Newmont Mining got at least part of a $300 million property-value reduction it wants from the State Board of Equalization, which could save the company millions of tax dollars.
Exactly how much won't be known until the Department of Taxation recalculates the values of nearly 1,500 real property improvements at five mine sites in Elko, Eureka, Lander and Humboldt counties
But Carson City Assessor Kit Weaver said he is more concerned about the possible precedent set by the board's decision, which came during a meeting Tuesday.
Newmont appealed to the board because dropping gold prices had greatly reduced the amount of ore it can mine profitably. The company should get a reduction in the taxable value of their milling, refining and other property improvements, officials argued.
The logic behind that argument, according to Newmont lawyer Jim Wadhams, is that the value of processing mills and other improvements at any mine site depends almost completely on the economic viability of the mine. When the price of gold drops dramatically, so does the value of the mills, refineries and other buildings. And, he said, so should the taxes the mine pays.
Gold mining in Nevada has been in a slump for two years. Prices have dropped from $400 an ounce to about $275. Hundreds of mine workers have been laid off, some mines have closed and most have reduced operations.
The state and counties put Newmont's taxable value for those improvements at $1.45 billion, based on a 50-year "life" of any building under Nevada law. Newmont argued some of those mines may be exhausted in as little as six years and that the actual taxable value should be about $314.2 million lower.
After a hearing that lasted more than five hours, Rose Dominguez, who chairs the board, and members Stephen R. Johnson and Bruce Thee agreed with Wadhams not every building has a 50-year economic life. But they said a depreciation schedule as short as six years for mines which will probably last another 20 was also wrong.
So they assigned an estimated economic life of 19 years to the Carlin Trend, Nevada's largest gold mining operation, 11 years to Twin Creeks, 16 years to Lone Tree and 15 years each to the Rain and Mule Canyon mines.
They told Assessment Standards Director Terry Rubald on Tuesday to recalculate the value of those improvements using those numbers.
Both Rubald and Wadhams said the total taxable value will be somewhere in between what the two sides claim it should be.
Wadhams said Newmont was satisfied because, "we got them to accept the concept of economic life instead of 50 years for everything." He said that is a much more realistic way to value improvements used by a business.
But Weaver said that was exactly why he is worried about the ruling.
"We're concerned this does open the door for casinos and other businesses," he said.
He used the example of gas stations, which he said have a "life" of only about 25 years. He said station owners have made the same argument as Newmont in the past but lost.
"What this is saying is that the assessors have to go in and figure out the effective life of a building," he said. "That's what we don't want to do because, then, two appraisers are going out and looking at the same building and coming up with two completely different values."
He said casinos and many other businesses would probably join gas station owners in seeking tax reductions if the 50-year depreciation schedule is tossed out.
The 50-year schedule was created by the 1981 Legislature as part of the tax shift which dramatically reduced and limited property taxes in Nevada. It was designed to reduce constant assessment appeals and give more stability to the property tax base relied on by local governments and schools.
Rubald, however, said she doesn't think it's a precedent at this point. She said this ruling applies only in the case presented by Newmont and that anyone else asking similar treatment would have to prove their taxable value under the 50-year depreciation schedule exceeds full cash value of the business. She pointed out that burden is on the business taxpayer, not the state.
And Wadhams pointed out that, if another gold deposit is discovered on one of the mine properties, it would add years to its economic life and increase the taxable value.
Weaver, however, made it clear there are many businesses that will see the decision as an opportunity to appeal their property taxes.
