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  Richmond Confidential - Chevron Asks for New Tax Appeal Judges
March 11, 2013

Chevron asks for new tax appeal judges
Chevron's Richmond refinery. (Photo by Rachel Waldholz)
Chevron's Richmond refinery. (Photo by Rachel Waldholz)
By Zach St. GeorgePosted 4 hours ago
Chevron is worried that James Giacoma, Art Walenta and Clark Wallace might be holding a grudge. That’s one argument the oil company made in legal documents  filed in January asking that the three be removed from the county tax appeals board–the most recent maneuver in Chevron’s nearly decade-long battle with Contra Costa County over the property taxes it pays on its Richmond refinery.
The three men are civilians appointed by the county Board of Supervisors to handle property tax disputes. They form the three-person panel that will hear arguments and decide whether Chevron did or did not pay too much property tax for its Richmond refinery in 2010, 2011 and 2012.
Because Chevron has named the three in a lawsuit regarding its previous property tax appeals, the company argues they cannot fairly judge its most recent appeal.
Chevron’s objection, read, in part: “The Board Members cannot be adverse advocates in that litigation and impartial adjudicators in the instant appeals.”
Chevron spokesperson Sean Comey said by email, “As one of the largest property taxpayers in Contra Costa Country and one of the largest taxpayers in California, we are committed to paying our fair share of taxes, but we need a fair and transparent process for calculating our property taxes in Richmond going forward.” 
The dispute goes back to 2005, when the county assessor raised the value of the refinery from $1.9 billion to $3.5 billion. That increased Chevron’s property taxes by more than $20 million.
When the men on the panel heard Chevron’s appeal for its 2004-2006 taxes, they agreed that it paid too much. The county had to pay back $18 million to the company, including $400,000 that came from Richmond city funds. But when the panel heard Chevron’s appeal for its 2007-2009 taxes, they agreed that the refinery was worth slightly more than what the county assessors had calculated. The county got to keep the tax money.
In October, Chevron sued over the panel’s denial of their appeal, demanding new hearings. Giacoma, Walenta and Wallace, as members of the panel, are named in the suit. Chevron said that would make it hard for them to be unbiased when considering the separate question of whether the refinery overpaid on its taxes for the years between 2010 and 2012
In its objection, the company said the panel ignored evidence, held hearings when key witnesses for Chevron weren’t available and otherwise showed bias against the company. Chevron said that, “Under the circumstances, Chevron does not believe that the Board can or will act fairly or impartially toward Chevron in the pending 2010-2012 Appeals (or any later appeals) as it is required to do by law. Accordingly, Chevron requests that the Board Members recuse themselves or be disqualified.”
“That’s like saying, ‘I hit you in the face with a mud pie, and you’re going to make a ruling on something I’ve done, but now you can’t make a ruling because you’re dirty,” said Gus Kramer, the county tax assessor, who originally determined the value of the refinery, which is used to decide property taxes. “I think it was an absolutely idiot move,” he said, referring to the objection. “Or a stroke of genius.  We’ll see.”
A fourth member of the property tax appeals board, Harold D’Ambrogia, will hear the objection next month. If he agrees with Chevron that his colleagues are biased, then that would only leave D’Ambrogia and the fifth member of the tax appeals board eligible to hear Chevron’s most recent appeal.
But because state law requires that the panel be composed of at least three members, the Board of Supervisors would either have to appoint new board members, or would have to hear the appeal itself. Either way Chevron might find more sympathetic ears, Kramer said, because Chevron has contributed heavily to several of the supervisors’ past campaigns. “Would they allow that to prejudice them?” Kramer said. “God knows.”
Either way, losing Giacoma, Wallace and Walenta would mean a loss of knowledge on the subject, Kramer said. Giacoma worked for the county assessor for more than 35 years before retiring in 1994 to work as a private valuation consultant. Wallace is a former president of the National Association of Realtors, and Walenta is a former county attorney. Kramer called them, “three of the most knowledgeable people in California about business and real-estate.”
All three have responded to Chevron’s objection with public statements, each refusing to recuse themselves and denying they have a bias.
“Neither this Assessment Appeals Board nor any of its members showed any bias or prejudice against CHEVRON nor any of its witnesses,” wrote Wallace in his response. “Rather this Board and its members bent over backward to allow both parties (CHEVRON and Assessor) a very full and fair 35 days of hearing on CHEVRON’s 2007-2009 applications. While CHEVRON apparently is unhappy with the Board’s decision, it cannot rightfully complain that it was the result of not having a full and fair hearing.”
James Giacoma wrote, “I James Giacoma deny that I am disqualified by nature of the allegations and objections presented by Chevron USA, Inc. to my hearing of Chevron’s 2010, 2011, and 2012 applications for changed Assessment of Chevron’s Richmond California Refinery.”
Arthur Walenta wrote, “I deny that I am disqualified to hear CHEVRON’S pending 2010, 2011, and 2012 applications for changed assessment.”
D’Ambrogia will hear 15-minute presentations from Chevron, Giacoma, Walenta and Wallace on April 12, and then will give a written decision.
The conflict over the property taxes is just a part of the complicated Richmond-Chevron relationship, said City Councilmember Tom Butt. Chevron often gives with one hand while it takes with the other, he said. The company frequently contributes to local school programs and other good causes in the area.  “On the other hand, they’re doing things like pursuing the property tax appeals that could bankrupt the city,” Butt said. “It’s like good cop, bad cop.”
The whole county relies on the property taxes Chevron pays, but Richmond is particularly tied to the refinery. It’s one of the city’s biggest employers, and Butt said its taxes make up 30-40 percent of the city budget.
Butt said that the appeals are particularly worrisome, because if it ever turns out the county has vastly over-valued the refinery, the city could have to pay back far more than the $400,000 it did after the 2007-2009 decision. “It’s very unfortunate that we have to keep going through this,” he said.
Don Gosney, a retired Richmond steamfitter who has worked on the refinery in the past, and a recent City Council candidate, said that the county can’t expect the company to not appeal their property taxes.  “We look at Chevron and we try to think of Chevron as somebody special—record profits, they’ve got more money than God. … But we have to ask ourselves, what would we do with our own property taxes on the house that we own?” Gosney said. “Wouldn’t we try to get it assessed at a lower value?”
Gosney, though, said that Chevron’s challenge to the appeals panelists could be poor timing. The company is still trying to get approval for its Hydrogen Renewal Project, a costly upgrade of the refinery. The Richmond City Council approved the permits in 2008, but environmental groups including Communities for a Better Environment, West County Toxics Coalition, and the Richmond Progressive Alliance sued, alleging a flawed environmental impact report. A judge ordered a halt to the project, and now the company is working its way back through the process of getting permits.
Gosney says that the ongoing fight over the property tax appeals could taint the work on the renewal project. “Don’t fight the battle of trying to get approval of the permits at the same time you’re spitting in the face of the people you’re trying to get approval from,” Gosney said.
According to its December 2012 Securities and Exchange Commission filings, the company views the hydrogen renewal project as up in the air: “Management believes the outcomes associated with the project are uncertain.”  The filings make no connection between the project and its tax appeals.
Kramer, the assessor, said that the nine years of property tax appeals and lawsuits have cost the county $5 million to $6 million to fight. “These guys have been doing this for 100 years. They’re experts,” Kramer said of Chevron’s lawyers. “Chevron is known for papering people to death. If they don’t beat you in court, they’ll bury you in paperwork.”