MICHIGAN TAX TRIBUNAL GIVES FINAL APPROVAL OF
MCV – CITY OF MIDLAND
TAX APPEAL SETTLEMENT

April 22, 2008 – The Michigan Tax Tribunal gave final approval last Friday to the tax appeal settlement reached between the City of Midland and Midland Cogeneration Venture (MCV) in February 2008. This approval brings a final close to the 12-year tax appeal and starts the 90-day time period for the State and Midland County taxing jurisdictions to pay their portion of the $137.3 million settlement.

After years of negotiation, the City of Midland and MCV announced in February that they had reached a settlement to MCV’s appeal of its property taxes for the tax years 2001-2007.

Final settlement documents approved by Midland City Council on February 25 were immediately filed with the Michigan Tax Tribunal (MTT); however, the State of Michigan filed a motion to intervene.

After weeks of intense discussions between all parties and the MTT, the Court rendered its final decision on April 18, and the MTT entered the Agreements and final Order in the MCV case. The settlement was unchanged from what Midland City Council approved in February.

Midland County taxing jurisdictions – which include the City of Midland, Midland County, Midland Public Schools, Bullock Creek Schools, Midland County Educational Service Agency, Delta College, and the State of Michigan – will owe MCV approximately $137 million dollars on property that was over-assessed.

The settlement included a credit in the form of a donation by MCV of roughly $10 million, most of which will go to Midland Public Schools, Bullock Creek Schools, Midland County Educational Service Agency and Delta College to offset a portion of their refund liability.

The following is a breakdown, by taxing unit, of the estimated refunds due, after taking into consideration the donations being made by MCV:

Taxing Unit Amount Owed (in Millions)

City of Midland $ 36.2

County of Midland $ 19.6

Midland Public Schools $ 2.9

Midland County ESA $ 2.8

Delta College $ 5.6

State of Michigan $ 60.2

Estimated net refund, all units 2001-07 $127.3

Another key component of the settlement is establishment of a process by which MCV and the City will work cooperatively together on future assessed property values in order to avoid disputes and costly tax appeal litigation in years to come.

The City of Midland will refund a total of $36.2 million to MCV. Since 1997 the City has levied an additional tax millage to save for a potential refund of taxes to MCV. Today, that fund contains approximately $17 million. This reserve will be applied toward the $36.2 million refund due to MCV. The remaining $19 million, however, will likely be secured through the issuance of bonds to be repaid over 15 years.

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