Cities consider suing Contra Costa County over Chevron assessment dispute

By Paul Thissen
Contra Costa Times
Posted: 01/12/2011 04:25:33 PM PST
Updated: 01/12/2011 05:42:09 PM PST

A group of cities is considering suing Contra Costa County, saying they should not be forced to pay any of the $18 million the county owes Chevron for incorrectly assessing its Richmond refinery.
They say they never received any of the extra tax revenue in the first place, so the cost should be paid by the governments that did, primarily the city of Richmond. Right now, the cost has been divided up among all the governments in the county.
County Auditor-Controller Robert Campbell disagrees, asserting that all Contra Costa cities did receive part of the tax money, and they now have to pay it back. Taxes in the county are pooled and divided based on a complex calculation depending on assessed values in each city and its tax revenue when Proposition 13 passed in 1978.
Brentwood, Concord and San Ramon's city councils have given their attorneys permission to file a lawsuit against the county's Auditor-Controller's Office. Other cities have discussed the dispute, but not all have sought the formal approval of their city councils yet, Brentwood City Attorney Damien Brower said.
There is not yet a lawsuit, said Ben Fay, a specialist attorney representing Brentwood. He hopes a suit can be avoided entirely through more talks with the auditor-controller about the taxing methodology. However, Brentwood, Concord and San Ramon should not be on the hook, he said.
In June, then-county Auditor-Controller Stephen Ybarra notified local governments about how their property taxes would be affected by the decision. Brentwood's share was listed at $79,816, with the local park district contributing another $16,525. Concord's share was $123,454; San Ramon's was $109,685.
"These other cities across the county are being asked to refund money that they never got in the first place," Fay said.
He said Campbell is correct that in practice -- all tax money in the county is divided up. However, that is an approximation to simplify the county's job, Fay said.
Fay disagrees with the county that the approximation should be used for the refund. A lower assessment of the Chevron refinery would have changed that calculation and lowered the share of taxes that Richmond received from the county.
"Rather than having to go through every single (property), they can come up with an approximation "... but that doesn't change the underlying rule of what's going on," Fay said.
Fay cited a similar situation in Humboldt County, where state auditors faulted the county for using a similar methodology to Contra Costa's.
"We concluded that only agencies within the tax rate areas of the successful appellants should be charged for the refund," according to the state auditor's report.
Contra Costa itself does not benefit from its methodology, Fay said.
Richmond should repay the largest portion of the $18 million, he said, with smaller amounts coming from regional agencies such as the East Bay Regional Park District and BART.
Last year the county's Assessment Appeals Board decided that the county owed Chevron $18 million because it overassessed the refinery for three fiscal years from 2004 to 2007. The first $6 million was to be paid in August, with the remaining $12 million being paid this coming August. Appeals of later years' assessments and a court challenge could lead that figure to double or more, Fay said.
Richmond City Manager Bill Lindsay said he was not versed on the specifics of the dispute, and that it is too early to worry about any effect on Richmond's budget.
"I think if the cities have an objection to this, then I think they should raise the objection to Chevron," he said. "The root cause is not the county and how they allocated the refund; the cause was Chevron's appeal of their property taxes."
The mayors of Concord and San Ramon said they need to make sure their constituents are getting a fair shake. "We're part of the lawsuit to make sure we're not being taken advantage of," San Ramon Mayor Abram Wilson said.
Staff Writer Sophia Kazmi contributed to this report. Contact Paul Thissen at 925-943-8163. Follow him at Twitter.com/pthissen.