By Lora-Marie Bernard
Taxpayers throughout Galveston County will refund more than $15 million to Valero over the course of three years to settle an appraisal fight that went to the Texas Supreme Court. The Galveston County Commissioners Court voted unanimously to authorize its portion of the refund at its regular meeting on July 18. County taxpayers will refund the refinery $3.36 million through January 2020.
The commissioners did not speak publicly about the agreement. The vote was taken after executive session. Other entities that will refund Valero are the Texas City Independent School District, the City of Texas City, College of the Mainland and the County Road and Flood District. The refunds are due following a judgment issued in June that reduced the appraised value of Valero’s property over a three year period.
The company sued the Galveston County Appraisal District in three separate lawsuits over the methods used to determine the taxable value of its Texas City site. The suits are known by the collective term “the 2013-2016 lawsuits” in the judgement.
The Supreme Court of Texas agreed to hear Valero’s arguments against CAD and rendered an opinion in February. The parties reached a refund agreement in May. The court had a motion for a rehearing but closed the case in June when the final judgment was filed in the 56th District Court.
As a result of the battle, Galveston County entities will repay the company in installments. Only the school district will make a lump sum payment. TCISD will make a payment on Aug. 26 for a total of $8,087,601.81.
Other entities will follow a predetermined three-year payment schedule. The City of Texas City will repay a total of $2.72 million. COM will reimburse the refinery a total of $1.23 million while County Road and Flood District will pay a total of $34,000. The high court gave the San Antonio-based refinery a victory, according to attorneys at K&L Gates, a law firm that watches and reports on Texas Supreme Court cases.
“The Supreme Court’s decision is likely to give rise to strategic opportunities for both Texas property owners and appraisal districts,” wrote company attorney Cynthia M. Ohlenforst in her review of the case with co-authors Sam Megally, and William J. LeDoux.
Ohlenforst’s review surmises that the court’s opinion supports all Texas taxpayers. CAD had taken Valero’s property and divided it into several accounts. It was portions of those accounts that Valero said were not compared in an apples to apples fashion.
The high court charged that CAD made a logic argument rather than a fact-based one, although justices agreed CAD could separate properties into separate accounts. “If component parts of a property cannot be valued in isolation, then as a matter of law, separate accounts are not appropriate,” wrote Chief Justice Nathan Hecht. “It follows that if tax accounts are appropriate, then as a matter of law, the property in each account can be valued in isolation. This is transposition logic, not a factual dispute.”
Incidentally, appraisal districts in El Paso, Fort Bend and Montgomery counties filed amicus briefs with the Supreme Court in support of Galveston. As a result, Ohlenforst wrote that the state could see homeowners, other businesses and large industries following Valero’s lead. “When considering whether to contest a property tax appraisal, property owners — including owners of refining and industrial facilities, power generation facilities, and other complex properties — should carefully analyze and consider how their properties are assigned to tax accounts, how the appraisal district assigns similar properties to tax accounts, and which tax accounts to challenge,” she wrote. She also noted that CAD has since changed its methods.