Howard County and officials with Chrysler Group LLC are close to finalizing an agreement on the payment of $25 million in personal property taxes for 2009 and 2010.
Chrysler owes $12.9 million in taxes this year and another $12.3 million in personal property taxes to government entities including Howard County, city of Kokomo, and Kokomo-Center and Northwestern schools.
The boards for the two school corporations voted this week to seek loans from the Indiana Rainy Day Fund. Northwestern is seeking a $1.7 million loan and Kokomo-Center is requesting up to $1.9 million.
“The loan is a contingency plan to make sure the schools have funds by the end of the year,” Howard County Attorney Larry Murrell said Friday. “They can have money available if we don’t receive a payment from Chrysler.”
The loans sought by the schools will only cover taxes owed in 2009 and another loan if necessary for 2010 would have to be sought from the state, he explained.
Murrell said local officials are still negotiating with the state on the interest rate on any amount borrowed, adding the range is between 1 percent and 3 percent.
“We were hoping to pay no interest,” he said. “Part of the negotiations is on the payment of interest.”
He said Kokomo and Howard County will probably not borrow money from the state this year but could require financial assistance in 2010.
Murrell said county officials and Chrysler officials hope to have an agreement reached by the end of the year.
“The length of the payment is still negotiable,” Murrell said of the agreement with Chrysler.
The repayment agreement is expected not to exceed six years, according to Northwestern Superintendent Ryan Snoddy.
Dick Miller, president of the Howard County Council, agreed that a settlement with Chrysler is close to being completed.
“There are a lot of attorneys involved,” he said of any agreement. “There is Chrysler, the U.S. Treasury, old Chrysler and the county.”
Miller said the biggest concern in recent weeks was protecting county taxpayers as much as possible in any settlement agreement.
A $2.2 million check was received from Chrysler Group LLC for real estate taxes owed in November.
This is the second time local taxing units have had to deal with tax issues as the result of bankruptcy by a major employer in Howard County.
Delphi Corp. filed for bankruptcy in 2005. The state allowed local taxing units to borrow money from the Rainy Day Fund at no interest, with the loans to be repaid by 2015.
The New York bankruptcy court signed an order in August requiring payment of the personal property taxes due to the county. Property assessed March 1, 2005, for $4,615,399 must be paid in full by March 1, 2011, with an interest rate to be set by the court.
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 agreed to purchase the Delphi facilities in Kokomo as part of the bankruptcy agreement. GM will be responsible for paying $3,769,193 in personal and real-estate taxes due in November and $7.6 million in taxes due during 2010.
Treasurer Martha Lake said she received a check in the amount of $3,795,497 from GM for the fall payment. Lake said she also received a $68,000 check for taxes owed when Delphi filed for bankruptcy in 2005.
• 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
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Closing in on a tax agreement
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