“Our area has historically been in the vicinity of 7.5 percent of the value of the pipeline,” borough assessor Patrick Carlson said.
Carlson estimated the valuation should increase the value of the total taxable revenue in the borough by $55 million, based on the portion of the pipeline that passes through the borough.
The previous pipeline value of $7.9 billion was determined by the Alaska Department of Revenue but appealed by the Fairbanks borough, the North Slope Borough and the city of Valdez. The pipeline owners, primarily BP, ConocoPhillips and Exxon Mobil, also appealed the state assessor’s figures.
The state’s assessment method fixes a hypothetical replacement cost for the pipeline and factors in an estimated end-of-life date. The $7.9 billion value figure for 2011 used an end-of-life date of 2040, but the State Assessment Review Board decided 2045 was a more realistic date.
While the appeals process is costly and time consuming, borough officials say it is necessary to pursue if the initial assessment seems incorrect.
“I’m in the business of making sure that the pain of taxation is applied fairly to all taxpayers,” Carlson said.
The Fairbanks Borough Assembly in April approved the spending of $716,000 to pay for legal challenges to appeals of the pipeline’s value. Seeking increased valuation was listed as a priority in Mayor Luke Hopkins’ 2011-12 budget proposal.
The money approved by the assembly will be used to pay for ongoing challenges to the pipeline valuations of recent years. Trials are scheduled for September.
The borough successfully appealed the 2006 assessment of the pipeline and received an additional $8.6 million in December.
Contact staff writer Dorothy Chomicz at 459-7590.
The pipe line is valued based on the revenue it generates to owners. The revenue is based on the amount of oil flowing through the line and has nothing to do with the market price of crude. Try looking at the Alyeska Pipeline web site for some insight as to information such as the daily flow for 2011 YTD of 596,433 barrels per day or 90 billion barrels YTD. The pipeline is what makes Alyeska money. NOTE: they do not publish the revenue or other financials on their site.
Gas, diesel, heating fuel and other products are based on world mark prices for crude. If Alaska oil was free it would not change the pump price by a cent.
As everyone else's property taxes have increased substantially it is only fitting for TAPS property tax to increase substantially.
TPP, depreciation has nothing to do with it, and I think you can see why.