After months of negotiations, Howard County officials have reached an agreement in principle with old and new Chrysler for the payment of personal property taxes owed for 2009 and 2010.
Attorneys with Old Carco (Chrysler LLC) filed documents with the U.S. Bankruptcy Court for the Southern District of New York Friday, indicating an agreement in principle has been reached.
The county has been seeking the payment of $12.9 million in personal property taxes due in 2009 and $12.3 million owed in 2010.
When Old Carco filed for bankruptcy protection last year, the county started discussions with Chrysler Group LLC on the payment of the taxes.
Dick Miller, president of the Howard County Council, said the negotiations have been on-going for nine months.
“I’m very pleased with where we are today,” Miller said.
County attorney Larry Murrell said the agreement in principle outlines what Old Carco intends to do in terms of the taxes owed to Howard County.
“Old Carco was comfortable enough with the agreement in principle to file documents with the court to start the clock running and get this done,” he said.
If there are no objections filed and the necessary paperwork is completed, the agreement could be finalized Feb. 18 by the bankruptcy court.
Under terms of the agreement, Old Carco will pay 50 percent of the taxes that were due in 2009 and 14 percent of the 2010 taxes. Chrysler Group LLC will pay 50 percent of the 2009 taxes and 86 percent of the 2010 taxes owed to the county, according to Murrell.
“We will recover all the taxes due,” Murrell said.
Murrell said the payment plan with Old Carco and Chrysler Group must be finalized, but the county will receive $11 million to cover all the real property taxes due for 2010 shortly after the agreement is finalized.
Miller said it is unknown if the county will have to borrow any funds from the State of Indiana to cover the tax shortfall.
Jamie Shepherd, Howard County Assessor, said there is an agreement on appeal filed by Old Carco on the assessed value of Indiana Transmission Plants I and II.
Details of the entire agreement will be made public once the court approves the agreement in principle.
“The community will be more than happy,” Shepherd said of the agreement in principle.
A part of the agreement is that Kokomo and Howard County will transfer any tax abatements approved for Old Carco to Chrysler Group.
Old Carco will reimburse Chrysler Group in the amount of $4.4 million for real estate taxes paid under protest in 2009.
This appears to be the second agreement Howard County has reached since August with the county’s two largest employers to settle tax questions as a result of bankruptcy filings.
The New York bankruptcy court signed an order requiring payment of personal property taxes due to the county by Delphi. Property assessed March 1, 2005, for $4,615,399, must be paid in full by March 11, 2011.
The real estate taxes for 2005 in the amount of $1,881,860 will be paid over the next seven years, with an interest rate of 5 percent.
General Motors Co., which agreed to purchase the Delphi facilities in Kokomo last year as part of the bankruptcy agreement, has paid $3,769,193 in taxes due last year and will pay $7.6 million in taxes this year.
• Ken de la Bastide is the Kokomo Tribune enterprise editor. He can be reached at 765-454-8580 or via e-mail at ken.delabastide@kokomotribune.com
AT A GLANCE:
• Old Carco (Chrysler LLC) will pay 50 percent of personal property taxes that were due Howard County in 2009 and 14 percent of the 2010 taxes.
• Chrysler Group LLC will pay 50 percent of the 2009 taxes and 86 percent of the 2010 taxes owed.
• The agreement could be finalized Feb. 18 in bankruptcy court.
Local News
County, Chrysler reach tentative deal
County to receive all taxes due
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