Township caps building fee
SPIRITWOOD, N.D. — Spiritwood Township set a $250,000 cap for building permits at a special meeting Monday. The move may have implications for property taxpayers in all of Stutsman County.
The cap will have the most immediate effect on the planned CHS nitrogen fertilizer plant. The township’s standard fee structure would have set the cost of a building permit for the plant at about $1 million based on building construction costs of about $1 billion and a total project cost of about $1.5 billion.
CHS is in the planning process for a plant which would produce nitrogen farm fertilizer. If constructed, the plant would be the largest private construction project in North Dakota. Officials for CHS have indicated a final decision is planned for early 2014 with the start of construction possible later in the year. Once operational, the plant will employ between 150 and 175 people.
The board of supervisors called the meeting after receiving a letter from Brian Schouvieller, senior vice president of CHS, that said the company would not request a full tax exemption but would focus on a partial exemption over an extended period of time. The letter requested the building permit fee be lowered to approximately $100,000.
The vote to cap the building fee passed on a 4-1 vote with George Quigley dissenting. He had spoken in favor of leaving the fee at $1 million. He said the township could draw from that money until it was gone for township operations. The plant is expected to employ between 150 and 175 people when fully operational.
The cap applies to all future projects that agree not to apply for a full tax exemption. It also limits the fee to $10 for any project up to $250,000. The previous fee schedule charged $1 per $1,000 of construction costs.
Casey Bradley, auditor and chief operating officer of Stutsman County, said CHS had not submitted any request for a tax exemption yet. The final decision on the exemption would be made by the Stutsman County Commission and a committee of representatives of Spiritwood Township, Jamestown Rural Fire District and Barnes County North Public School District.
Bradley said North Dakota law prohibits granting tax exemptions during construction. The nitrogen plant will be taxed based on its percentage of completion during the years it is under construction. This would result in a reduction of the county, township, fire district and school district mill rates during the construction.
“If they were granted a full exemption the rates would go up after construction,” Bradley said. “No one likes to see taxes jump up after they’ve gone down.”
The amount of the tax CHS will pay is still an unknown.
“There are about a million different ways this could work out,” he said. “We don’t even know for sure what the final valuation for taxes on the plant will be.”
North Dakota property taxes are assessed on land and buildings only. The value for taxation does not include the machinery within the plant. The current true and full value estimates for the completed plant are about $500 million, Bradley said. This would amount to about 30 percent of the total valuation of real property in Stutsman County.
“We’ve requested plans and drawings to try to understand what the final value will be,” he said. “In the end, we may have to contract with a third-party expert to sort it out.”
Another variable is the amount of the exemption.
When CHS makes a request the County Commission will have the final say on the amount, Bradley said.
“Right now it really is all hypothetical,” Bradley said. “But even if a 40 percent exemption is granted the county levy could go down 5 to 10 mills. When they pay the full taxes the mill rates will go down substantially.”
The tax effects are greatest for properties in Barnes County North school district, Spiritwood Township or Jamestown Rural Fire District. For residents outside these districts, the mill rate reduction would be limited to the 5 to 10 mills of county tax.
Sun reporter Keith Norman can be reached at 701-952-8452 or by email at firstname.lastname@example.org