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Chevron Findings & Decisions on Supplemental 2007,2008

Chevron Findings & Decisions on Supplemental 2007,2008

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Published by Bill Gram-Reefer
Contra Costa County rejects Chevron tax appeal; supplemental findings find rehabilitation of Richmond facility increased value for tax purposes
Contra Costa County rejects Chevron tax appeal; supplemental findings find rehabilitation of Richmond facility increased value for tax purposes

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Published by: Bill Gram-Reefer on Apr 02, 2012
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04/02/2012

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CONTRACOSTACOUNTYASSESSMENTAPPEALSBOARDNos.2009-5746and2009-3692ChallengingAssessor'sSupplementalAssessmentsforFixtureAdditionsDuringCalendarYears2007and2008
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CHEVRONUSA,INC.IntheMatterofApplicant.FINDINGSANDDECISIONSONCHEVRONUSA,INC.'SAPPEALSOFTHEASSESSOR'S2007AND2008SUPPLEMENTALFIXTUREASSESSMENTSByitsorderdatedJuly28,2011,thisBoarddeterminedthattheAppraisalUnitforthe2007,2008,and2009hearingsontheapplicationsofChevronUSA,Inc.(Chevron)ontheassessedvaluationofitsRichmondrefineryconsistsoftheland,improvements,fixtures,andpersonalpropertyoftheChevronUSA,Inc.,Richmondrefinery.Accordingly,theBoardheardChevron'sappealsfromtheAssessor's2009supplementalassessmentvaluations.Chevronarguesthattheappellatedecisionin
WesternStatesPetroleumAssociationv.StateBoard
of
Equalization
(Cal.Ct.App.2ndDist.,No.B225932)requiresthatthesupplementalassessments
be
cancelled,onthegroundthattherefineryfixturesmustbetreatedasaseparateappraisalunit.The
WesternStates
decisionhasbeenappealedtotheCaliforniaSupremeCourt,andrequestsforitsdepublicationarepending.Asthatdecisionisnotfinalandissubjecttoreversal,modification,ordepublication,thedecisionisnotbindingonthisBoard,andweconsideritsapplicationtobespeculative.TheAssessorleviedthesupplementalassessmentsthatarethesubjectofChevron'sapplications,tocapturethevalueofnewconstructionthatoccurredin2007and2008betweentheliendates.
 
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Suchconstructionissubjecttoassessmentifitisanadditiontoproperty,includingfixtures,oranalterationofpropertythatconstitutesamajorrehabilitationorconvertsthepropertytoadifferentuse.Majorrehabilitationisthesubstitutionofanewfixtureoranyrehabilitation,renovation,ormodernizationthatconvertsafixturetothesubstantialequivalentofanewfixture.Substantialequivalencyisdeterminedbycomparingtheproductivecapacityoftherehabilitatedfixturewithitsoriginalproductivecapacity.(PropertyTaxRule463(b)(5).)
CHEVRONREPORTEDTHENEWCONSTRUCTIONFORWHICHTHEASSESSORISSUEDSUPPLEMENTALASSESSMENTS
1.RevenueandTaxationCodesection75.15,subdivision(a),requiresapropertyownertoreportallfixturesaddedtoandremovedfromrealproperty.Forpurposesofthesupplementalassessments,RevenueandTaxationCodesection75.15,subdivision(b),clarifiesthatthetaxpayermustreportonlythosefixturessubjecttotaxationonthesupplementalroll.2.Chevronreportedallofthepropertyadditionsandremovalsthatformedthebasisforthesupplementalassessments.Chevronneitheramendedtoremove,norfiledanyclaimsofexemptionfor,thepropertyitidentifiedinitsexchangeofinformation.TheAssessorreliedonthatinformationandforwardedittorefiningindustryconsultants,Baker&O'Brien,forfurtheranalysis.3.AfterreceivinginputfromBaker
&
O'Brien,theAssessorsupplementallyassessedonlyafractionofthe300assetsthatChevronreported.TheAssessorconcludedthatChevronadded$11,260,358intaxablenewconstructionin2007and$41,010,310intaxablenewconstructionin2008.4.Regardlessoftheactualin-servicedates,theAssessorassignedtheassetsanin-servicedateonthelastmonthoftheyearforwhichtheywerereported.Underthisassumption,theAssessorappliedthelowestavailableprorationfactorof50percent.The50percentprorationfactorhalvedthevalueofChevron'sreportedtaxablenewconstructionforthepurposesofthesupplementalassessments.5.Basedonthesecalculations,andpursuanttoRevenueandTaxationCodesection75.11,theAssessornoticedandbilledsupplementalassessmentsintheamountsof
 
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$5,630,179forpost-liendateadditionstotheRichmondrefineryin2007and$20,505,155forpost-liendateadditionsin2008.
II
APREPONDERANCEOFTHEEVIDENCESHOWSTHATTHESUPPLEMENTALASSESSMENTSOFTHEASSETSCHEVRONREPORTEDWERECORRECT
1.Chevronfiledappealschallengingthesupplementalassessments.Initsapplicationsforchangedassessment,Chevronstatedanopinionofvalueof$0,basedonitsargumentthatfixtureswerenotsubjecttosupplementalassessment.TheBoardrejectedthatargumentinitsJuly28,2011,OrderDeterminingAppraisalUnits.ThatrulingleftChevrontoargueatthehearingthatthepropertysupplementallyassessed,oraportionthereof,either(1)didnotqualifyas"newconstruction,"or(2)hadnoassociatedvalue.2.PursuanttoPropertyTaxRule324(b),Chevronhadtheburdenofprovingbyapreponderanceoftheevidencethatthesupplementalassessmentswereincorrect.3.Chevron'sprofferedevidenceintheformofexhibitsandthetestimonyofRobClarkfailedtoprovebyapreponderanceoftheevidencethatthesupplementalassessmentswereincorrect.4.Inundertakingtoprovethatthevariousassetconstructionsthatitchallengeddidnotconstitutemajorrehabilitation,Chevronfailedtoprovethattheproductivecapacitiesofanysuchrehabilitatedfixturesdidnotexceedtheproductivecapacitiesoftheoriginalfixturesthattheyreplaced.5.Infact,theproductivecapacitiesofeachoftherehabilitatedfixturessignificantlyexceededtheproductivecapacitiesoftheoriginalfixtures,andineverycase,therehabilitatedfixturesweresubstantiallyequivalenttonewones,or,infact,constitutedmajorrehabilitation.TheChevronAuthorizationforExpendituredocuments(AFE's)thattheBoardreceivedinevidencesupportthisfinding.6.Insupportofitsapplication,Chevronhasaddressedcertainassessments,asfollows:A.LightNeutralCrackerBottomsUnitChevroncharacterizestheconstructionasthereplacementofdefectivepartsandpiping.TheBoarddoesnotconsiderthereplacementofdefectivepartsandplumbingtoberoutinemaintenance.Infact,Chevron'swork

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