Oil pipeline’s assessed value challenged

Three Alaska municipalities are contesting a state review board’s decision that assessed the trans-Alaska oil pipeline value at $3 billion.

The Fairbanks North Star Borough, North Slope Borough and the city of Valdez filed an appeal in Superior Court on June 27.

This is the governments’ third attempt to change the value, which, if it stands, means about $1 million in lost property tax revenues for the Fairbanks borough.

“It’s a disagreement about statutory interpretation of replacement costs,” said Fairbanks borough attorney Rene Broker.

Earlier this year, the state petroleum property assessor dropped the value of the pipeline and its associated properties from $3.017 billion to $3 billion. The three municipalities appealed that decision with the assessor’s office and lost. They then went to the State Assessment Review Board to seek a reversal.

The board issued a decision that upheld the state petroleum assessor’s ruling.

Part of the assessment was determining how much it would cost to replace the pipeline.

The municipalities based their current appeal on three points that the review board failed to rule on, according to the court documents.

First, they said, the Alaska Department of Revenue wrongly interpreted state law by excluding the cost of construction of a replacement pipeline from the pipeline’s replacement cost analysis.

The municipalities also said the revenue department didn’t include taxes that would be paid during construction of a replacement pipeline. And the department didn’t include the costs of roads and bridges that would have to be built for a replacement pipeline. Excluding some expenses in the replacement cost analysis affected the resulting pipeline assessment, the appeal stated.

The pipeline’s value shouldn’t be dropping at a time when private citizens’ tax assessments on property values have increased, said Fairbanks borough Mayor Jim Whitaker.

“Particularly when oil is selling over $50 to $60 dollars a barrel,” he said. “Where is the logic behind that?”

—The Associated Press