Cherry Point tax decision could be worth millions to Whatcom County
Petrogas has lost a state Appeals Court lawsuit where it claimed that its pier and terminal at Cherry Point had been overvalued for property tax purposes.
A ruling signed by the three-judge appellate panel issued Monday, Nov. 28, affirms a valuation method that was used by the Whatcom County Assessor’s Office in determining property taxes owed for the operation, which receives, stores and ships liquid propane gas and butane to U.S. and international markets from its terminal and pier at Cherry Point.
The court’s decision upholds a ruling from the state Board of Tax Appeals issued in June 2021, and affects the tax years 2016-2018, when Keith Willnauer was the elected assessor.
“Because the (state) Board (of Tax Appeals) ‘showed a good understanding of the accounting and economic principles in play here,’ we find that the findings of fact are supported by evidence and support the conclusions of law,” the judges said in their written ruling.
Whatcom County Assessor Rebecca Xczar was elected in 2019 and has pursued the case as it has progressed against Petrogas Pacific and Petrogas West.
“I am very pleased with the Washington State Court of Appeals decision regarding the Petrogas assessed values. While the outcome was expected, we are relieved for this strong confirmation and next steps in the process,” Xczar told The Bellingham Herald in an email Monday.
She said that Petrogas has appealed its assessments for the years 2019-2022, and those appeals are being handled separately.
.JPG "INTALCO 0020 (1).JPG")
Petrogas officials weren’t immediately available for comment.
The company could ask the state Supreme Court to review the appellate court’s ruling.
In 2020, Xczar told The Herald that the ruling could be worth $10 million or more in back taxes from 2016 to 2019.
“They are claiming that the facility should be valued much less than what they paid for it,” Xczar said at an Aug. 5 meeting of the County Council finance and administrative services committee.
Gavin Carscallen, vice president of legal affairs for Petrogas Corp., declined to discuss the issue at the time.
In its lawsuit, Petrogas Pacific LLC and Petrogas West LLC were challenging Whatcom County assessments that included the value of an aquatic lands lease.
In all, the holdings in dispute include a 35.7-acre site on Unick Road and a 6.3-acre site on Mountain View Road in the Cherry Point industrial zone, plus physical assets and improvements made to the site that Petrogas West bought in 2014 for a combined $242 million from Chevron USA, according to Xczar and records at the assessor’s website.
Petrogas Pacific bought the pier, which is sometimes called a wharf in official documents, in 2016 for $122 million.
All five taxable assets are treated as a single “going concern,” but Petrogas is challenging only the value of improvements and the pier, Xczar said.
Value of the pier includes intangible assets such as a Department of Natural Resources permit to dock large vessels, and Xczar said Petrogas doesn’t want to be assessed for the value of that permit.
The Cherry Point location is the only LPG terminal on the U.S. West Coast, according to Petrogas’ website.
For the 2016 tax period, Whatcom County appraised the facility and wharf at $275,550,700, but Petrogas claims that it is worth $103,025,601 — a difference of more than $172 million in appraised value.
Washington state law defines what elements can be included in taxable value, which is why the Petrogas site’s appraised taxable value is below the sale price, Xczar said in an email.
The state Board of Tax Appeals decides whether the property value is more, less, or the same as the value set by the county Board of Equalization, according to its website.
“When the case is settled in 2021, and back taxes are recovered, taxing jurisdictions will receive their portions of the tax at that time. All taxpayers in those districts will likely see a decrease in their property tax the following year,” Xczar told The Herald.
Affected taxing districts include Washington state, Whatcom County, county roads, flood-control zone, Cemetery District No. 7, Conservation Futures, Fire District No. 7, rural library, Port of Bellingham, Ferndale schools and Whatcom County EMS.
This story was originally published November 29, 2022 at 5:00 AM.
