The Enbridge tax settlement case that could have resulted in 13 Minnesota counties paying nearly $30 million has reached a conclusion, with the Minnesota Legislature agreeing to pay all of the $47 million owed to Enbridge after it was determined that the company's pipeline properties had been overvalued in numerous years.
Enbridge's tax case started when the company appealed its state-assessed property tax valuation by the Minnesota Department of Revenue from 2012-2018 to the Minnesota Tax Court. The court ruled in favor of Enbridge for the years 2012-2016, and in coming to the recent agreement, Enbridge said in a statement they made "concessions for taxes in 2017 and 2018 and forgave interest for those years."
Enbridge also agreed to pay an additional $35 million in taxes in the first year of operation following completion of the Line 3 pipeline.
"From the beginning we have acknowledged that counties were caught in the middle of this tax valuation issue, and have been committed to working with them to ensure undue hardship does not result," Enbridge said in a statement. "We are pleased to have come to an equitable conclusion to this issue."
The DOR is responsible for assessing the value of utility companies in Minnesota, not county agencies or assessors, leading Carlton County officials to ask that the state step in to pay local entities’ share of the tax refund.
“The Carlton County Board of Commissioners identify that Carlton County had no role in the assessment of Enbridge properties or their defense during litigation,” a resolution passed in June said. “This role was taken by the State of Minnesota Department of Revenue and, as such, payment due to Enbridge should be the responsibility of the state to rectify this issue, similar to how the County rectifies our own local abatements.”
Carlton County assessor Kyle Holmes said if the state hadn't paid, Carlton County could have ended up paying as much as $2 million to the pipeline company, which he said would have had a "devastating" effect on taxpayers, school districts, townships and county projects.
"It was untenable to imagine," Holmes said.
The Enbridge payment would have likely resulted in a 10% tax levy increase and plummeting credit lines for the county, according to Holmes. He said that bonds for projects, such as the upcoming Carlton County Jail, would have become much harder to obtain.
Tiffany Gustin, associate director of management and insurance trust services at the Minnesota School Board Association, said the same would have been true for school districts in the 13 affected counties. She cited an estimated 20% increase to the Carlton Public School District's overall levy, with school districts as a whole owing almost $3.5 million in Enbridge settlement funds.
"The impact on schools had several layers," Gustin said. "MSBA worked closely with representatives ... to provide testimony to a joint legislative committee to support a state pay solution."
In the end, Holmes and Gustin credited local Minnesota state representatives, as well as the tax committee chairs, for supporting the resolution to use state funds for the tax settlement. Holmes said he has been trying to deal with these possibilities for nearly nine years and only now does he feel like he can confidently say a solution has been reached.
"It's definitely a win for the county," he said. "It's a huge win."