STATE BOARD OF EQUALIZATION PROPERTY AND SPECIAL TAXES DEPARTMENT
STATE OF CALIFORNIA BETTY T. YEE Acting Member First District, San Francisco STATE BOARD OF EQUALIZATION PROPERTY AND SPECIAL TAXES DEPARTMENT 450 N STREET, SACRAMENTO, CALIFORNIA PO BOX 942879, SACRAMENTO, CALIFORNIA 94279-0064 916-445-4982 z FAX 916-323-8765 www.boe.ca.gov BILL LEONARD Second District, Sacramento/Ontario May 5, 2005 CLAUDE PARRISH Third District, Long Beach JOHN CHIANG Fourth District, Los Angeles STEVE WESTLY State Controller, Sacramento TO COUNTY ASSESSORS AND INTERESTED PARTIES: PROPOSED PROPERTY TAX RULE 474, PETROLEUM REFINING PROPERTIES RAMON J. HIRSIG Executive Director No. 2005/028 In January 2005, the Honorable Claude Parrish, Chairman of the Board's Property Tax Committee, requested that the rulemaking process be initiated for a proposed new rule pertaining to property used for the refining of petroleum. On March 22, 2005, the Property Tax Committee discussed proposed Property Tax Rule 474, Petroleum Refining Properties. After hearing testimony, the committee referred proposed Rule 474 to the interested parties' process for further discussions. Enclosed is a copy of the current language of proposed Rule 474. We are soliciting comments on the current rule language and suggestions for additional topics that should be included in the proposed rule. Comments and suggestions should be submitted by June 24, 2005 to Mr. David Yeung at [email protected], or mailed to: Mr. David Yeung State Board of Equalization Assessment Policy and Standards Division P. O. Box 942879 Sacramento, CA 94279-0064 Upon reviewing the submitted comments and suggestions, this project will proceed as follows: ♦ Staff will meet with interested parties in August 2005 to discuss the proposed rule. ♦ On December 13, 2005, the Property Tax Committee will hear presentations on issues regarding the language for proposed Rule 474. This letter and all documents regarding this project will be posted to the Board's website at www.boe.ca.gov/proptaxes/rule474.htm. If you have questions regarding this project, you may contact Mr. Yeung at 916-324-2812. Sincerely, /s/ David J. Gau David J. Gau Deputy Director Property and Special Taxes Department DJG:dy Enclosure DRAFT RULE 474. PETROLEUM REFINING PROPERTIES. Authority Cited: Reference: Section 15606(c), Government Code Article XIII, Section 1, and Article XIII A, Section 2, California Constitution Sections 51, 53.5, and 110.1, Revenue and Taxation Code (a) The provisions of this rule apply to the valuation of the real property, personal property, and fixtures used for the refining of petroleum. (b) GENERAL. (1) The unique nature of property used for the refining of petroleum requires the application of specialized appraisal techniques designed to satisfy the requirements of article XIII, section 1, and article XIII A, section 2, of the California Constitution. To this end, petroleum refineries and other real and personal property associated therewith shall be valued pursuant to the principles and procedures set forth in this section. (2) Notwithstanding any other provision in this section, any appropriate valuation method described in section 3 of title 18 of this code may be applied in the event of a change in ownership in a petroleum refining property. (c) DEFINITIONS. For the purposes of this section: (1) "Petroleum refining property" means any industrial plant, including real property, personal property, and fixtures, used for the refining of petroleum, as identified in Standard Industrial Classification (SIC) System Codes 2911 and 2992, or North American Industry Classification System (NAICS) Codes 324110 and 324191. (2) "Appraisal unit" consists of the real and personal property that persons in the marketplace commonly buy and sell as a unit. (d) DECLINES IN VALUE. For the purposes of this section: (1) Declines in value of petroleum refining properties will be determined by comparing the current lien date full value of the appraisal unit to the indexed base year full value of the same unit. (2) The land, improvements, and fixtures and other machinery and equipment classified as improvements for a petroleum refining property are rebuttably presumed to constitute a single appraisal unit, except when measuring declines in value caused by disaster, in which case land shall constitute a separate unit. (3) In rebutting this presumption, the assessor may consider evidence that: (A) The land and improvements including fixtures and other machinery and equipment classified as improvements are not under common ownership or control and do not typically transfer in the marketplace as one economic unit; or, (B) When the fixtures and other machinery and equipment classified as improvements are not functionally and physically integrated with the realty and do not operate together as one economic unit.