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HomeMy WebLinkAboutMINUTES - 12171996 - C.83 TO: BOARD OF SUPERVISORS g3 FROM:Victor J.Westman,County Counsel By:Dennis C.Graves,Deputy DATE: November 26, 1996 SUBJECT: Approval of contract for professional services SPECIFIC REQUEST(S)OR RECOMMENDATIONS)&BACKGROUND AND JUSTIFICATION I. RECOMMENDATIONS Approve a contract for professional.seruices with Baker and O'Brien, Inc. and authorize the Chair to sign the Agreement. II. FISCAL IMPACT Payment will be made out of State funtls already allocated for this purpose, so there will be no cost to the County. If the contract is not approved, there is a greatly increased possibility of very significant but presently unquantifiable impact due to adverse decisions by the Assessment Appeals Board on large pending refinery valuation disputes. i I I III. BACKGROUND/REASONS FOR RECOMMENDATIONS Baker and O'Brien is one of the leadi Ig consulting firms in the Country for refinery valuations. Assistance is required because income approach valuations of refineries are highly technical, requiring specialized knowledge that only industry experts have. The County entered into a similar contract with Baker and O'Brien for appraisal assistance relating to the Sliell Martinez Refinery dispute, and the assistance of Baker and O'Brien was Ptical in reaching a highly favorable f settlement in that dispute. This contract contemplates that the same type of services will be provided to assist the County in the remaining refining valuation disputes. The money for this contract is available from funds earmarked buti!not spent on the contract for assistance on the Shell dispute. I I CONTINUED ON ATTACHMENT: _YES SIGNATURE RECOMMENDATION OF COUNTY ADMINISTRATOR_RECOMMENDATION OF BOARD COMMITTEE —APPROVE _OTHER i SIGNATURE(S). ACTION OF BOAR ON)2-L `g1°APPROVED AS RECOMMENDED /OTHER VOTE OF SUPERVISORS: I HEREBY CERTIFY THAT THIS IS A /UNANIMOLIS(ABSENT TRUE AND CORRECT COPY OF AN AYES: NOES: ACTION TAKEN AND ENTERED ON THE ABSENT: ABSTAIN: MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE SHOWN. ATTESTED: DEC 17 V96 PHIL BATCHELOR, CLERKOF 7HEBOARD OFSUPERI/ISORS AND COUNTYADMIN/STI?ATOR 0-a.6 0 A 1 Contact:Dennis Graves(335-1833) Deputy County Counsel c:\msoffice\winworftfiles\RefexpRR2.doc CONTRACT FOR PROFESSIONAL SERVICES (Government Code Section 31.000) I Baker and O'Brien, Incorporated ("Consultant") and the Board of Supervisors of Contra Costa County on behalf of the County Counsel of Contra Costa County ("Counsel or "County") agree as follows: 1. Assessment appeals are filed to challenge the valuations of the taxable property of refineries in Contra Costa-County, owned by the following refining companies for the following tax years: Approximate Difference In Values of. Refinery Tax Years Assessor and Taxpayer Chevron USA, Inc. 19,96-7 $800,000,000 Unocal, Inc. 1995-6 and 96-7 .$300,000,000 each year TOSCO, Inc. 1995-6 and 96-7 $300,000,000 each year Pacific Refining, Inc. 1993-4 thru 96-7 $45,000,000 each year Counsel desires to retain specialized consulting appraisal services to defend such appeals. 2. Consultant is specially qualified to perform such services. 3. The "Specification For Appraisers Interested in Contracting With the County of Contra Costa County for Property Taxation Appraisal of Refineries", dated September 30, 1996, ("Specification" or the "Work"), is incorporated in full as a part of this contract. Consultant agrees to perform so much of the services set forth in the Specification as County may request, in accordance with the time schedules set forth in the Specification. Such work may include (but is not limited to): i 1) Appraisals of the value of the foregoing Refineries and any related properties adjacent thereto as of the lien dates (March 1)'for the foregoing tax years under the applicable California property taxation standards set forth in the Specification. This shall be Phase One of the Work. 2) Evaluate any appraisals the Taxpayers submit, and assist in any way County deems appropriate to counter the Taxpayers' appraisals. Subject to direction of Counsel, assist in defending Consultant's appraisals 1 i before the Assessment Appeals Board and, if County deems necessary, the courts. This shall be Phase Two of the Work. I I 4. Consultant shall submit monthly invoices for the Work performed the preceding month, showing:I a. The phase of the Work i(Phase One or Phase Two). b. The task or general category of services performed by Consultant and any consultant, subcontractor or other person retained by Consultant, the names or positions of the individuals performing the service, and the hours, hourly rates andi extended totals. c. The costs incurred in performing the Work (faxing, copying, word- processing, etc.). I i 5. Rates, Payment Limits and primary Work: a. The hourly rates for Consultant's personnel shall be as follows: 1.) Professional appraisal staff: $210/hour in calendar year 1996 and $220/hour thereafter. 2) Analysts and paraprofessionals:$95/hour in calendar year 1996 and $100/hour thereafter. 