The Valdez Star - Serving Prince William Sound and Copper River Basin

Editor, Valdez Star 

Millions to flood city coffers after TAPS settlements

Council approves three separate agreements to end years of litigation


The Valdez City Council ended years of litigation between TAPS owners and the State of Alaska Monday night, and also agreed to a long-term valuation of the pipeline and related properties that is designed to stop future tax disputes from landing in the court system.

"I'll tell you what, it's huge," Valdez mayor Larry Weaver said Tuesday morning before reading a lawyer-authorized prepared statement.

The city, along with the North Slope Borough and Fairbanks North Star Boroughs, have been in and out of court with TAPS owners, including BP, ConocoPhillips and ExxonMobile, since 2006.

The settlements are actually three separate agreements.

The municipalities have consistently triumphed against TAPS owners in disputes over the valuation for pipeline property tax valuations.

Two years ago, Valdez and the other municipalities in the pipeline corridor won a significant victory after the Alaska Supreme Court upheld a lower court ruling that valued TAPS at $9.8 billion for the 2006 tax year.

Under one of the agreements council passed Monday, the state and municipalities have agreed to value TAPS assets at $8 billion for the years of 2016 through 2020.

"The Valdez City Council has approved the TAPS settlements resolving several outstanding legal issues associated with the valuation and ad valorem taxes for TAPS. While, from the City of Valdez's perspective, the TAPS settlements do not reflect the full and true value of TAPS for the years at issue, the settlements do reflect a reasonable settlement of the issues among the parties under the circumstances of these cases," Weaver said in the prepared statement.

Valdez was the last of the three municipalities to ratify the agreement that will tax TAPS at the $8 billion valuation.

The city also approved the TAPS assessments for the tax years 2007 through 2015, ending that phase of protracted litigation.

As part of the settlement with the plaintiffs, the state of Alaska and the municipalities, each agreed to cover their own legal costs that were incurred over the eight tax years in dispute, among other concessions, including waiving the right to again sue TAPS and its owners for the tax years of 2008-2015.

"The Parties agree that this Agreement settles all disputes over property taxes, tax refunds, and fees and costs related to the valuation of TAPS for tax years 2007 through 2015..: the contract reads.

The city also settled a long-running dispute between Valdez and the state. Under the administration of Gov. Sean Parnell, the state of Alaska had sued the city of Valdez for a portion of close to $50 million in past TAPS tax payments which the state had argued exceeded the maximum amount of property tax a municipality can collect based on its population.

Under that settlement, the state agreed to accept a "payment from the City to the State of $7.3 million and the restriction of an additional $41.4 million of the funds..."

This mean the city will be able to access $41.4 million in disputed funds, but can only use the money to pay off debts, such as bonds for the small boat harbor or other city incurred debt.

It cannot be used in the city's general fund for operating expenses.


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