Tax break frozen as judge hears dispute on assessment of Wood River Refinery

Tax break frozen as judge hears dispute on assessment of Wood River Refinery

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Wood River Refinery

The Wood River Refinery in Roxana is seen from above in this Sept. 13, 2005, file photo by David Carson,

SPRINGFIELD, Ill. • A judge on Friday froze an attempt by the expanded Wood River Refinery to hold down an expected property tax increase while the court decides whether two state agencies helped it in violation of Illinois law.

Local governments in and around Roxana claim in a lawsuit filed in Sangamon County that refinery owners, the state Pollution Control Board and the state Environmental Protection Agency shut them out of decisions that could cost schools and other taxing bodies millions of dollars.

Circuit Judge John Schmidt ruled that there are enough questions to "put a freeze" on further action until another hearing.

"I think the pleadings in the case raise a question about whether or not the rules are being followed," Schmidt told attorneys for all the parties.

Schmidt acknowledged imposing "an extraordinary remedy" but said the only way to be sure the tax adjustments were properly approved was to "put a freeze on them, to stop them from moving forward."

The judge ruled that "there are to be no more meetings" on the issue until after an April 25 hearing.

At issue is last year's completion of a $3.8 billion expansion at the oil refinery, owned by WRB Refining LP, in Roxana and Hartford. It is a joint venture of ConocoPhilips and Cenovus Energy Inc.

The business sought to blunt an expected increase in its assessed valuation — on which property taxes are based — by claiming that the vast majority of its operation is dedicated to pollution control.

A pollution control facility designation means significantly smaller assessment increases, which mean that school districts and other taxing bodies get smaller increases in revenue.

Plaintiffs in the lawsuit include the village of Roxana and the school districts in Roxana, Wood River and East Alton. They say they were not initially aware of the move because the Pollution Control Board and Illinois EPA did not provide proper information and public access to meetings, in violation of the Open Meetings Act and Freedom of Information Act.

As a result, the suit claims, the local governments have not been able to formally dispute what they say is an obviously suspect claim: that $3 billion of the project's $3.8 billion expansion was dedicated to pollution control rather than the business of refining fuel.

"We've anticipated that (the tax cuts) will be rubber-stamped next week" by the state officials, the plaintiffs' attorney, Don Craven told the court in seeking an injunction.

Attorneys for the state unsuccessfully argued against a freeze.

The Pollution Control Board did not respond to a request for comment Friday. An IEPA spokeswoman said that agency, and the Illinois attorney general's office, were reviewing the ruling.

The refinery and a larger group of affected taxing bodies negotiated an agreement in 2005 that established tax valuation through 2010. That agreement set the value at about $265 million — an increase of about $85 million — and provided for annual increases at a rate 1 percentage point below any increase of the Consumer Price Index. The refinery also agreed to supplemental payments of more than $3 million for previous tax years.

Two weeks ago, the Madison County Board of Review set the 2011 assessed value at $402.2 million, reflecting a market value of $1.2 billion. It would affect taxes payable this year. That is up sharply from the 2010 valuation of $93.4 million, based on a market value of $280 million.

Kerry Miller, chairman of the Board of Review, said the new valuation includes assessments for pollution control items as determined by the Pollution Control Board and reported to the county by the state Department of Revenue. He said it also reflects some applications by the refinery that are still pending. Miller said he believes there will be time for adjustments before tax bills are mailed in a few months.

"We do what the state tells us to do" regarding such assessments, Miller said. He said the process was established by law and has existed for years.

Miller said he has no way to estimate what the value would have been without the pollution control designation because the county has not reassessed the property for seven years and thus not taken the improvements into account.

The seven taxing districts that filed the lawsuit are among nearly 20 that worked out the 2005 taxing agreement. The Madison County government is a member of the consortium but not a plaintiff in the suit, said Joe Parente, its county director of administration. He said the county wants "an equitable, long-term settlement beneficial to all parties."

Roxana School District Superintendent Debra Kreutztrager has acted as spokeswoman for the consortium but referred requests for comment Friday to attorneys.

The huge expansion increased the refinery's oil-processing capacity by about a third, to 356,000 barrels per day, and enabled it to process heavy crude from the oil sands of Alberta, Canada. The oil arrives via the 2,100-mile-long Keystone Pipeline, which opened last year.

Melissa Erker, a spokeswoman for the refinery, would not comment on litigation specifics but said the pollution control exceptions are part of the state's tax code and "allow us to remain competitive relative to property taxes as compared to other refineries in the Midwest."

Erker said the value is about 75 percent greater than an average Midwestern refinery, after adjustments for fair comparisons.

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