HomeMy WebLinkAboutMINUTES - 12162014 - C.107RECOMMENDATION(S):
APPROVE AND AUTHORIZE the County Administrator’s Office to send a letter to the State Board of Equalization
on behalf of Contra Costa County requesting that the State Board of Equalization reenact Rule 474, which allows oil
refineries to be valued as a single unit.
FISCAL IMPACT:
No negative fiscal impact.
BACKGROUND:
On January 1, 2007, the State Board of Equalization (SBE) enacted Rule 474, which provides that the fixtures at a
refinery should be valued together with its land and improvements, unless a contrary factual showing is made. Rule
474 advances accurate assessment of refinery properties by using a market-based approach, which recognizes that an
operating refinery is typically sold as a single operating unit consisting of land, improvements and fixtures.
After the enactment of Rule 474, the Western States Petroleum Association (AWSPA@), a trade association that
represents petroleum refining and exploration companies, brought suit claiming that Rule 474 was invalid as
inconsistent with Proposition 13 and related statutory enactments, and therefore was an unlawful exercise of the
SBE’s rulemaking authority. WSPA also contended that the rule was procedurally invalid because the SBE failed to
assess the economic impact of the regulation as required by the Administrative Procedures Act (“APA”).
APPROVE OTHER
RECOMMENDATION OF CNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE
Action of Board On: 12/16/2014 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: Laura Strobel (925)
335-1091
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: December 16, 2014
David Twa, County Administrator and Clerk of the Board of Supervisors
By: Chris Heck, Deputy
cc: Sharon L. Anderson, County Counsel
C.107
To:Board of Supervisors
From:David Twa, County Administrator
Date:December 16, 2014
Contra
Costa
County
Subject:Request of State Board of Equalization to reenact Rule 474 to allow oil refineries to be valued as a single unit
BACKGROUND: (CONT'D)
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After the trial court and the Court of Appeal held Rule 474 invalid on both grounds, the California Supreme Court
granted review. Contra Costa County submitted an amicus brief in support of the SBE. On August 5, 2013, in
Western States Petroleum Association v. Board of Equalization [(August 5, 2013) S200475], the California Supreme
Court ruled that Rule 474 is consistent with applicable constitutional and statutory provisions, and it is also consistent
with the long-standing valuation principle that the proper appraisal unit is the collection of assets that persons in the
marketplace buy and sell as a single unit. At the same time, however, it held that the SBE failed to provide an
adequate assessment of the rule’s economic impact as required by the APA. Thus, although the Court found that Rule
474 is procedurally invalid under the APA, it provided that Rule 474 may be reenacted if the SBE adheres to the
requirements of the APA.
On October 24, 2014, the SBE sent a notice that it was proposing to readopt 474 and set a hearing on the matter for
December 18, 2014. The notice provides that any interested person may present or submit oral or written statements,
arguments, or contentions regarding the re-adoption of proposed Rule 474.
Contra Costa County, which contains four petroleum refineries within its boundaries, is an interested entity in these
proceedings. Due to the location of these refineries, Contra Costa County is charged with assessing and taxing the
refineries, and the resulting property tax revenues are apportioned to the County’s public agencies. If Rule 474 is not
adopted, public agencies across Contra Costa County may be substantially impacted by revenue loss resulting from
refinery valuations at less than full market value.
CONSEQUENCE OF NEGATIVE ACTION:
Failure to take the recommended action could result in property tax revenue loss and expose the County to litigation
concerning whether the fixtures of a refinery should be valued together with its land and improvements.
CHILDREN'S IMPACT STATEMENT:
No impact.