3) Support and Other,Iby category: No charge. b. The hourly rates for any consultant, subcontractor or other person retained by Consultant'shall be those charged to Consultant by such consultant, subcontractor or other person. c. The payment limit for all Work to be performed under this Agreement is $400,000, with the payment limit for Phase One being $200,000 and the payment limit for Phase Two being $200,000. I � d. The primary work to be performed, and time limits, shall be: 1. Summary income alpproach appraisals, of the type done under a prior contract for the Shell Oil Martinez Refinery, for lien date January 1, 1997 for the Chevron, Unocal and Tosco refineries. Said appraisals are to be completed by June 1, 1997. I 2 I � I 2. If County deems appropriate, complete income approach appraisals for lien date March 11, 1995 for the Unocal and Tosco refineries. Said appraisals are to be(completed by June 1, 1997. I 3. If County deems appropriate, complete income approach appraisals for lien date March 1,, 1996 for the Unocal, Tosco and Chevron refineries. Said appraisals are to be completed by June 1, 1998. The Parties agree that the summary income approach appraisals (Item 1, above), can be completed within the payment limits specified above. Other Work (including Items 2 and 3, above) will be performed on a best efforts basis to complete the assignments within the payment limits, and the Parties recognize that completion of the Work for all refineries may require adjustment of the payment limits. Consultant shall notify Counsel when it appears that Items 2 or.3, or other Work, may require an increase in the payment limits. I e. County may increase the payment limits only by written amendment to this Agreement. I � 6. Consultant shall remain an independent contractor and not become an agent or employee of Counsel or the County. I I 7. Notwithstanding that County agrees to pay Consultant the charges incurred by Consultant for consultants, subcontractors or other persons that Consultant may retain to assist with the Work, Consultant will be solely responsible for retaining and paying any such consultant, subcontractor or other person and for the Work product that any such consultant, subcontractor or other perison produces for Consultant. Further, Consultant agrees that: i 1) Any such consultant, subcontractor or other person shall not be deemed an agent, employee or!subcontractor of Counsel or County. i 2) Neither Counsel nor the County will contract with or be liability to any such consultant, subcontractor or other person, and such consultant, subcontractor or otherlperson shall not be deemed a third party beneficiary of this Agreement. I 8. Upon approval of the County's agent for administering this Agreement, County agrees to pay such invoices within one month. Such invoices shall be charged to and paid from Account Number 1600-2310. I l i 3 I I I ` I I 9. This Agreement will commence on the date signed by both parties and, unless terminated by Counsel under Paragraph 10, below, shall continue until the Work is completed. Upon expending $50,000, or any multiple thereof, Consultant and County will jointly review the progress of the Work. I I 10.Counsel may terminate this Agreement for any reason at anytime. Upon payment of invoices for the Work, costs and expenses accrued at time of termination, Consultant agrees to deliver to Counsel all documentation relating to the Work then completed. I 11. The right to receive payment hereunder may not be assigned without prior written consent of Counsel. I I 12. Consultant and any consultants, subcontractors or other persons Consultant may retain to assist with the Work shall maintain the confide,tiality of proprietary information and information that is confidential under Revenue and Taxation Code Sections 408 and 451 or other California law, when such information is provided by the Refineries to Counsel or the Assessor or directly to Consultant in the course of the Work performed hereunder. I I 13.Except as expressly authorized in a written Waiver of Potential Conflict signed by Counsel, when performing the Work hereunder Consultant will not engage in any employment or activity that may conflict with its responsibilities to the County under this Agreement, including (but not limited to) working for another client whose interests may be adverse to the interests of the County relating to this Agreements I 14.The appraisals and associated documents produced by Consultant pursuant to this Agreement shall be the property of County, which shall have the sole right to distribute or otherNvise use such documents. Consultant may keep copies of any such documents, subject to maintaining the confidentiality of the documents as specified in this Agreement. Consultant recognizes that cooperation with Counsel land the Assessor's representatives is necessary, particularly when preparing for an Assessment Appeals Board or Court hearing, and agrees to provide any data or work product related to the Work to Counsel or the Assessor's representatives upon request by Counsel or the Assessor's representative designated by Counsel. I � I 4 I I I I i 15. Consultant shall indemnify,I defend and hold harmless Counsel and the County, and its officers, agents and employees from any loss, unauthorized disclosure, errors and omislsions, claim, damage, injury or other liability arising out of, or in connection with, the performance of this Agreement by Contractor and/or its agents, employees, consultants or sub-contractors, excepting only loss, injury, 'or damage caused solely by the acts or omissions of Counsel or the County or their officers, agents or employees. I I 16. At no cost to County, Consultant