Wednesday, April 5, 2000 Refineries want refund By Denis Cuff and John Hill TIMES STAFF WRITERS

Amid soaring gasoline prices, three Contra Costa oil refineries are seeking property tax refunds of $80 million over three years because they say the county overvalued their plants and profitability.

If the refineries prevail, it will shrink the pieces of the tax pie available for police, fire, health care, parks and other services in cities, the county and special districts.

Chevron in Richmond, Tosco in Rodeo and the Martinez Refining Co. (formerly Shell) in Martinez are asking to slash their individual property assessments -- the basis for tax bills -- by a half or three-fourths.

The refineries were assessed at a value of about $3.8 billion but claim the real value is more like $1.94 billion.

Reassessments in past years fueled the dispute, but the cases are bubbling toward a showdown during a year of increasing gasoline prices.

"The refineries are saying their places aren't worth that much, but I know what I'm paying at the pump for gasoline. It doesn't add up," said County Assessor Gus Kramer. "I don't understand how the refineries can say their plants are worth less when they're making windfall profits. I think they are greedy."

Kramer said Thursday the testy assessment negotiations with industry are taxing the resources and patience of his department. He plans to pass the cases on this summer to the county's Assessment Appeals Board for hearings to decide the dispute.

Oil industry representatives say they have solid grounds for the appeals and the right to do so like any property owner, big or small.

Refiners contend the county inflated refinery values by basing assessments too heavily on the cost of expensive hardware that produces cleaner gasoline and less pollution, but no additional income.

Oil company officials also argue the county gave too little weight to meager refinery profit margins in the 1990s.

"The argument about current gas prices is largely irrelevant," said Mark Hughes, a spokesman for the Martinez Refining Co., a joint venture of Shell and Texaco. "We're looking at 2-year-old figures in one case for an appeal in Jan. 1, 1998, when refinery profit margins were at an all-time low."

Gasoline profits have captured public attention this year because of record high prices at the pump.

In a report last week, California Attorney General Bill Lockyer said oil companies have boosted the profit they make from every gallon of gas produced in California from 24 cents a gallon in mid-January to 66 cents a gallon in March.

Oil companies dispute the estimate.

Contra Costa County officials say profits are not irrelevant but just one of several factors used in setting industrial property values.

"We know the profits go up and down. It comes down to the profitability over time," said Steve Dawkins, the county's assistant assessor. "We feel very comfortable with our numbers. And getting information from some of the oil companies about income has been like pulling teeth."

The appeals by the Contra Costa refineries appear to be part of a trend across the state.

"All the big businesses are starting to challenge all the assessors," said Dave Peets, Alpine County assessor and the president of the California Assessors Association. "It's just part of nature nowadays. You fight your taxes."

It's harder to assess a refinery than a house because the plant has invested heavily in the expensive maze of pipes, reactors and boilers that turn petroleum into gasoline and other products.

Contra Costa County based refinery assessments in the 1970s and 1980s mostly on the cost of the plant hardware minus wear and tear.

But oil refineries complained that more attention should be paid to refinery profitability and the prices for which refineries are selling.

Chevron spokesman Dean O'Hair said oil refineries had low profit margins in the 1990s even if oil companies had different overall results.

"Chevron is a big company with income coming in from many places. You can't look at the income of the whole company," O'Hair said.

Kramer won his most recent refinery case when the county Assessment Appeals Board ruled in favor of his assessment for the Rodeo refinery before Unocal sold it to Tosco.

The appeals board valued that refinery at more than $400 million; Unocal had said it was worth only $184 million.

Heavy industry accounts for 20 percent of the collected property taxes in Contra Costa.

In Benicia, the Valero Energy Co. has no complaint with Solano County's assessment of the refinery that Valero just purchased from Exxon Mobil Corp.

"I've talked to several people, and we agree the status quo is fair," said Valero spokeswoman Mary Rose Brown.

Times reporter Jahna Berry contributed to this story.

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-- Martin Thompson (mthom1927@aol.com), April 05, 2000