L’ANSE – Five Baraga County municipal and education organizations expect to pay back $520,000 in tax money to the L’Anse Warden Electric Company to settle a dispute over the company’s 2012, 2013 and 2014 taxes for its L’Anse power plant.

Lawyers and representatives for L’Anse Township, Baraga County, the Village of L’Anse and the L’Anse Area Schools settled with L’Anse Warden at an April 30 mediation session, said Baraga County Treasurer Anne Koski. The Copper Country Intermediate School District and a state education fund are also affected.

The settlement must still be approved by the Michigan Tax Tribunal, Koski said.

Koski said the tribunal is expected to rule within 30 days. If the deal is accepted, the taxing groups will have another month to refund the money.

“It will be an expense in this year’s budget,” said Koski. “It’s a big hit.”

The municipal groups already had to pay back $350,000 last year in a dispute over L’Anse Warden’s 2010 and 2011 taxes, though they’re appealing that ruling in a separate case. In that case, L’Anse Township, which handles tax assessment for the power plant, was found in default by the Tribunal when then-assessor Matt Arko failed to show up to an appeal hearing.

Arko has since left the township’s employ. New Assessor Jim Fedie said that while the 2012-2014 settlement was costly, he felt it was still a good deal for the municipalities.

“The Warden plant gave a lot. We gave a lot,” Fedie said. “We could have lost double if we would have gone to a tribunal and they would have ruled against us.”

Fedie said he’d gone into the negotiations seeking a taxable value of about $11 million for the plant, on average for the three years, while L’Anse Warden’s lawyers had offered a taxable value of about $4.5 million. The settlement represented an average taxable value of more than $9 million.

“They weren’t happy with it. We weren’t happy with it. But in the long run they were good to work with,” said Fedie. “The (township) board was happy. “Going forward we’d have been spending a lot more money if we were going to fight it, and then there was the risk of losing.”

Koski said the municipal groups had already spent over $100,000 on legal costs in the dispute from September through February, with more bills expected. She said Grand Rapids Attorney Jack Van Coevering had handled the negotiations under a cost-sharing agreement between the municipalities and school district. She, Fedie and L’Anse Village Manager Bob LaFave had tentatively approved the deal before taking it back to their respective boards for their approval.

The L’Anse Area Schools had previously capped what they would spend on legal help and hadn’t attended the mediation, said district Superintendent Carrie Meyer.

Despite facing an approximately $130,000 payback from various village funds, LaFave said he felt the village “did fairly well in mediation.”

“We’re going to have less (money) than originally planned, but it’s a path to certainty for the village,” he said. “The reason we settled is there was a lot of risk for both parties going forward. We could have poured another $100,000 in in legal expenses.”

The other tax refunds will come from Baraga County, about $106,000; Baraga Township, about $19,000; the L’Anse Area Schools, about $183,000; the Copper Country Intermediate School District, about $21,000; and a state education fund, about $48,000.