shall maintain insurance to cover the risks specified in Paragraph 15, labove, which shall include: a. Workers' Compensation Insurance as required by applicable State law. I b. Comprehensive or Commercial General Liability Insurance, also known as Business Pursuits Liability Insurance, including coverage for blanket contractual liability, broad form property damage and owned and non-owned vehicles, with a minimum combined single limit coverage of $300,000 for all damages due to bodily injury, sickness or disease, or death to any person, and damage to property, including the loss of use thereof, arising out of each accident of occurrence, and naming County, its board, officers and employees as additional insureds. Before the first payment is due under this Agreement, Consultant shall provide a certificate of insurance as evidence of such coverage in a form,satisfactory to Counsel, including a requirement of 30 days written notice to County of policy lapse, cancellation or material change inkcoverage. I C. Automobileliabilityl insurance in an amount no less than $100,000/$300.000/$50,000 or a minimum of $300,000 combined single limit. I i 17.Unless Consultantis notified otherwise, County's agent for administering this Agreement will be the Deputy County Counsel approving this Agreement as to form. • I 18.This Agreement is subject to and shall be interpreted under the law of the State of California. I I I i I I 5 I . I I I I I Approved as to form: Dennis C. Graves, Dep y CouI nty Counsel I - Dated: /A- /7 , 1996 Dated: Zf 1996 Contra Costa County ! Consultant I I By. By. Chair, oard of Supervisors Title- Taxpayer ID No. 7S—oZ�b�OS3 I c:refexcon2.doc-10/22/96 I I I I I I I I I I I I I i i I I I ' I I I I I 6 I ' I I COUNTY COUNSEL'S OFFICE CONTRA,COSTA COUNTY 651 Pine Street, 9th Floor Martinez CA 94553 (510)335-1833 Fax:(510)646-1078 I I I CONFIDENTIAL i I To: Appraisal Firms I From: Dennis Graves, Deputy County Counsel Contra Costa County Date: September 30, 1996 . I Re: Specification for Appraisers Interested in Contracting Withl the County of Contra Costa County fors Property Taxation Appraisal of Refineries i I I I This document is incorporated as part of the contract for the appraisal firm retained to value refineries in Contra Costa County. I Property in Issue, the Dispute, and the Assignment In approximately 1994, Chevron USA, Unocal and TOSCO (the "Refineries") began projects totaling approximately $700,000,000 dollars in order to meet the new State and Federal "clean air/clean fuels" requirements and to otherwise modernize their refineries. The projects were largely completed as of the lien date'for the 1996-7. tax year. The Assessor valued the improvements primarily under the cost approach. The Refineries have filed assessment appeals for one or more years, contending 1) that their future incomes will not increase enough i to recover the costs of the clean air/clean fuels and modernization projects and 2) that the additional costs the Assessor Chas added for the clean air/clean fuels and modernization improvements result in cost approach values higher than indicated by market comparisons. I I i I i CONFIDENTIAL In addition to Chevron USA, Unocal and TOSCO, Pacific Refining Company has filed assessment disputes for several years, unrelated to clean air/clean fuels improvements. The time for hearing the assessment appeals for Chevron USA, Unocal,:TOSCO, and Pacific Refining ranges from September 1997 to September 1998, under the restrictions of California Revenue and Taxation Code section 1604. I'n advance of each hearing, the County may need to have appraisals done for each of the years under appeal for each of the Refineries. i Primary reliance will be on the income approach, assuming adequate and reliable data is available. If meaningful comparable sales exist, the comparable sales approach also should be done. The cost approach should also be done, if considered a. valid. indicator for the Refineries. While the Assessor has reproduction cost data (the historical costs reported by the Refineries over the years), the firm retained would be expected to do a replacement cost approach, and the Assessor's reproduction cost data may be of limited use in a replacement cost approach. The firm retained will be expected. to do the following, subject to applicable legal interpretations of the Assessor's counsel and with the concurrence :of designated County staff: I .1) Complete appraisals of the Refineries far enough . in advance of the scheduled valuation hearing dates as will allow sufficient preparation for the hearing. The appraisals are to be done in accordance with the California property taxation standards specified in this document. Although the . appraisals should emphasize the income approach, the cost, sales and possibly stock and debt approaches should also be used i to the extent appropriate. I 2) Evaluate any appraisals the Refineries may submit, and assist in any way County deems appropriate to counter the Refineries' appraisals. I 3) Subject to direction of Counsel, assist in defending the firm's appraisals before the Assessment Appeals Board and, if necessary, the courts. I Qualifications I j The appraisal firm selected must have outstanding income approach expertise and considerable background in appraising oil refineries under that approach. Although experience in comparable sales and