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E-M:/ The Tax Ax Falls on Tondu

Title: Message

Ludington Daily News

  Posted: 1-26-2004
Tondu remains shocked by tax tribunal


Daily News Staff Writer

FILER TWP. — It cost Manistee County, Filer Township and other local taxing entities about $800,000 to fight a legal case involving the taxable value of the Tondu Energy Systems Filer City Cogeneration Plant, but those costs will be covered by at least $1.2 million in taxes the state said the company owes.

The judgment not only dismissed Tondu’s claims that it overpaid about $8 million in taxes during 1993-96, it also increased the taxable value of the property during those years causing Tondu to owe the extra $1.2 million.

“I’m extraordinarily pleased, obviously,” Filer Township Supervisor Dana Schindler said about Friday’s decision by the Michigan Tax Tribunal. “It would have bankrupted the township had the decision gone the other way.

“We were taxing the T.E.S. Filer City plant exactly as the state had told us,” she said. “We weren’t asking for the moon, like Midland.”

The Michigan Tax Tribunal also published a decision Friday declaring that the taxing entities of Midland owed a refund of $29 million in overpaid taxes and $7 million in interest to the company that owns a cogeneration plant in that city.

Tondu Corporation owns about 50 percent of the T.E.S. Filer City plant through an affiliated company, Western Michigan Cogeneration Limited Partnership and employee Beverly Z. Baker and former employee Robert C. Pelfrey. Tondu Corporation President Joe Tondu said this morning that he is still not sure how much money the tax tribunal’s decision will cost his company.

“We’re still in shock,” he said. “Of all the things we thought would happen, this is one we never thought of.

“For years we had been calculating ($8 million) was how much they owed us,” Tondu said. “We never contemplated owning them money.”

Schindler said the township had paid about $179,000 in attorney fees while fighting the lawsuit for nearly 10 years. She said Manistee County also paid for most of the fees that accumulated during that time. Among the taxing entities who benefit from the decision are the township, county, Manistee Area Schools, Manistee Intermediate School District, West Shore Community College, Manistee County 911, Dial-A-Ride and the Manistee County Library.

Tondu said his company paid more than $1 million in attorney fees to take the case to the Michigan Tax Tribunal.

The case centered on the true cash value and taxable value of the Filer City cogeneration plant during the years 1993-96. The tribunal originally heard testimony in the case in fall 1997 and reconvened the hearing in fall 2002.

See TONDU, page A2


Continued from page A1

The tribunal’s decision came Friday, after Judge Richard A. Southern considered more than 158 exhibits and about 260 hours of videotaped testimony.

In the end, Judge Southern found that “Petitioner (Tondu) fails in its burden of proof, the Tribunal finding their appraisal experts lack any credibility. Respondent’s appraisal experts do the most credible analysis. The Tribunal lacks jurisdiction to consider petitioner’s reclassification claim in the alternative.”

Neither Schindler nor Tondu were sure this morning what the tribunal’s decision will mean to taxes the company owes for the years 1997-2003.

“I just couldn’t read it this weekend,” Tondu said about the decision. “The lawyers will be looking it over.”

Meanwhile, Tondu’s company officials continue talks with Manistee officials concerning the amount of community service fees the company will pay if it builds a 425-megawatt power plant in Manistee.

Tondu said he was surprised the issue of taxes and service fees came up so early in the process since his proposed plant has not yet been approved. He also said he expects the fees will be based on what impacts the plant has on the city and county services.


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Date published: 1-26-2004

© 2002 Ludington Daily News.