Alva Review-Courier -

The Woods County Equalization Board spent a frustrating one and one-half hours Wednesday morning in the final tax protest hearing on 2023 evaluations. On the agenda were two gas companies, Targa and DCP, who have protested the assessor's valuations of their properties in Woods County.

Board Chairman Joe Shirley, Vice Chairman Chris Olson and member Bob Seivert were present. Also attending were Assessor Renetta Benson, County Clerk Shelley Reed, Reed's First Deputy Jennifer Schafer, Assistant District Attorney Brian Mitchell and consultant Jerry Wisdom of TASC (Total Assessment Solutions Corp.). Wisdom was able to attend only because he was issued a subpoena.

During the meeting, Wisdom provided a wealth of information while each of the two gas companies sent one-page written statements to be read into the record. Targa offered the phone number of their accountants for questions while DCP said they didn't want to talk.

Targa Protest

A letter from KE Andrews (KEA), accountants, on behalf of Targa stated the Woods County market value for the company in 2022 was $246,118,325 while the 2023 value is $409,561,650. KEA's opinion is that the 2023 valuation should be $75,255,600. They objected to the 26 percent increase in valuation by Woods County from 2022 to 2023. (The 2022 valuation is still under protest and consigned to the court system.) KEA stated in 2020 Targa Westok impaired their assets down to $152 million across multiple Oklahoma counties due to utilization income. The letter states that the assets have been overvalued and a reduction is warranted.

After reading the letter, Shirley said, "I want to make one comment. Income has squat to do with this. It has nothing to do with this, the value of the property involved. As an example, my tractor is worth so much money whether I make a dime or not, and I pay the same amount of tax on that tractor whether I make a million dollars or I make a dollar. The amount of money they make is insignificant. That has no bearing on what we're talking about."

Olson said, "There's a lot of difference between $309 million and $75 million. Somebody is attempting to twist the numbers. Targa bases their facility on the fact that there are so many reserves in this area whether it's taken out today, tomorrow or whatever. The tax base should be equal to their investment in what they've got out there.

"One thing I don't like is for them to be able to send this in writing and not be able to answer questions. We've got a problem here. I want to talk to these people. Our position is we have to be fair, and we're representing all taxpayers. And these folks here are just wanting to skirt our responsibility of the equalization board by not having them available here to answer questions."

Reed said a phone number was supplied that they could call to talk to KEA. The person handling Targa was not available but KEA gave a contact name.

Wisdom provided a written report to board members that he went over in depth. "Again, I am here by way of subpoena to provide documents and information that Renetta (Benson) utilized in the valuation model for this year."

"While they wrote down the assets in 2020, that doesn't necessarily mean what the assets started at and where their book values are at now. While we do see impairment, at the end of the day what is the market value of the assets?" he said.

He explained there are three approaches to value: income, sales and cost. "Income is an indicator of value if you have the information. They do note that the income was so low that they could not provide you with that information. I would just note for the record that income is a method of value but you need to add information," said Wisdom. However, he had reports on Targa income data provided in public hearings in Alfalfa and Major counties.

Wisdom went over a chart showing the average of gas per year per system for all major gas pipelines in Oklahoma. "You can see the Panhandle Eastern gas price year to year was up 71.85 percent. While as he (Targa) states, his market value (county valuation) went up 26 percent you can see the market value of gas prices went up 71.85 percent. There's a discrepancy there between the two."

He said he didn't have the information to do an income approach to value since Targa didn't supply it.

"How did companies do last year? Targa was up 61 percent. DCP was up 94 percent last year. The overall average increase in EBITDA for these peer groups was 49 percent," he said. "And again the Woods County) valuation difference from last year was 26 percent." Wisdom explained that EBITDA is the operating profit.

He said the county assessor used the cost approach to value. According to his analysis, the $309 million is the proper amount. Wisdom spent some time going through his written report.

