Review board upped original valuation after reconsideration
The trans-Alaska pipeline system (TAPS) has been accessed at a taxable value of $11,874,014,300. Yes, that’s in billions.
And well over $2 billion of that property is located within the city limits of Valdez. Oil property taxes pay for the lion’s share of the yearly Valdez budget, which has inched up towards $50 million dollars a year.
The $11.8 billion taxable valuation includes the 800 miles pipe from the North Slope to the Valdez Marine Terminal, and all associated properties across the state.
The decision was handed down May 29 by the State Assessment Review Board (SARB) which found that the state assessor’s original assessment of $7.1 billion back in January of this year was in error.
During the appeal process the municipalities, including Valdez, argued the actual taxable value of TAPS is closer to $13 billion. The primary owners of TAPS, BP, ConocoPhillips Exxon/Mobile, Koch Alaska Pipeline Company and Unocal, argued the value was no more than $2.25 billion.
All parties can appeal the SARB decision within 30 days. Prior to 2012, TAPS owners and the taxing entities typically appealed the SARB decision.
Last year, TAPS and the municipalities reached a unique agreement and agreed to value the baseline value of oil properties at just over $8 billion and skipped the SARB process in order to save each side legal costs.
The municipalities, the state assessor and TAPS owners have been in court over the value of TAPS since 2006.
In late 2010, the State Superior Court ruled TAPS was valued at $8.941 billion for 2007, $9.644 billion for 2008 and $9.249 for 2009.
The 2013 SARB decision may very well wind its way through the lengthy court process, if the past seven years are any indication of how the process will play itself out.
In simplified terms, the 2010 decision sided with the municipalities that had argued the taxable value of TAPS should be based on replacement costs for an identical pipeline. TAPS owners have argued it should be valued based on its tariff income, which has been significantly lower in the past decade due to less oil throughput.
In SARBs latest findings, it reported that the state assessor erred repeatedly in its assessment and accepted methodologies that were contrary to the court’s 2010 decision.