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REFINERY ASSESSMENT
Chevron taxwindfall
puts agencies in bind
Districts challenging
refund formula also
stand to gain from it
Byt Usa ftderbrueggen
lnorderbrueggen@
bayareanewsgroup.com
More than two dozen Contra
Costa cities, fire and other spe-
cial districts that are suing the
county over bills they received
for Chevron's $18 million 2004-
2006 property tax refund are in
a pickle.
The tax allocation formula
that makes them pay Chevron's
refund will also ve them a
share of the extra 27 million in
property taxes Chevron must
pay for tax years 2007 -2009.
A county appeals board ear-
lier this week rejected the oil
giant's appeal of its 2007 -2009
property tax bill. Instead of
getting the $73 million refund
it wanted, the company was
ordered to ante up $27 million
in additional taxes for its Rich-
mond refinery.
Agencies outside Richmond
sued because they were unhappy
about having to pay a share of
Chevron's $18 million refund
ordered by the appeals board
for tax years 2004 -2006. The 28
agencies said they never got any
of that money in the first place.
But now that Chevron has
been ordered to pay more taxes
for years 2007 -2009, those agen-
cies will get money they wouldn't
have had before.
"It is ironic, isn't it ?" said
attorney Ben Fay, who rep-
resents the 28 cities, fire,
parks, sewer and other spe-
cial districts that have joined
the lawsuit against Contra
Costa Auditor- Controller
Bob Campbell. "If the auditor
distributes the money as he
has said he will, the question
will be: Does it make sense to
proceed? The agencies will
have to evaluate what they
think is the best choice in the
long term." _ .
These agen i a
over a combined $1.8 mil-
lion toward the 2004 -2006
refund but would receive an
estimated $2.8 million from
the additional payment or-
dered in Chevron's second
appeal, resulting in a $1 mil-
lion windfall.
The litigants may have a
dilemma, but if this were a
child's game of "Crack the
Whip," Richmond would be
on the tail end.
The lawsuit initially ter-
rified the city, which would
have been liable for a far
larger chunk of any refunds
to Chevron if the legal chal-
lenge prevailed in court, be-
cause it gets a larger share y
of the refinery's regular tax
payments. D
Under a quirk of the law
and Byzantine tax rules, re-
funds or extr# proceeds that
result from an appeal deci-
sion are shared moire broadly
than money handed out dur-
ing the regular tax cycle.
Richmond, for example,
ipaid $2.3 million — 13 per -
cent — of the 2004 -2006 re- j
fund due Chevron and would
receive $3.4 million —13 per-
cent — under the allocation
of the extra taxes Chevron
owes for 2007 -2009.
In contrast, the city re-
ceives roughly 30 percent
of the property taxes col-
lected each year within its
borders earmarked for city
operations, bond debt and
sewers. The balance goes to
Richmond -area schools, the
county, transit, parks and
other districts.
If the courts rewrite the
formula as the lawsuit ar-
gues, Chevron's extra tax
payment for years 2007 -2009
would boost Richmond's
share to $8.9 million.
"What are you going to
do ?" laughed Richmond
Councilman Tom Butt.
"There are so many things in
y -5•IZ
play right now, I'm not sure
there is a right answer."
As Butt accurately notes,
the Chevron property tax
math exercise is a long one.
Chevron's Superior Court
lawsuit challenging the
county in the 2004 -2006 tax
appeal is pending and most
expect the company will
sue over the appeal board's
2007 -2009 decision.
The state has asked the
California Supreme Court to
rule in a case brought by the
Western States Petroleum
Association, which is con-
testing a refinery appraisal
regulation that generally
increases taxable worth. If
the state loses, Contra Costa
may have to lower the refin-
ery's assessment.
Chevron is also appeal- i
ing the refinery's 2010 -2011
values as calculated by
Contra Costa Assessor Gus
Kramer. The Assessment
Appeals Board begins hear-
ings April 16.
The outcome in any one of
these disputes could change
the refinery's numbers and I
send public agency budgets ,
up or down.
Given the uncertainty,
county Auditor- Controller w
Campbell could impound the 1,
BY THE NUMBERS
6. b, (Pandaa�)
$27 million pending the final
outcome in court although
he said he cannot recall an
instance in which his office
has done it.
Campbell said he antici-
pates disbursing any addi-
tional payment from Chev-
ron for 2007 -2009 under
the same process he used to
charge public agencies for
the 2004 -2006 refund
Contact Lisa Vorderbrueggen
at 925 - 945 -4773, www.
ibabuzz.coralNlitics
or at TwittenconV
lvorderbrueggen.
The Contra Costa Assessment Appeals board ruled Monday that
Chevron must pay an estimated additional $27 million in prop-
erty taxes for years 2007 -2009. The extra cash will be distributed
far more broadly than it would have been if the taxes had been
collected during the regular tax cycle. Here are estimates of what
the top 10 recipients will receive:
AGENCY AMOUNT PERCENT
Contra Costa County $2.78 million 10.3
Contra Costa Fire District
$1.3 million
5.1
San Ramon Valley Fire District
$693,278
2.5
East Bay Regional Park District
$602,140
2.2
Richmond*
$538,308
2
Contra Costa County libraries
$307262
1.1
Moraga- 0rinda Fire District
$214,625
0.8
Concord
$186,504
0.7
Central Contra Costa Sanitary
$169,887
0.63
East Bay Municipal Utility District $166,680 0.62
* Richmond will receive an additional estimated $2.9 million for
general obligation bond debt payments, for a total of 13 percent.
Other agencies will receive money for debt payment, but the
totals are unknown at this time.
Source: Analysis by Lisa Vorderbrueggen