The Fairbanks North Star Borough Assembly on Thursday discussed possible litigation amid a tug of war over how much the Trans-Alaska Pipeline System is worth. A decade-long settlement had held the assessed value at $8 billion, but it expired this year.
The Assembly convened in executive session, so most of the conversation wasn’t public. But in a brief presentation before the closed-door session began, Robin Brena, the attorney representing the borough, called the most recent development a “good result.”
That’s after the State Assessment Review Board gave the pipeline a value of $13 billion in a decision late last month. Brena put that in different terms for the Assembly.
“To give you some sense of perspective, every billion dollars is another $166,000 to your borough,” he said.
The 800-mile pipeline from Prudhoe Bay to Valdez is owned by ConocoPhillips, ExxonMobil and Harvest Alaska, a subsidiary of Hilcorp. Alyeska Pipeline Service Company operates it on behalf of the owners.
The pipeline runs through the North Slope Borough, Fairbanks North Star Borough and City of Valdez. The state and those municipalities collect taxes on the property in an amount that increases or decreases depending on the pipeline’s value.
At a press availability Thursday morning, Fairbanks Borough Mayor Grier Hopkins told reporters that decisions on the pipeline’s value are a “really big deal” for borough property taxpayers.
“When we increase the overall assessed value and get an actual, true, good value as determined by courts or a settlement, that reduces the amount of taxes that everybody else pays for their property taxes,” he said
The companies had argued the pipeline is worth just under $3 billion, while the municipalities said it’s more like $20 billion. The state Department of Revenue’s assessment this year landed in the middle, at about $10 billion. That led to appeals from both sides to the state review board, which increased it to $13 billion.
If that decision holds, it would be about $5 billion higher than the valuation the pipeline had for the last decade. Hopkins said that wouldn’t mean more overall revenue for the borough, which operates under a tax revenue cap. But he said it would translate to other people’s property tax bills dropping by a little more than one-tenth of a mill, or $10 per $100,000 of assessed value.
An appeal to state court from either side could be the next step for the tax dispute, which wouldn’t be unheard of. The parties have previously grappled all the way to the Alaska Supreme Court. An Alyeska spokesperson said Thursday that the owners are still reviewing the state assessment review board’s decision.