cost approach, valuations of refineries is quite desirable, the l primary need is for an appraiser with a strong background in income approach valuation of refineries. I j Reduction in value due to toxic contamination also is a significant' issue in many large industrial properties in this County, including refineries. Experience in i 2 CONFIDENTIAL I I QONFIDENTIAL adjusting California property tax values when toxic contamination exists would be desirable. The firm should be well-grounded in all appraisal concepts that might be applicable to the valuations in issue, but the primary qualification is broad experience in income approach appraisal of heavy industrial properties, including income approach work on at least one complex refinery. The appraisal firm selected should have ready access to refining industry sources of data and to oil economists, accountants, toxic contamination specialists and other industry experts who might be needed to assist in preparing the appraisal and testifying in valuation hearings. I Conflicts I The County expects that the issue of potential conflicts of interest will be addressed at the outset by appraisal firms that might be interested in this assignment and that, when performing the Work hereunder, Consultant will not engage in any employment or activity that would conflict with its responsibilities to the County. I ' Prospective appraisal firms should appreciate that, while some data might be obtained directly from the Refineries, California law governing assessment appeals often is insufficient to allow discovery of much of the refinery industry data that might be necessary to. make asound valuation, particularly as to the income approach. Accordingly, the appraisal firm retained will be expected to have its own sources of data for valuing the Refineries and to be free of potential conflicts (eg, prior relationships) that might preclude the full use and disclosure, of such data. Such data might include (but is not limited to) information needed to: I 1) develop a rate under the weighted average cost of capital method, I 2) derive a rate from comparable industry sales, 3) project net income, including estimates of: a) costs and availability oflraw materials, b) prices and demand for finished products, c) expenses of production! and d) the most likely product slate for the Refineries. I Conformance With California Law For purposes of California property taxation, questions of appraisal methodology are deemed legal issues, governed by California law. Thus, property tax I I I I � I I 3 CONFIDENTIAL - I I � I i ,CONFIDENTIAL OJ • i � i appraisals are governed by the State Board of Equalization (SBE) valuation rules, the Revenue and Taxation Code and any applicable case law.1 The SBE publishes assessor's handbooks to provide appraisal guidance to assessors on many subjects. Unlike the SBE rules, the assessors handbooks do not have the force of law but, depending upon the handbook, may offer persuasive. guidance. and generally should be(consulted. To the extent not inconsistent with the Rules, statute (eg, the R+T Code) and any applicable case law, California property tax appraisals contemplate the use of the principles generally accepted in the appraisal profession. I When making an appraisal for California property tax purposes, there often are difficult, close legal questions the resolution of which may control the valuation. It is vital that appraisers perform their analyses and render their value opinions consistent with the legal interpretations provided by Counsel. Accordingly, the appraiser retained by the County will be expected to communicate with counsel and follow counsel's interpretation regarding the law governing the appraisal. The Assessment Appeals Board acts as the quasi-judicial "trial court" for assessment disputes, and various'State and local procedural rules govern appeals heard by the Board. There is always a possibility that an aggrieved' taxpayer may appeal an Assessment Appeals 1 Board decision to the Superior Court. That possibility makes it particularly important that the law governing valuations and the procedural rules be followed. i I California Property Tax Valuation Principles I In California, taxable property is divided into three categories'. 1) land and structures, 2) plant machinery; equipment and fixtures constituting improvements (ie, classified as real property); and 3) personal property used in business (inventory is not taxed). Business personal property usually is a minor concern in disputes over major industrial properties. Such disputes usually.focus on the value of the plant machinery, equipment and fixtures constituting improvements (also known as property statement improvements or "PSI"), as that often constitutes the largest part of the total value. The appraisal unit to be valued is all property that would be expected to be sold together in an open market sale. Taxable property often is purchased as part of a transaction also involving non- taxable property, such as the purchase of a business which has an. industrial plant and other taxable assets. If the'appraiser begins with the valuation of the entire business, a proper allocation must be made between the value attributable only to the taxable property (eg, industrial plant and other taxable assets) and the value attributable to the intangiblesassociated with the business enterprise (eg., attributable to superior entrepreneurial talent, goodwill, trademarks; etc.) which are not taxable. (See, eg, Cal. R+TC Sec. 110(d)(1),(e).) Although taxable property For example, the general income approach provisions of SBE Rule 8 (eg, Rule 8(c)+(g)) would apply in any income approach appraisal. 