As the two large pipelines that cross Wood County continue their appeals, county school districts are
receiving just a drop of what was initially told they would receive.
“Yes, they baited everybody with ‘here’s what we’re going to do for you as taxpayers’ … and convinced
landowners to sign on. Coming back after the fact and not acknowledging it is not very honest,” said
Brad McCracken, treasurer at Eastwood Local Schools.
As the law is now, payments are based on the value of the pipeline going into the ground. Nexus, which
runs through the Eastwood district, wants to change it based on their revenues from the natural gas
flowing through the line, McCracken said.
Wood County Auditor Matthew Oestreich supplied charts outlining the original taxes owed by the Nexus and
Rover pipelines and what school districts were originally told they would receive as well as the actual
payments.
Rover paid in 2020 on the tax amount it appealed in 2019; Nexus did the same but then appealed twice more
to lower amounts. If it wins its appeals, that will mean districts will have to refund some of the funds
they have received.
For Eastwood, that refund is $207,092.
That makes this year’s potential payment about $650,000, McCracken said, referring to the net payment
after any refund, “and that’s painful to say the least.”
The district has set aside funds to make that payment if necessary.
“We’re just trying to keep our expenses down. We’re not planning on that (income) for future expenses,”
said LuAnn Vanek, treasurer at Elmwood Local Schools.
The Rover pipeline originally was to pay Elmwood $5.68 million but appealed that amount and paid $3.24
million. Its newest appeal is 54% of the original value.
“We’re just holding onto it” and not using it for any projects or to pay down debt, Vanek said.
The amount the district may potentially have to pay back is close to $830,000, but Rover has not
indicated that stipulation as Nexus has done, she said.
“It’s unfortunate that they recorded the cost and estimated our taxes and now are saying it is only worth
54%,” Vanek said. “I think that’s bad business.”
Taxes for 2020 are due Feb. 12, and Oestreich won’t know until then what the pipelines will pay.
“In a couple of weeks, we’ll know exactly what they paid,” he said.
Oestreich said that for tax year 2020 paid next month, his office has received the Rover appealed amount
but not the Nexus amount.
“We estimate at the same amount (for Nexus) appealed at the percent amount last year,” he said.
The original taxes owed school districts was based on the installation cost of the pipelines.
“When they first were talking about these pipelines, it was a shock to everyone here they would have that
value,” Oestreich said.
Nexus claimed their line wasn’t worth as much as Rover as Rover came online first.
Rover has appealed its payments to 54% of the original amount, while Nexus’ appeal is to 38%.
“I feel that (Rover) met what they promised with their appeal but Nexus is nowhere near,” Oestreich said.
That 38%, or $856,063, is what Eastwood is set to get of the original $2.25 million that was first
pledged.
McCracken said that lower amount is disrupting plans to hold off an operating levy request for Eastwood.
“It’s not helping,” he said.
With the potential pipeline money, the district was going to push out its need for new operating funds.
But with the appeals, the district is back in its original timeline of 2023 or 2024.
“It puts us in a more precarious position to be back on the ballot sooner than we want to be,” McCracken
said.
He said he expects the pipeline funding issue and the appeals with the Department of Taxation to get
worse before they get better.
“I think they will possibly get very ugly with the state … and threaten bankruptcy to change the law,” he
said. “I think that ultimately they will lose their appeals but that will take a couple more years.”
Otsego Local Schools pulled a new income tax levy off the ballot once it got news it would be receiving
$1.12 million from the Nexus pipeline.
“It has had a negative impact on our finances,” said Treasurer Steve Carroll.
The last payment received was $530,771.
Depending on how the appeals work out, he is hoping to not have to pay back $103,389.
“Having to pay money back would be more detrimental to the impact it had,” Carroll said about the lower
amount received.
Pipeline funds have gone toward Otsego’s operations, which has helped with the added costs due to the
coronavirus this year.
It is “absurd” the pipelines are challenging the amounts they set, said Steven Stewart, treasurer at
North Baltimore Local Schools.
“They came up with this amazing value … you knew it was one of those things that was too good to be
true,” he said.
The district was set to receive $1.98 million, but the next payment from Rover is expected to be
$801,447.
Stewart said the district has been using the money it has received to replace buses and other small
projects.
“At no point will we depend on this money,” he said. “I’d like to see those original estimates paid, but
as long as we’re collected some tax value, beggars can’t be choosers.”
Stewart added he expected appeals from the beginning
“We never counted on the pipeline. Whatever we received, we were grateful we got that.”
Bowling Green City Schools put the $2.23 million collected from Rover into a capital improvement fund.
“It frees up the general fund,” said Treasurer Cathy Schuller.
Residents had wanted the money to go toward school facilities but Schuller cautioned from the beginning
to not count on that money.
“If we had $3.9 million going into the capital project funds, the opportunities would be different,” she
said.
Facilities would be a possible choice “if it was reliable revenue.”
Schuller said it is unfortunate that the pipeline is taking money from schools to help its bottom line.
“I am hopeful that the board of tax appeals supports that value but it is hard to say what will happen,”
she said.
The tax value is set every year, and the pipelines can appeal that value every year.
“So far that has been the trend,” Oestreich said.
He said he hopes the Department of Taxation and the pipelines can settle on a value for multiple years to
eliminate the annual appeals.
“Even though they’re appealing, they still have to pay the amount appealed,” Oestreich said.
If they lose their appeals, they must pay interest on the amount owed.
The pipelines will depreciate in value for the next 30 years, but then must continue to make payments of
15% of its residual value.
“They can appeal every year, even after 30 years if they don’t agree with the 15% value,” Oestreich said.
“I hope it’s sooner than later,” he said about the appeal process, “but I don’t have an estimate of when
the appeal promise may be done.
“I’m hopeful once they make a decision, it is good for everyone.”
Carroll is disappointed in the continued appeals.
The original amount was “extremely misleading, especially when the initial value was determined by Nexus
and the Ohio Department of Taxation,” he said.
Carroll is not optimistic Otsego will ever receive that full amount.
“Realistically, I don’t know if it’s going to happen. When the money is in the bank, we’ll believe it.”
