A suit challenging the Gillespie Central Appraisal District’s valuation of a new electrical line through the Hill Country holds tax implications for other power corridors statewide.
Plaintiff Horse Hollow Generation Tie LLC , a Florida power company subsidiary, is fighting the $14.3 million taxable value that the district put on easements in Gillespie County that the firm obtained for the 345-kilovolt line that went into service in late 2009.
The line carries energy generated by wind farms from Taylor County to Kendall County.
Complaining of unfair and unequal taxation, the suit, filed in district court in Fredericksburg, seeks deletion of the 2010 appraisal on its 180-foot- wide easement that passes through 27 miles of Gillespie County.
The nine other appraisal districts along the 229-mile transmission line valued only the towers and cables, the suit states, and no other power lines in Gillespie County had their easements valued as real property.
Gillespie Chief Appraiser David Oehler doesn’t dispute taking a different tack toward Horse Hollow, but he defended as reasonable and legal the appraisal of the easements.
Oehler noted that Horse Hollow, a private firm, bought the easements from landowners for use both in power transmission and telecommunications, and retains the right to sell or lease the easements.
He said the line built by NextEra Energy Resources, Horse Hollow’s parent company, has far more capacity than other power lines in Gillespie County, which distribute power locally and were built by public entities that obtained easements using condemnation or the threat of it.
The 345-kilovolt line “is basically an interstate with no exits in Gillespie County, while the others are just county roads,” Oehler said, using a street metaphor.
Many appraisal districts in remote rural areas are reluctant to risk a costly court fight with big firms over property valuations when there’s comparatively little tax revenue at stake.
But in Gillespie County, where land values run high, Oehler decided the Horse Hollow easements should be on the tax roll.
Horse Hollow already succeeded in getting the appraisal review board in Gillespie County to cut the 2010 values on its poles and wires there from $33.6 million to $26.7 million, and the easement values from $29.9 million to $14.3 million.
The firm’s protest of its 2011 values is pending before the review board.
Other appraisers along the line, and elsewhere in Texas, are waiting to see if the power company prevails or has to pay taxes on its easements.
“To my knowledge, there hasn’t been this particular scenario ever presented to the courts in Texas,” said Jim Robinson, chief appraiser in Harris County, who also heads the Texas Association of Appraisal Districts’ legislative committee.
Taylor County Chief Appraiser Richard Petree used the traditional “unit method” to value the power line there, basically averaging out the value of the poles and wires on a per-mile basis.
He said Oehler faces “a tough climb” to win the suit, particularly since Gillespie County hadn’t previously appraised other power line easements.
Oehler said he began appraising those easements in 2011 after discovering, due to the suit, that consultants hired to do industrial appraisals weren’t valuing easements.
“We’re now conducting all industrial appraisals in-house,” he said.
State District Court Judge Keith Williams in December declined to grant a Horse Hollow motion for summary judgment, saying genuine fact issues exist in the case, which hasn’t been set for trial.