4 CONFIDENTIAL i • I CONFIDENTIAL may.be valued by assuming the presence of the intangible assets or rights that are necessary to put the taxable property to beneficial or productive use, !the Assessor must take care to enroll only that part of the entire value of a business that constitutes taxable property. (Id.) (Although some adjustments may need to be made to exclude value attributable to non-taxable intangibles, specialized heavy industrial facilities such as refineries often are best valued by capitalizing the income stream that would be projected by prospective purchasers.2 When property taxable in Contra Costa County is purchased as part of a transaction also involving out-of-County property, there frequently are significant issues regarding the value to be allocated to the property that properly is taxable in Contra.Costa County. When the'property to be valued is part of the property of a vertically integrated-business, there may be difficulties both in determining the income attributable to the property I taxable under California law (eg, separating out the income attributable to non-taxable intangibles) and the value allocable to the taxable property located in Contra Costa County.3 i Refinery Valuations In Contra Costa County i In valuing refineries, Contra Costa(County traditionally has used the cost approach, because. the necessary data is Ireadily available from information provided on business property statements. However, in the case of oil refineries, primary reliance will be on the income lapproach developed by the appraiser we hire because 1) good comparable sales are often unavailable4 and 2) the usefulness of the cost approach may be limited because new refineries are unlikely to be built in the Bay Area (due to environmental constraints, etc.) and because measuring obsolescence is very difficult. Although other considerations may be important (eg, the synergism of the subject property with other properties owned by the prospective purchaser), the reason for primary reliance on the income approach for Bay Area refineries is that prospective purchasers most likely would base a I I ` 2 The historical income of the current owner, or the.income that the current owner would project, is relevant only to the extent that it is indicative of the income that a prospective purchaser would project. I 3 For example, the County may need to establish a new base year value for a Contra Costa refinery that is part of a sale of several refineries and a chain of gas stations with high Iname recognition. The value enrolled in Contra Costa County would have to exclude the excess value attributable to high name recognition and the value attributable to the refineries and stations located outside of Contra Costa County. 4i Of course comparable sales must meet the basic definition of being open-market and arms- length, with neither party being able to take advantage of any exigency. Because of the frequency of exigency sales and the Code requirement that comparable sales not occur more than 90 days after the valuation date (R+TC Sec. 402.5), the Contra Costa County has sometimes found that it is impossible to obtain sufficient meaningful comparables for a sound refinery sales approach valuation. Further, similar refineries may appear comparable, subject to location adjustments, but factors relating to the differences in locations (eg, West Coast vs East Coast),sometimes are so significant that the sale cannot meaningfully be adjusted for such differences. 5 CONFIDENTIAL i I I ' G3 ',C.ONFIDENTIAL �, 0 purchase decision on their valuation lresent worth of the income)stream the p Iof the P Y project from the property. A significant difficulty with employing an income approach is that the County rarely has either the specialized expertise in the refining industry or the particular property in question to develop sound income projections or a rate fairly reflecting = that which a prospective purchaser would use. Under California property tax law (Proposition 13), valuations are performed. to establish the fair market value of real property changing ownership or newly constructed. Such values become the base year values of the property and can be increased only by an annual inflation factor (maximum of 2% per year)i until another change of ownership results in a new base year fair market value or until value is added upon additional new construction. Valuations are also performed to determine if'the value of real property has declined below its inflation-factored base year value on any lien date (March 1), in which event that lower "Prop 8" value becomes the taxable value for the tax year beginning the following July 1. The Prop 8 appraisal units for a refinery are 1) land, buildings and tanks and 2) plant machinery, equipment and fixtures, including cracking towers and other units classified as real property improvements or fixtures (also knowni as "PSI" or property statement improvements). The value of business personal property, exclusive of inventory (which is non-taxable), is done at fair market value each year and is not included in the appraisal!unit. The taxable value of real property potentially subject to a declined Prop 8 value for the tax year is done by: i i 1) determining all the parcels that would sell together in a typical market transaction, I 2) determining the total factored base year value for all such parcels for each of the two Prop 8 appraisal units, ! 