There is not always a profit in "going green."
When Microgy Inc., a subsidiary of Environmental Power Corporation, moved into Erath County and constructed a sprawling, multi-million dollar facility capable of turning cow manure into pipeline quality natural gas with the ability to produce the equivalent of 12,700 gallons of heating oil per day, the county celebrated. For an area that relies on the success of the dairy industry and an industry that comes with its fair share of waste, it only made sense to support the plant that would turn cow poop into power and profit while reducing the manure's impact on the environment.
But less than four years later, the company has filed bankruptcy, and local taxing jurisdictions that rely on property tax collections, are feeling the squeeze.
Ask Huckabay Independent School District Superintendent Dr. Cheryl Floyd and she will tell you budgeting on poor property collections just plain stinks. Huckabay not only took a hit on last year's taxes but will also be delivered a blow in the coming fiscal year since the company was operational on Jan. 1 and therefore remains on the tax role.
Floyd said Monday that for the first time in her almost nine years as superintendent, she prepared the proposed budget based on a 90 percent property tax collection rate.
"That is because Microgy is the No. 1 taxpayer in the (school) district and they have not paid," Floyd said. "Historically, we have a 96-97 percent collection rate. Huckabay ISD property owners pay their taxes and always support the school district."
While Floyd said there are a few other names on the delinquent collections roster, she said Microgy's failure has cut deep.
"Microgy is the primary reason collections are low," Floyd said. "There are others that are delinquent, but when the No. 1 taxpayer doesn't pay, the collection rate is drastically impacted."
Floyd said she first became aware of the company's financial woes when she noticed Huckabay's tax collections were low in March, a deficit that continued into April. She said she began discussing the problem with Tax Assessor/Collector Jennifer Carey and tax attorney Jeff Brown shortly thereafter.
In mid-May, Huckabay ISD filed a civil lawsuit relating to the unpaid taxes in an attempt to collect on the debt.
A month later, Wells Fargo Bank filed a separate lawsuit against the company. According to Dow Jones Financial Information Services, www.fis.dowjones.com, "Wells Fargo is the trustee for $60 million in bonds that Microgy used to finance the development of facilities in Texas," including Huckabay Ridge, the largest renewable natural gas plant in North America.
While Carey was not available for comment Monday, she reportedly told the Abilene Reporter-News that Microgy's delinquent taxes in Erath County total an estimated $178,000, not including penalties and interest with a majority of the money being owed to Huckabay ISD.
Meanwhile, Floyd said the district will simply forge into the future with the historically low collection rate, which likely means the school district will have to dip into reserves during the 2010-11 school year.
According to www.nysb.uscourts.gov, motions to consolidate will be considered at a hearing on Aug. 26 in the United States Bankruptcy Court Southern District of New York on the Chapter 7 bankruptcy case.
Telephone numbers to Microgy's corporate headquarters and media relations have been disconnected.