Council passes 2012 compromise for oil properties
Ping ponging valuations come and go during long running disputes
A purposeful move was made by the Valdez City Council Monday to address the ongoing dispute between municipalities, the State of Alaska and oil producers regarding the taxable value of TAPS, the Trans-Alaska Pipeline System.
In early 2012, the Valdez City Council signed off on a negotiated deal that set the taxable value of TAPS at $8.25 billion as a place-holder figure in order to skip the lengthy and expensive appeal process before the State Assessment Review Board (SARB), pending the outcome of previously filed lawsuits, including the 2006 tax year.
Valdez is home to about $2 billion worth of TAPS properties.
The yearly appeals, which have been ongoing since 2006, pit the municipalities of Valdez, the Fairbanks North Star Borough and the North Slope Borough, against the primary owners of TAPS: BP, ConocoPhillips Exxon/Mobile, Koch Alaska Pipeline Company and Unocal.
Earlier this year, the Alaska Supreme Court ruled that the taxable value of TAPS for 2006 was $9.8 billion.
According to the agenda statement published supporting the new agreement, a SARB hearing was set November for the 2012 valuation, "but also ordered mediation between all parties."
The new agreement will value TAPS properties for the 2012 tax year as an average between the 2011 and 2013.
"No money will change hands" until the 2011 and 2013 tax year valuations are settled, Craig Richards, the city's acting attorney said Monday night after the council made the unusual move to go into an executive session before the vote, but before the end of the meeting.
The Valdez City Council typically holds its executive sessions – meetings that are allowed to be held without the public – after its regular meetings.
Valdez Star photo
The Valdez City Council left its chambers Monday night to go into executive session during Monday night's meeting. The move came before the vote came up on whether or not to approve a settlement with oil producers regarding the 2012 oil property tax dispute.
"At mediation, the Municipalities and TAPS Owners were not able to agree on a final value of TAPS for 2012, but did agree to take back to their clients a proposal to agree to set the value of TAPS at the average of the 2011 and 2013 value established by the Superior Court and dismiss all 2012 tax year appeals," the statement said.
The agreement passed by six votes. Council member Dennis Fleming abstained from attending the executive session and from voting on the matter due to his employment with the parties involved.
Earlier this year, SARB valued TAPS at $10.2 billion.
Early estimates peg the city's 2014 tax revenues at $51,276,976 – if the SARB ruling stands.