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Home My WebLink AboutMINUTES - 04272010 - C.69RECOMMENDATION(S): APPROVE AND AUTHORIZE the County Administrator, or designee, to execute an agreement with Chevron USA, allowing a refund to Chevron, arising out of property tax appeals for tax years 2004, 2005 and 2006, to be paid over the next two fiscal years, and to provide for a partial waiver of interest by Chevron. FISCAL IMPACT: The agreement is intended to spread the impact of the refund over the next two fiscal years, instead of requiring the affected taxing jurisdictions to absorb the full amount this fiscal year, and to reduce the amount of interest owed to Chevron on the refund. BACKGROUND: Chevron USA appealed the assessed value of its property located at its Richmond Refinery for tax years 2004, 2005, and 2006 before the Assessment Appeals Board (“AAB”). On November 19, 2009, the AAB issued a decision, finding that the property had been overvalued for these three years. Based on the AAB’s decision, Chevron seeks a refund of $16,010,197 APPROVE OTHER RECOMMENDATION OF CNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE Action of Board On: 04/27/2010 APPROVED AS RECOMMENDED OTHER Clerks Notes: VOTE OF SUPERVISORS AYE:John Gioia, District I Supervisor Gayle B. Uilkema, District II Supervisor Mary N. Piepho, District III Supervisor Susan A. Bonilla, District IV Supervisor Federal D. Glover, District V Supervisor Contact: David Twa, County Administrator (925) 335-1086 I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown. ATTESTED: April 27, 2010 David J. Twa, County Administrator and Clerk of the Board of Supervisors By: KATHERINE SINCLAIR, Deputy cc: Stephen Ybarra, County Auditor-Controller, William Pollacek, County Treasurer-Tax Collector, Sharon Anderson, County Counsel, Gus Kramer, County Assessor C.69 To:Board of Supervisors From:David Twa, County Administrator Date:April 27, 2010 Contra Costa County Subject:AGREEMENT REGARDING TIMING AND WAIVER OF INTEREST ON CHEVRON PROPERTY TAX REFUND BACKGROUND: (CONT'D) in paid property taxes, plus statutory interest under Revenue and Taxation Code section 5151. Under normal circumstances, this property tax refund would be apportioned among the various taxing jurisdictions in the County, including the County, cities, school districts, special districts, and others, and paid in the current fiscal year. Chevron and County staff have been negotiating a proposed agreement concerning payment of the refund and associated interest. The proposed agreement allows Chevron to be paid the refund, plus interest accrued through January 24, 2010, in two payments, the first payment due on or before August 2, 2010, and the second payment due on or before August 1, 2011. Chevron previously waived interest for the period between January 25, 2010, and March 31, 2010, pending these negotiations. Under this agreement, Chevron will waive interest on the unpaid refund from April 1, 2010, forward, provided that timely payments are made. The agreement is made without prejudice to any claims that the parties may have regarding the assessments for the 2004-2006 tax years, or any other year. CONSEQUENCE OF NEGATIVE ACTION: If the agreement is not approved, interest will continue to accrue on the refund at the rate set forth in Revenue and Taxation Code section 5151. In addition, the entire amount of the refund would be paid to Chevron this fiscal year. CHILDREN'S IMPACT STATEMENT: ATTACHMENTS Ltr of agreement on Chevron Extension Cahill·Davis &O'Neall, LLP LAWYERS April 19, 2010 BY E-MAIL; ORIGINAL BY FEDEX David J. Twa County Administrator Contra Costa County Office of the Count6' Administrator 651 Pine Street, lOt Floor Martinez, CA 94553 John D. Cahill C. Stephen Davis Cris K. O'Neall Andrew W. Bodeau Michael T. Lebeau Kenneth A. Franklin Of Counsel 550 South Hope Street • Suite 1650 Los Angeles, California 90071 telephone: 213-622-0600 facsimile: 213-622-9825 www.cahilldavis.com Re: Chevron USA Richmond Refinery Property Tax Controversies Deferral of Refunds (2004, 2005 and 2006) and Limited Interest Waiver Dear Mr. Twa: Please refer to my letters to you dated January 26, 2010, February 12, 2010, and March 3, 2010. In accordance with these letters and subject to the terms and conditions contained in this letter, Chevron USA (Chevron) has agreed to extend the interest waiver memorialized by these letters, and to defer payment of the refund amount. This letter describes the terms and conditions of the limited interest waiver and of the refund payment deferral. The principal portion of the refund payable by Contra Costa County (the "County") to Chevron as a direct result of the Contra Costa County Assessment Appeals Board decision dated November 19,2009 (the "Decision"), on Chevron's 2004,2005 and 2006 applications for changed assessment totals $16,010,197, exclusive of statutory interest. Statutory interest accrued and payable through January 24,2010 is $1,862,097. Chevron previously agreed to fully and finally waive interest for the period between January 25, 2010 and March 31, 2010. The total sum now due and owing Chevron as a direct result of the Decision is $17,872,295 (the "Refund"). Chevron agrees to accept payment of the Refund in two installments. The first installment payment in the amount of $6 million (the "First Payment") will be paid by the County to Chevron on or before August 2,2010, in partial satisfaction of the Refund. This sum will be allocated first to accrued interest and then to principal for purposes of calculating interest due and owing if a payment required under the terms of this letter agreement is not timely paid as discussed below. Provided the First Payment is timely made, Chevron agrees that the County will pay the second installment, in the amount of$II,872,295 (the "Second Payment"), on or before August 1,2011. If timely made, the Second Payment will satisfy County's entire obligation to Chevron regarding the payment of the Refund. DavidL. Twa April 19, 2010 Page 2 Provided both the First Payment and the Second Payment are timely made, Chevron waives its right to receive statutory interest on the Refund as provided herein. Absent subsequent agreement of the parties, if either the First Payment or Second Payment is not timely made, statutory interest on any unpaid portion of the Refund will begin to accrue again effective April 1, 2010. In the event of an untimely payment, any portion of the Refund previously paid by County to Chevron will be deemed credited to the deferred, accrued interest before it is credited to the principal amount of the Refund. This letter agreement is limited to the Refund presently due and payable and accrued interest thereon, as described above. This letter only defers the County's obligation to pay the Refund, and waives statutory interest on the Refund for the period between April 1, 2010 and August 1, 201l. Other than as specified in this letter agreement, neither the County nor Chevron has agreed to change and/or alter the legal character or nature of the County's statutory obligation regarding property tax refunds, and nothing in this letter shall be construed as such. Without limiting the generality of the foregoing, the County confirms that until such time as the Refund has been paid in full on the terms set forth herein, Chevron shall have the right, in the event the First or Second Payments are not timely made, to recoup any unpaid amount of the Refund against any future tax liabilities to the County. This letter agreement is made without prejudice to any and all claims that Chevron or the County has asserted, or may assert in the future, regarding the Decision and/or the 2004,2005 and/or 2006 tax years. Chevron does not waive its right to seek or receive additional refunds and/or statutory interest on additional refunds for any reason whatsoever, including but not limited to any additional refunds for the 2004,2005 and/or 2006 tax years, or any other year. This letter agreement is made between Chevron and the County, and is not binding upon the Assessment Appeals Board, the Assessor, or any other taxing agency. If the Decision or the County's method of payment, as set forth in this letter agreement, is legally challenged, the County's obligation to pay the Refund may be decided by the court or other reviewing body. If the reviewing body finds that the Decision overstated the assessable value of Chevron's property for the 2004, 2005 and/or 2006 tax years, any additional refunds pertaining to the 2004, 2005 and/or 2006 tax years determined to be payable to Chevron for any reason are not subject to this agreement and shall be due and payable as set forth by law. If the reviewing body finds that the Decision understates the assessable value of Chevron's property for the 2004, 2005 and/or 2006 tax years ("New Value"), Chevron shall pay County the difference between the Refund and the refund calculated using the New Value, plus any additional amount Chevron owes the County as provided by law. If the reviewing body finds the County's method of payment was erroneous or contrary to law, both parties will proceed as directed by the reviewing body. Nothing in this letter shall be deemed as an admission regarding the law or facts presented at the hearing on Chevron's applications for changed assessment for the 2004, 2005 and 2006 tax years or set forth in the Decision. This letter constitutes a compromise relating to the method of repayment of the Refund and is not intended to reflect an agreement regarding the law or facts presented at the hearing or set forth in the Decision. The terms of this letter may not be used in any proceeding or claim, except to enforce or resolve the terms of this letter. DavidL. Twa April 19, 2010 Page 3 The matters set forth in this letter agreement shall not become effective unless and until duly authorized representatives of Chevron sign this letter acknowledging and accepting its terms, and the Board of Supervisors approves the terms of this letter. Chevron and County agree that this letter agreement may be signed in counterparts. Very truly yours, C. Stephen Davis READ, APPROVED and AGREED BY: David Twa, Contra Costa County Administrator READ, APPROVED and AGREED BY: William Vick, Property Tax Manager for Chevron USA CSD: aps cc: Dean O'Hair William Vick Alana Knowles