South Routt School District posed a potential and almost immediate crisis, but that was forestalled by a $1 million loan from the Colorado Department of Education. And Routt County advanced a loan to the South Routt Medical Center to keep its doors open.

But it wasn’t long before commissioners and the treasurer were at odds about how best to represent the interests of the taxing entities in the matter. Horn has accurately and repeatedly declared she is the statutory authority authorized to collect property taxes on behalf of all 18 taxing entities, and it is her role to redistribute the monies accordingly.

Among the most-affected taxing entities are several based in the town of Oak Creek, whose boundaries — for tax purposes — include the bulk of Peabody’s assets in Routt County. They include the South Routt School District, South Routt Medical Center (a critical provider for Medicaid patients throughout the county) and the tiny South Routt Library District, which operates one library in Oak Creek and another in Yampa.

An undercurrent in the exchange between the BOC and the treasurer regarding Peabody’s property taxes relates to the fact that each has retained their own outside legal counsel to advise them on the matter. On June 20, as the board of commissioners was considering retaining attorney John Bernstein, of the Denver office of Kutak Rock, Horn introduced them to Scott Gessler and Steven Klenda, of the legal firm Adroit Advocates.

Horn has insisted that, by engaging its own legal advisors on the matter of the property taxes, the BOC is interfering with her statutory role.

Klenda has responded to letters from BOC Chairwoman Cari Hermacinski seeking to arrange a joint meeting with Twentymile Mine officials with strong remarks directed toward Hermacinski.

“Your efforts to use Peabody’s bankruptcy to maximize your own profile or otherwise score political points through unauthorized freelancing are interfering with the treasurer’s efforts to obtain payment of Peabody’s taxes in full and with interest that Peabody is statutorily obligated to pay,” Klenda wrote in a July 28 email. “You are (perhaps unwittingly, but given what I have observed of your actions so far, likely not) participating in an effort by Peabody to divide and complicate rather than to allow the treasurer to do her job by complying with Colorado law. In short, you are allowing Peabody to use you to the detriment of Routt County. This crosses a line from hackneyed self-promotion to something quite different and more serious.”

Links to the full text of the exchange of letters — from the commissioners to Horn and responses from her attorney, as well as Horn’s four-page explanation of her strategic position — can be found at the conclusion of this report.

To reach Tom Ross, call 970-871-4205, email tross@SteamboatToday.com or follow him on Twitter @ThomasSRoss1


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