NEXUS pipeline owes millions in taxes to Ohio schools, libraries and government agencies
The owners of the NEXUS Gas Transmission pipeline owe millions of dollars to Ohio schools, libraries and governmental agencies, with roughly $5 million due to Stark County.
Ohio Tax Commissioner Jeffrey A. McClain has settled a three-year dispute with NEXUS officials over how much the roughly 256-mile interstate natural gas transmission pipeline is worth in Ohio. The pipeline is a partnership between Detroit-based DT Midstream and Enbridge, a Canadian company.
More about NEXUS' construction in Stark: NEXUS pipeline in service
McClain notified county auditors last week about the settlement, and the auditors have since been running the calculations to determine how much their affected entities are owed if the settlement stands. While neither the Ohio Department of Taxation or NEXUS can appeal the agreement, the auditors of the 12 affected counties have 60 days to object.
Besides Stark, the counties affected by the settlement are Columbiana, Erie, Fulton, Henry, Huron, Lorain, Lucas, Medina, Sandusky, Summit and Wayne.
Why does NEXUS owe money?
The NEXUS pipeline, which starts near Hanoverton in Columbiana County and connects to existing natural gas pipelines in Michigan, is taxable as a public utility. The amount of taxes is based on the construction of the pipeline, including materials and labor and company overhead.
Initial statewide estimates projected the pipeline would boost tax revenue by $83.7 million during its first year in operation. Stark County, which saw the pipeline cross Washington, Nimishillen, Marlboro and Lake townships, was expected to see a $8.9 million tax boost the first year and $41.7 million over the first five years of operation.
But then an oversupply of natural gas caused natural gas prices to drop to all-time lows and reduced the amount of gas flowing through the pipelines. In 2019, the pipeline owners asked the Ohio Department of Taxation to reduce the taxable value of its natural gas pipeline statewide by almost half.
The state had set the statewide valuation at $1.4 billion.
While NEXUS’ valuation was under review, its owners paid taxes based on the value they believed the pipe was worth, not the state’s assigned taxable value, as they were permitted to do.
More about NEXUS in Stark: Stark County schools fight NEXUS, Rover tax appeals
Last week’s statewide settlement resets the taxable value of the pipeline for 2019 at $950 million statewide. The subsequent years’ values take the 2019 valuation and subtract for depreciation.
Adam Parker, manager of public affairs for NEXUS, said pipeline owners are optimistic about coming to a mutually agreeable resolution that will provide additional revenue to local school districts and will give them certainty in their forecast and budgeting.
"NEXUS has always endeavored to pay a fair and reasonable property tax," Parker wrote in an emailed statement. "Throughout the process and in accordance with Ohio law, NEXUS paid the full undisputed portion of the tax bills while the valuation has been under review."
Stark County Auditor Alan Harold said he does not want to appeal the valuation.
"I think it’s a fair resolution," he said. "It gives local governments and NEXUS certainty throughout time over what the revenue stream is going to be."
How does the NEXUS settlement affect Stark County?
In Stark County, the settlement means that local entities will get hundreds of thousands of dollars they have been waiting for, but the amounts are far less than what they were initially promised.
The pipeline owners owe Stark County schools and governments $4.8 million for taxes they didn’t pay in 2019, 2020 and 2021, according to data provided by the Stark County Auditor’s Office. That’s on top of the $13 million in taxes over the three years that they already have paid, figures show.
The owed amounts do not include any interest that might be calculated, Harold said. He expects the money to be disbursed in October, as long as no county auditor objects to the settlement.
Among Stark County entities, Marlington Local School District has had the most at stake.
Stark County auditor figures show that NEXUS was supposed to pay Marlington $11.3 million in taxes between 2019 and 2020 based on the state’s valuation of the pipeline. Nexus only paid $4.7 million to Marlington while it contested its valuation.
Under the settlement, NEXUS will pay an additional $1.76 million to Marlington but the district will lose out on the $4.8 million it would have received if the valuation had not been appealed.
Marlington school board President Karen Humphries said the board has not had a chance to review how the settlement will affect the district’s finances.
The board has scheduled a special meeting for 5 p.m. July 6 at Marlington High School’s Digital Learning Zone to discuss the settlement. The meeting also will be steamed live online at www.youtube.com/channel/UCiuxnry5ZS9alba13hdPzbA/.
Humphries said the board later will discuss any recommendations administrators have for how to best use the money.
“The board is committed to doing what is best for education at Marlington, and it will take some time to make decisions,” she said.
The district of 1,900 students, which will run out of money in a few years if it doesn’t overhaul its finances, so far has used the money it has received from NEXUS to repair its aging school buildings.
Besides Marlington, the other entities affected include: Lake Local Schools, Lake Township, Louisville City Schools, Louisville Public Library, Marlboro Township, Nimishillen Township, North Canton, North Canton Public Library, Plain Local Schools, R.G. Drage Career & Technical Center, Rodman Public Library, Stark County 911, Stark County Board of Developmental Disabilities, Stark County Mental Health & Addiction Recovery, Stark County Children Services, Stark County government, Stark Parks, Stark County District Library and Washington Township.
Northwest Local Schools also is set to receive money from the settlement for land within its district boundaries that sit in Summit County. Its collections are not included in the Stark County auditor figures.
What about the Rover Pipeline appeal?
Separately, some Stark County schools, libraries and governmental entities still are awaiting a resolution on the taxable value for the Rover Pipeline. A hearing to review Rover’s appeal is scheduled to begin Aug. 1 before the Ohio Board of Tax Appeals.
Rover’s twin 42-inch-diameter mainlines cross Pike, Bethlehem and Sugar Creek townships in Stark County and traverse Carroll, Tuscarawas, Harrison, Wayne, Ashland and Richland counties.
Reach Kelli at 330-580-8339 or kelli.weir@cantonrep.com.
On Twitter: @kweirREP
This article originally appeared on The Repository: NEXUS pipeline owes Stark County schools, governments $5 million