3) determining the total lien date fair market value for all such parcels for each of the two Prop 8 appraisal.units, i 4) comparing the totals of 2) and 3) for all such parcels for each of the two Prop 8 appraisal units, and taking the lower value for each Prop 8 appraisal unit as the taxable value of the unit, i 5) adding the taxable values for both Prop 8 appraisal units for alp such parcels I 6) adding the fair market value of business personal property (exclusive of inventory) for all such parcels. I i 6 CONFIDENTIAL i i CONFIDENTIAL Our approach for the Refineries has been to construct valuations as follows each year: i i A: Land, buildings and other structures appraisal unit: i 1) Land at a 1975 base year value, as shown by the 1975 fair market values from 1975 comps, inflation-factored by 2% per year, i 2) Buildings at 1975 value or the value when constructed thereafter, inflation- factored by 2% per year, i 3) Tanks, at base year values shown by 1975 state value tables, inflation- factored by 2% per year, 4) The cost value of construction in progress on the lien date. We have not enrolled Prop 8 declined values for the -land, buildings and tanks appraisal unit for the Refineries, because such property largely has 1,975 base year values which are well below current market value; thus we have enrolled the factored 1975 base year values each year as the taxable value for this appraisal unit. i I B. Plant machinery, equipment and fixtures appraisal unit: i 1) The historical trended and depreciated book values determined by class according to tables, adjusted for the past year's additions and withdrawals (reproduction cost method); 2) The cost value of construction in progress on the lien date. i The trended and depreciated historical cost approach value of the plant machinery, equipment and fixtures appraisal unit virtually always has declined from year to year because plant machinery; equipment and fixtures lose value over time (depreciable wasting of the assets) more than the cost value appreciates due to inflation. The trending and depreciation tables we have used invariably result in market values lower than the factored base year value each lien date for this appraisal unit, so the declined Prop 8 values have.been enrolled; as the taxable value each year for this appraisali unit. i i i C. Business personal property: The current market value of the personal property, exclusive of inventory, as reflected in trended and depreciated book costs. i 7 CONFIDENTIAL i i i i CONFIDENTIAL �� 0 An income approach inherently values the income generated by all property that would be expected to transfer in an open market sale of the refinery and related property, and it may be difficult to meaningfully attribute income separately to the two Prop 8 appraisal units. Because the land, buildings and tanks appraisal unit of the Refinery has been carried at abase year value lower than its expected lien date fair market value, some method should be devised 1);to meaningfully allocate the total income approach value between the two appraisal units and 2) to adjust the taxable value of the land, buildings and tanks appraisal unit downward to reflect the lower base year value for the unit. For example, this possibly might be done by 1) determining the lien date fair market value of the land, buildings and tanks appraisal unit under the comp sales and cost approaches, 2) subtracting the value of that appraisal unit from the total ;refinery income approach value to get the value of the PSI appraisal unit, and 3) adjusting the land, buildings and tanks appraisal unit down to its base year value as;shown under A., above. The value of personal property would then be added to the values determined under 2) and 3) to get the total refinery value. Confidentiality As part of the process of selecting an appraisal firm, Contra Costa County may candidly raise questions on which1we need expert assistance. Obviously, it could be quite detrimental to our position if the opposition were to obtain such information. If a firm determines that it would not be interested in this project or is not selected for this project, we ask that the firm commit to not revealing the content of any documents or discussions of.Contra Costa County relevant to this project. This memorandum is confidential attorney work product, and potential consultants are expected to maintain the confidentiality of the information contained herein. Conclusion Firms interested in this project, or who have any questions whatsoever, are encouraged to contact Dennis Graves, attorney for-Contra Costa County, for further discussion (address, fax and telephone numbers as noted above). Resumes and otherr information.should be sent to the above address. Upon selecting one or more firms that appear to meet our requirements, we intend to present more detailed information to the firm(s) and ask for a rough estimate of the costs of doing the assignment;noted above. � I c:\word\fi l es\exspec2.doc-5:9/30/96 i 8 CONFIDENTIAL I