"This is a systemic problem with the taxation of these oil and gas related assets," said Wisdom. "Again, I'm just an appraiser giving you the value to the situation. It's your money, it's the schools, well it's all our money because if the money shortfalls the schools, it gets reimbursed. I don't want to get off on a political agenda, and I'm not trying to. I just want to give you the facts of what's going on with this, and it's an unfair property tax scheme or system."

"Seems to me the equalization board's authority and their job is to equal the tax base between all taxpayers. And they're trying to limit us by way of going to the state," said Olson.

"Absolutely, and the thing I can tell you from the assessor's standpoint is we value all the pipelines in the county the same way," said Wisdom. "So as far as equalization, we're not picking on these companies just because they are in a lawsuit or whatever. Obviously they didn't want to have a discussion earlier or try to reach some sort of settlement."

He also noted that he can't send his report information to the board members prior to the hearing, by law. "This is the first time you guys are seeing it. That's another disadvantage. If you guys want to do your own evaluation of the valuation models, you can't do that," he said.

When Wisdom finished his comments, Olson asked that a call be made to KE Andrews. Reed attempted the call, but she couldn't get past the recorded messages without an extension number. She searched paperwork but could not find one. Wisdom said he had the cellphone number of the listed contact "Rhonda." That number went through. She couldn't answer questions, and there was another wait while she found someone else. Ben Thompson of KEA eventually talked to the board.

Olson asked if the proceedings and discussion of the board in this meeting would be part of the evidence considered if the matter goes to court. Thompson wasn't sure but said court proceedings start over. When asked about income information provided to Alfalfa and Major counties but not Woods, Thompson said that was not available for Woods County.

After the call ended, Olson said, "I'd like to hold their feet to the fire, make them come up with the information."

"I don't think they have to," said Shirley. "He already told you 'we don't have that. We're not going to do it.'"

Olson turned to Assistant DA Mitchell and asked if the school district and county have the right to sue these companies "because they're impeding our ability to make correct decisions based on proof, based on fact."

"I see your point," said Mitchell. "I think the way they're penalized though, you have a meeting here where they were provided notice, and the decision is yours to make."

He continued, "You have very ample evidence on this side. The other side submits something that doesn't even rise to the level of an affidavit. He characterized it as an affidavit. But it's not. It's not self-proving. It's nothing more than a letter. It's not even signed. It's just printed off. It would appear you're to weigh the evidence, and one side gives you a known expert. The other side gives you a one page letter. It is what it is. If they don't want to make any more effort than that then the decision's yours to make."

"I think we're good here. I think we've got good information and he's (Mitchell) backed us up on that," said Shirley.

Olson asked if what had been discussed could be passed on to the next level, whether district court or the three judges set up by the state.

"When it goes before the district court, it's a case of first impression," said Mitchell. "The court will take whatever evidence is provided. Now it would be up to the court to admit whatever evidence they want to see whether that is a record from a previous hearing or not. That would be in the discretion of that court. I would suspect the court would like new evidence to be presented by both parties."

Shirley made a motion to accept the valuation by the county assessor, seconded by Olson. The motion carried unanimously. With no settlement, the protest will go to the court system.

DCP Protest

The DCP hearing was much shorter. Scott Crisler of DCP sent a letter to be read. He cited the long-term downturn that has impacted fair market value. Woods County's valuation was $11,418,906. DCP wanted a valuation of $2.388 million.

"What bothers me is they present no evidence," said Shirley.

Olson said somebody should sue them, but Mitchell restated his comments from the previous hearing. "Do you see this is a game?" asked Olson in frustration.

Shirley made a motion, seconded by Olson, to accept the county assessor's valuation. The motion passed by unanimous vote, and this protest will also go to the court system.

Reed told the board this was the last formal hearing date so they won't be meeting to handle more protests for the 2023 tax valuations.

A video of the meeting may be viewed by clicking on the Video tab at http://www.AlvaReviewCourier.com