Ten year dispute ended: Alcoa, Inc. to pay estimated $4 million to county, Alcoa city

Alcoa, Inc., will pay the city of Alcoa and Blount County $4.1 million to cover the cost of back taxes, ending a decade-long dispute relating to how raw materials at the company are assessed.

Blount County Property Assessor Mike Morton made the announcement at a press conference Thursday, saying that an estimated $2.1 million would go to Blount County and $2 million would go the City of Alcoa.

Morton said the 10-year legal process was over personal property assessments related to the Aluminum Company of America facilities in Blount County.

Morton said that after taking office in 2000, he discovered that the State of Tennessee Division of Property Assessments had notified his office that the county was in non-compliance regarding a personal property audit program for commercial properties. In January of 2001, the Property Assessor’s office contracted with a consultant, Tax Management Associates, to audit companies in Blount County regarding the non-compliance.

In 2002, TMA conducted a review of Alcoa, Inc., and added raw materials to the assessment roll. Alcoa, Inc., disputed the claim, saying they believed the raw materials were exempt under current state statutes. They appealed the decision.

After several years in the formal appeal process, the Tennessee Court of Appeals recently rendered a decision confirming that the raw materials assigned to Alcoa, Inc., are subject to property assessment under state law. Alcoa, Inc., did not take the Court of Appeals decision any further and were found to owe approximately $4.1 million to the county and city.

The bill covers every tax year since 2001.

Mike Morton said the appeals court upheld Chancellor Telford Forgety’s 2009 dismissal of a request for judicial review from Alcoa, Inc., after the company lost appeals to the County Board of Equalization, the State Board of Equalization and the Assessment Appeals Commission.

The process was part of business and a difference of opinion, said Morton, and was conducted without rancor on the part of Alcoa, Inc., and the county. “It was a business difference of opinion. It was handle professionally by both parties."

Morton indicated he thought it was important to bring this matter to the attention of the citizens and to elected officials in Blount County and the City of Alcoa in light of their on-going budget decisions.

County Mayor Ed Mitchell praised Morton’s team for their work in the matter. “I’m excited Mike Morton’s office was able to persevere and stay on top of this. Anytime you receive tax dollars, that allows you to put more toward services and fund balance.”

Blount County finance director Steve Jennings said he was not sure how much would ultimately end up in the county coffers and how much will be shared with the cities of Alcoa and Maryville, since residents in those municipalities pay county taxes as well. “I’ll have to figure all that,” Jennings said. “It will be subject to the split dollar.”

Morton could not say when those taxes would be collected from Alcoa, Inc. “That will be up to the collections officer in each jurisdiction,” he said. “They’ll make that determination.”

Christy Newman, Community Relations Manager with Alcoa, Inc., Tennessee Operations, said that the dispute - one in which both parties had a different perspective on the proper application and interpretation of several complex tax statutes - has now been resolved.

Newman clarified that throughout this decade-long process, the company paid taxes that were not in dispute.

“In fact, in total, more than $35 million was paid in property taxes to Blount County and the City of Alcoa by Alcoa Tennessee Operations between 2001 and 2009,” she said. “Alcoa Tennessee Operations willingly pays the taxes it owes. However, just like any other business or resident, the company believes it is important to make certain it is, in fact, paying the appropriate amount."

Newman said of the raw materials being disputed, alumina - used in the smelting process - makes up a large portion of the material. The Tennessee Operations Smelter has been curtailed since early 2009. Currently, no alumina is being used at Tennessee Operations.

Newman said this will not impact current jobs at Alcoa, Inc., in any way. “We’re still viable and still continue the rolling mill business in Tennessee and hope to do that well into the future,” she said. “We’re very willing to pay our fair share of taxes. Just like anyone, if we have a dispute about taxes, there is a process you go through, and we will pay what we owe, and business goes on.”

The property assessor said the amount the county and the City of Alcoa could expect to receive annually from now on regarding raw materials at Alcoa is a moving target. “That is calculated by the level of raw materials on site as of Jan. 1,” he said. “If history is a good indicator, a good estimate would be $200,000 annual per jurisdiction unless there is a significant change in the amount of raw materials,” he said.

“Our common goal is to ensure that no business owner in Blount County is unfairly appraised according to the laws of the State of Tennessee,” Morton said. “Alcoa, Inc., is an important and vital corporate citizen in this community, and they have been a great source of employment, charitable giving and community pride for many, many decades. We need for them to succeed, be profitable and remain in Blount County for many more years in the future.”

Newman said Alcoa, Inc., will continue to have a good working relationship with both Blount County government and the City of Alcoa. “We are happy and proud to do business in Blount County,” she said.

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