County holds valuation rate
The Simpson County Board of Supervisors has decided that the value originally set for taxation purposes for the natural gas storage facility Mississippi Hub would remain the same, despite the fact that the company has changed ownership and the new owners are placing a much smaller value on their investment based on appraised value.
When the facility was built almost 10 years ago the county gave Sempra, the first owner, a fee in lieu of taxes based on the scale of the investment they were making in Simpson County. Their initial investment of almost $520 million now has an estimated value just shy of $101 million, based on appraisal records submitted to the Simpson County Tax Assessor’s office.
In addition, the valuation of Mississippi Hub was to be divided proportionally based on operation with Covington and Jeff Davis counties.
This comes on the heels of a deal that was brokered for the sale of Mississippi Hub to ArcLight Capital Partners in the amount of $328 million in early February 2019.
Included in the sale was a facility called Bay Gas in Southwest Alabama. The Alabama facility has the capacity to store 20.4 billion cubic feet of natural gas, and the Simpson County facility has the capacity to store 22.3 billion cubic feet of natural gas.
County Tax Assessor Charles Baldwin cited examples of other storage facilities and stated that the valuation does not add up, noting specifically that a facility in Stone County Mississippi, which has 40.3 billion cubic feet storage capacity, has a $750 million valuation.
So how could this impact Simpson County and its tax collection efforts? Using estimations Baldwin concluded that using Mississippi Hub’s figures for taxation could cost the county $600,000 annually in the general fund and an additional loss of $700,000 in funding to the school district.
Baldwin told the board that other than initial written correspondence there has been no additional contact with the new ownership.
The Board of Supervisors voted last week not to change the valuation of the natural gas storage facility and to leave it at the same level that it been valued at over previous years for tax purposes.
Baldwin told the board the company has the right to file an appeal with the courts and allow them to determine the true value. This will open the terms of the deal that was brokered between Sempra and ArcLight for the Mississippi Hub properties.