State Upholds Pipeline Value for Local Taxation

State Upholds Pipeline Value for Local Taxation

By Pat Lynn
For The Star

VALDEZ – Valdez and other taxing jurisdictions along the trans-Alaska pipeline scored a victory of sorts Thursday when the state pegged the assessed valuation of the pipeline at $3 billion.

Alyeska had sought a value of $1.5 billion based on the depreciated value of the system over its 30-year life span.

Unable to reach an agreement, both sides appealed to the state Assessment Review Board which ruled for the municipalities and boroughs and set the value at $3 billion. Last year, the assessed value was $3.7 billion.

"It's not bad news for us," remarked Valdez city attorney Bill Walker who negotiated on behalf of the city. Arriving at the true figure "is complicated methodology, certainly," he added.

It means the assessed value of the marine terminal and the pipeline to the city limit at Mile 19 is pegged at around $650 million.

For Valdez, it means that the Alyeska property within the city limits, including the marine terminal and the pipeline to Mile 19, will continue to pay the brunt of the local property tax bill. Currently, the Alyeska properties pay more than 75 percent of local property taxes while in-town residents and businesses pay less than 25 percent.

With a rate of 20 mills, the City of Valdez took in $12.5 million in property taxes from Alyeska property with locals making up the balance of the city's $16.8 million operating fund.

In 1985 when the state negotiated the TAPS settlement with Alyeska, the assessed value of the 810-mile pipeline and marine terminal was placed at $8 billion.

The TAPS agreement continues until 2011 when it expires and a new deal is negotiated.

Presumably, Valdez and other taxing jurisdictions along the pipeline will be included in the negotiations along with the state. When the original deal was negotiated, they were excluded from the talks.

Under terms of the TAPS agreement, Valdez can only impose a 20 mill tax on Alyeska property. And any difference between a lower mill rate would automatically go to the state. That is, if the city were to impose an 18-mill rate, the remaining two mills of taxes would revert to the state.