|Ed and Op Ed on Chevron Tax Appeal
December 8, 2007
Opinion about Chevron’s greedy effort to recover property taxes paid to the City of Richmond and Contra Costa County and reduce property taxes in the future was featured on both sides of the Contra Costa Times editorial page this past week or so, a rare and remarkable confluence of public opinion not in Chevron’s favor.
Oil refinery for sale?
Contra Costa Times
Article Launched: 12/06/2007 03:01:26 AM PST
INVESTORS WHO THINK discounted foreclosure properties are gold mines may be overlooking a far better bargain: a large oil refinery. The owner estimates its 2006 value at just $1.1 billion. That may not be as good a deal as it was in 2005, when the owner believed it was worth just $600 million, but it's still exceedingly attractive.
If the owner were a bit reluctant to sell, certainly a far higher bid -- say $2.7 billion, the refinery's 2006 assessed value -- would be eagerly accepted. Of course, all the operating permits would be included.
Just what price would Chevron, the owner of the huge refinery in Richmond, accept if a group of investors, or perhaps Shell or Exxon Mobil, showed up with an offer to buy -- $1.1 billion, $2.7 billion or more?
Yet Chevron is challenging Contra Costa County's assessment, arguing that the county placed too high a value on the refinery property since 2004 and wants a refund of nearly $65 million in property taxes.
County officials are not bending, nor should they. They rightly estimate that Chevron should be paying even more than it does, not less.
There's a lot at stake. Contra Costa County, cities, special districts, East Bay transit agencies and the regional park district would lose $27 million that would not be replaced. School districts would lose $24 million, which state taxpayers would have to pay.
Local governments would lose $7 million designated to pay off bonds, which would be recovered mainly from property owners in the West Contra Costa school district.
None of the above includes the loss of future property tax revenue should Chevron win its appeal.
Chevron's current assessment is based on the Proposition 13 formula, which takes the 1975 valuation of the property plus 2 percent a year plus improvements. Taxes are then levied at 1 percent of the value plus another fraction of a percent to cover debt obligations.
With the exception of new properties, Prop. 13 generally undervalues property, often considerably. But Chevron disagrees, saying its Richmond refinery is worth far less than the Prop. 13 calculation.
Chevron would like to use other means of valuing its property, such as the cost of rebuilding the refinery, comparable sales prices or income from the refinery. Using the income method, Chevron assumes an unrealistic 20 percent profit as a base line, which could result in an artificially low assessment.
The real value of Chevron's refinery is what it would sell for in today's market, and that is all but certain to be way above its current assessment of $2.7 billion.
We trust that Chevron's appeal ultimately will fail. If it is not satisfied, the oil giant can always sell. If so, does anyone think Chevron would accept anything less than $2.7 billion?
JERRY POWER From the community
The heart bleeds for poor, poor Chevron
Contra Costa Times
Article Launched: 12/01/2007 03:03:13 AM PST
That's so sadly down from $5.38 billion the prior quarter. That's only $40 million in profit per day folks, down from $59 million per day last quarter.
But, oh yeah, the Richmond refinery isn't worth much of anything at all. How will they get by? Now they want $65 million back from the Contra Costa County and Richmond taxpayers. Pass me some money to wipe away my tears.
All I can surmise is that Chevron, which has blighted Richmond with its visual blight, flaring, stinks and smells and other air and water pollution, and a few broken windows over the years, makes a bad corporate citizen for Richmond.
We'd be better off without them. Chevron wants its host city's streets to go unpaved. It wants Richmond, the ninth most dangerous city in the United States, to be left without funding for about 70 police officers.
This is while it burns money on bonuses for its bosses out in San Ramon, where it takes all the money made in Richmond.
It wants to defund the West County School District, too. But let the "little people" worry about that.
Don't forget poor, poor Chevron's profits for the earlier quarter was $5.38 billion. That's about $59 million a day. So about a days worth of profit is all they want back.
That's on revenues of $55 billion or about $600 million per day coming in the door. I guess just gouging people that fill up at Chevron isn't enough. It seems this quarter profit is down because refineries in California and Mississippi are down for repairs, increasing the scarcity of gas in California. Why sell all that gas when you can sell less at a higher price?
Perhaps if Chevron really needs this money it wants back from the taxpayers, it could lay off the army of lawyers it has to fight the Contra Costa County Assessor's Office. Or it could just stop running all of those fuzzy commercials and front-page ads about how Chevron isn't a beacon of corporate greed but "just people who care" and oh so green.
I don't buy it and, hopefully, the taxpayers won't stand for it.
If Chevron persists in trying to rip off the county taxpayers as well as gouging us at the pump, it's time to boycott Chevron completely.
It's time to deny it the plant expansion permit it seeks. Since the refinery is so worthless, Chevron might need to relocate somewhere where property values aren't already tarnished by its presence.
Power is a resident of Richmond.