Minor memos

Minor memos

August 08, 2005

The owners of the TransAlaska Pipeline System largely won a dispute with three Alaska municipalities over what value should be assigned to the pipeline for property tax purposes. The owners claimed the value is only $1.5 billion based on a discounted cash flow analysis. They looked at the value of the oil flowing through the pipeline. The municipalities claimed the value is $8.9 to $13.9 billion. The Alaska state assessment review board assigned a value of $3 billion based on the depreciated replacement cost to rebuild the pipeline. The municipalities are expected to appeal . . . .  Twenty-two power companies lost a challenge in court in June to supplemental taxes that Pennsylvania ordered them to pay on their real estate. Utilities are exempted from local property taxes in
Pennsylvania. Rather, the state collects an equivalent amount and distributes it to the counties. There is a mismatch between what the state collects and what it distributes to localities. Taxes are collected on the net book value of real property, but the proceeds are distributed based on local assessed value. The state has been distributing more since 1997 than it collects. The gap was $77 million in 1997. It levies a supplemental tax to plug the gap. Twenty-two power companies challenged the supplemental assessment for 1997, but lost in a decision released in late June. The case is Safe Harbor Water Power Corp. v. Fajt.