Chevron, Contra Costa County spar, wind up property tax hearing
By Lisa Vorderbrueggen
Contra Costa Times
Posted: 01/10/2012 08:14:49 AM PST
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The Chevron oil refinery is photographed in Richmond (Aric Crabb/Staff File)
MARTINEZ -- Chevron and Contra Costa County accused each other Monday of engaging in obfuscation and faulty work as their high-stakes dispute over property taxes for the oil giant's Richmond refinery came to a close.
Chevron seeks reductions worth up to $73 million in property taxes it paid from 2007 through 2009, or slightly more than half of what the company was assessed.
If the three-member county assessment appeals board concurs, Contra Costa and the county's 143 public agencies that receive property tax revenue will owe an unprecedented refund.
During the two-hour closing arguments in Martinez, Chevron's lawyer excoriated county Assessor Gus Kramer, alleging the elected department chief set predetermined and arbitrary refinery values and offered as evidence a lack of documentation demonstrating how his staff made the complex calculations.
"Is this the way properties are appraised in Contra Costa County?" Chevron attorney Lawrence Hoenig asked. "Chevron is the largest taxpayer in the county. Would you, as a homeowner, be happy if your property was assessed this way? ... Chevron wants to pay the proper tax. No more. No less."
For the county, attorney Kevin Lally defended the assessor's work and described a pattern of what he called Chevron's "skilled contrivances" designed to drive down the refinery's taxable value to reduce its property tax liability.
For example, Lally said, Chevron reduced refinery revenues by half when it included costs for a new hydrogen plant that was never built. A lawsuit forced the company to halt construction.
Chevron earns "buckets of money at this refinery and the buckets are large," Lally told the appeals board. "The people of Contra Costa implore you to do the right thing."
The assessor puts the refinery's annual taxable value at $3.1 billion to $3.4 billion during the three-year period, while Chevron sets its own value at $1.1 billion to $1.8 billion. The refinery pays a percentage of its assessed value each year in property taxes.
Assessed value is not what a buyer would pay for a business on the open market. Instead, it reflects the worth eligible for taxation, such as land, buildings, equipment and other improvements.
Each side characterized the other's methodology as deeply flawed.
But the precise source of the combined $5.6 billion taxable value gap between Chevron and the county is nearly impossible to pin down based on the open testimony before the appeals board.
Under state law, the county must keep a company's financial data confidential during the property-assessment process. That kept a large portion of the testimony behind closed doors over the past three months.
Chevron also sought to close portions of the final arguments on the grounds that it would guard against improper disclosure of its business secrets.
Appeals Board Chairman Arthur Walenta denied the request and ordered the two-hour session open to the public, declaring the dispute a matter of "great public interest."
It may have been open, but significant portions of the attorneys' statements were indecipherable to the handful of people in the audience not affiliated with the case.
Both attorneys referred repeatedly to confidential documents unavailable to the public and argued about numbers that were never disclosed.
The appeals board is expected to make a final decision in the spring.
The board, in a previous appeal, awarded Chevron a partial refund of its 2004 to 2006 property taxes, although the oil company has filed a lawsuit challenging that reduction as insufficient.
The company has also appealed its 2010 to 2011 values.
Contact Lisa Vorderbrueggen at 925-945-4773, email@example.com, www.ibabuzz.com/politics or at Twitter.com/lvorderbrueggen.