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Gioia Asks Chevron to Withdraw Property Tax Appeal

As the hearing on Chevron’s property tax appeal gets underway, Contra Costa County Supervisor John Gioia has written to the $100 billion company requesting they drop the effort to recover nearly $60 million in taxes already spent by various public agencies and millions more in future tax revenue  Click here for a copy of Gioia’s letter.


Following is a story in yesterday’s Contra Costa Times about the appeal:


Chevron appeals for cut in property tax

·  If refinery successfully argues its rates were unfairly calculated, cities and schools could lose millions of dollars

By Katherine Tam


Article Launched: 11/29/2007 03:01:04 AM PST


Chevron began its appeal Wednesday to change the way the county calculates property tax at the oil giant's Richmond refinery, a request that could cut millions of dollars that flow to cities, schools, parks and fire districts throughout Contra Costa every year.

Chevron argues that the county has incorrectly assessed its land since 2004 and that the company paid $59.7 million more than it should have from 2004 to 2006. But county officials charged with figuring property values countywide and tallying how much owners should pay say that if anything, the refinery ought to pay more.

The issue is a highly technical one, mired in land values broken down by the square foot and tax methodology, but it has grabbed the attention of public officials who fear losing revenue that helps pay for everything from road repairs and park upkeep to teacher salaries and bus drivers. Public agencies could be asked to refund anywhere from a couple hundred dollars to millions.

Among the hardest hit would be the county, which could be asked to refund $7.9 million and lose an additional $2 million a year. The city of Richmond, which is stabilizing itself financially after years of a fiscal crisis that in 2004 resulted in massive layoffs, would be asked to refund $1.4 million and reduce future budgets by $4.7 million.

County Supervisor John Gioia, who represents most of West County, is asking Chevron to withdraw its appeal.

"The result of these property tax revenue reductions would be devastating on all of these agencies," Gioia said. "All of us would have to cut services dramatically. At a time when we are trying to fight crime and violence through increased prevention and enforcement activities and trying to save the vital emergency room at Doctors hospital, these revenue cuts would seriously impact our collective ability to be successful at these efforts."

School districts also would be affected, according to county assessor Gus Kramer. Although the state, by law, would reimburse them for any impact on their general funds, he said, it would not do the same for any lost property tax revenue generated from voter-approved school bond measures. He said he did not know how much money that might be.

Chevron says the key issue is whether the county properly calculated the refinery's property tax in the first place. And if not, local agencies got money they shouldn't have received, the company argues.

"We understand why politicians want to focus on what the outcome may be, but we need to focus on whether the process is being fairly applied," Chevron refinery spokesman Dean O'Hair said.

The hearing before the three-member Contra Costa Assessment Appeals Board began Wednesday in Martinez with an opening statement from attorneys representing the county assessor's office. The hearing continues through Friday before taking a five-week hiatus. Chevron is expected to deliver its opening statement when the hearing resumes Jan. 7.

Chevron is the county's largest property taxpayer and accounts for 2 percent of all revenue. The 105-year-old refinery sits on 2,900 acres that includes ballfields and wetlands. It can process 245,000 barrels of crude oil into gasoline and other products every day.

Chevron and the county assessor disagree on how to correctly assess the property value of the refinery, from how much the land is worth to what investors should expect as a reasonable annual return on investment. In 2004, the first year under debate, the county assessed the refinery land at $2.5 billion, but Chevron says its assessment should have been $600 million. For 2005, the county's assessment was $2.6 billion compared with Chevron's estimated $940 million. And in 2006, the county's figure was $2.7 billion compared with Chevron's $1.14 billion.

Those numbers are higher than the assessment in 2003 before the dispute, Chevron attorney Stephen Davis said. The county's assessment in 2003 was $1.9 billion, and Chevron made no improvements at the refinery that would warrant such a jump, O'Hair said. Other properties are not assessed the same way as Chevron, the company argues.

"We are trying to reconcile what we think is the correct value," O'Hair said. "This is a process everyone should want to see fairly applied."

County officials stand by their numbers, adding that the Chevron Richmond refinery is being assessed using the same method as other properties, including other refineries.

"It has been the best of time for refineries," said Kevin Lally, the attorney representing the county assessor's office.

Reach Katherine Tam at 510-262-2787 or ktam@bayareanewsgroup.com.

By the numbers

·  If Chevron's appeal is successful and the company seeks a refund, public agencies across the county would be asked to give back a combined $59.7 million in tax money. The agencies that would pay the most in a 2004-06 refund are:

Contra Costa County: $7.9 million

Contra Costa Fire District: $4 million

San Ramon Valley Fire District: $1.9 million

East Bay Regional Parks: $1.7 million

City of Richmond: $1.4 million

·  This is how much local agencies would lose in the future if the Chevron appeal succeeds:

Contra Costa County General Fund: $2,015,347

Contra Costa Flood Control District: $24,283

Contra Costa Water Agency: $4,947

Contra Costa County Mosquito Abatement District: $21,627

West Contra Costa County Healthcare District: $212,006

EBMUD Special District 1: $207,714

AC Transit Special District 1: $767,199

BART: $87,461

Bay Area Air Pollution Control District: $25,483

East Bay Regional Park District: $415,964

City of Richmond: $4,726,289

Richmond Sewer District 1: $45,397

Source: Contra Costa County