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HomeMy WebLinkAboutMINUTES - 09172013 - SD.1RECOMMENDATION(S): 1. APPROVE and AUTHORIZE the County Administrator, or designee, to sign a conditional settlement agreement among the County, Chevron USA and Chevron Corporation, the County Assessor, and the City of Richmond, settling Chevron’s pending property tax claims, appeals, and litigation for 2004-2013, following approval as to the form of the final agreement by County Counsel. 2. AUTHORIZE the County Counsel, or designee, to file stipulations for dismissal of pending litigation in the Contra Costa County Superior Court following execution of the settlement agreement by all parties and full compliance with its terms, including resolution by the Assessment Appeals Board of Chevron’s assessment appeals for tax years 2010-2012 as provided in the settlement agreement. FISCAL IMPACT: Avoidance of future litigation costs. APPROVE OTHER RECOMMENDATION OF CNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE Action of Board On: 09/17/2013 APPROVED AS RECOMMENDED OTHER Clerks Notes: VOTE OF SUPERVISORS AYE:John Gioia, District I Supervisor Candace Andersen, District II Supervisor Mary N. Piepho, District III Supervisor Karen Mitchoff, District IV Supervisor Federal D. Glover, District V Supervisor Contact: Rebecca Hooley, Deputy County Counsel (925) 335-1854 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: September 17, 2013 David Twa, County Administrator and Clerk of the Board of Supervisors By: Chris Heck, Deputy cc: David Twa, County Administrator, Gus Kramer, County Assessor, Robert Campbell, Auditor-Controller SD.1 To:Board of Supervisors From:Sharon L. Anderson, County Counsel Date:September 17, 2013 Contra Costa County Subject:APPROVE CONDITIONAL SETTLEMENT OF PROPERTY TAX DISPUTES CONCERNING CHEVRON’S RICHMOND REFINERY BACKGROUND: HISTORICAL BACKGROUND Property taxes are based on the assessed value of property owned by a taxpayer. When a taxpayer disagrees with the value that the Assessor’s Office has placed on a property, the taxpayer may appeal the property valuation to the county assessment appeals board. Since at least 2004, Chevron has annually filed property tax appeals with the Contra Costa County Assessment Appeals Board (“AAB”) challenging the assessed value of its Richmond Refinery. In 2009, the AAB reached a decision concerning Chevron’s assessment appeal applications for 2004, 2005 and 2006, awarding it a $17.8 million refund of property taxes it paid for those years. The money to pay Chevron’s refund came from property taxes that otherwise would have gone to the County, its cities, schools, special districts and other taxing agencies. Chevron subsequently challenged the AAB’s 2009 decision in Chevron USA Inc., et al. v. Contra Costa County, Contra Costa Superior Court, Case No. MSC10-01390, and a trial on the matter is scheduled for December 2013. In 2012, the AAB issued a decision concerning Chevrons’ assessment appeal applications for 2007-2009, requiring Chevron to pay approximately $25 million more in property taxes for the Richmond Refinery than it would have been required to pay based on the valuation by the Assessor’s Office for those years. All of the taxing agencies that lost revenue due to the earlier refund received a proportional share of the extra money from Chevron’s additional tax payment. Chevron again appealed the AAB’s decision to the Contra Costa County Superior Court in Chevron USA Inc., et al. v. Contra Costa County, Contra Costa Superior Court, Case No. MSC12-02368, as well as a subsequent AAB decision related to taxable value of the Refinery for 2007 through 2009, Chevron USA Inc., et al. v. Contra Costa County, Contra Costa Superior Court, Case No. MSC13-00743. Those cases are currently pending, although no trial date has been scheduled in either matter. Chevron also filed assessment appeals with the AAB challenging the Assessor’s 2010, 2011, and 2012 valuations of the Richmond Refinery. Those appeals are currently pending before the AAB. SETTLEMENT TERMS For the last 18 months, while the County and Assessor were defending Chevron’s assessment appeals and the related litigation, the Assessor’s Office has been working with Chevron representatives to settle the disputes. The parties now believe they have reached a proposed global resolution of Chevron’s claims for years 2004 through January 1, 2013. Because Chevron USA and Chevron Corp., the County, the City of Richmond and the Assessor are named in the Superior Court litigation, they are also parties to the proposed settlement agreement. Under the terms of the settlement agreement, Chevron and the Assessor’s Office will ask the AAB to approve the enrolled values of the Richmond Refinery for 2010 and 2011. Chevron and the Assessor will present evidence to the AAB that there should be a reduction in the taxable value of the Richmond Refinery for 2012 from $3.87 billion to $3.28 billion. If the AAB approves this reduction, the effect will be that Chevron will have overpaid property taxes for 2012. Ordinarily, this means that Chevron would be entitled to a refund of approximately $8 million. But one of the conditions of the settlement is that Chevron gives up its right to receive a refund of those property taxes, meaning that the County’s taxing agencies will not lose any additional property tax money to pay for a refund to Chevron. If the AAB approves settlement of the pending assessment appeals, the parties will dismiss with prejudice the cases that are currently pending in the Contra Costa County Superior Court: Chevron USA Inc., et al. v. Contra Costa County, Contra Costa Superior Court, Case No. MSC10-01390; Chevron USA Inc., et al. v. Contra Costa County, Contra Costa Superior Court, Case No. MSC12-02368; and Chevron USA Inc., et al. v. Contra Costa County, Contra Costa Superior Court, Case No. MSC13-00743. The settlement does not prevent Chevron from filing future claims, litigation or appeals concerning the value of the Richmond Refinery nor, with limited exceptions does it limit the issues that can be raised in future disputes. The settlement does prevent challenges to the historical base year values (Proposition 13 value) of the Richmond Refinery; the values enrolled for the Richmond Refinery for any year up to and including January 1, 2013 or any previous AAB decisions regarding the value of that refinery, unless (1) the AAB changes the enrolled value of the Refinery for any period on or before January 1, 2013; or (2) the Assessor issues assessments for property at the Richmond Refinery for any period on or before January 1, 2013. It also contains mutual releases. The purpose of the settlement is to give the Assessor and Chevron the opportunity to avoid the time and expense involved in litigating these property tax appeals. Going forward, Chevron and the Assessor’s Office will annually meet and confer regarding the value of the Richmond Refinery, as was the custom prior to 2004. If Chevron disagrees with property tax assessments in the future, the Assessor’s Office and Chevron will mediate the claims before asking the AAB to hold a hearing to adjudicate the property tax dispute. CONSEQUENCE OF NEGATIVE ACTION: Failure to take the recommended action will expose the County to continuing litigation concerning Chevron’s claim for property tax refunds for years 2004 through January 1, 2013, as well as the costs associated with defending such challenges, such as attorney’s and expert’s fees and costs. CHILDREN'S IMPACT STATEMENT: Not applicable. CLERK'S ADDENDUM Rollie Katz, representing Public Employees Union Local One - confirmed the finance agreement. All Supervisors expressed their appreciation for those involved in the long, arduous process of this settlement, and the positive effects it brings to the County.