County overlooks, then finds, taxable property worth $1.26 billion
| Friday, Nov 25 2011 09:00 PM
Last Updated Friday, Nov 25 2011 09:00 PM
Twenty-five thousand acres seems like a lot of property for the county tax assessor's office to have overlooked last summer.
And this wasn't just any land. It was one of Kern's most valuable oil fields, generating about $12 million a year for taxpayers.
Fortunately, the oversight was spotted in time and corrected. If anything, it highlights the difficulties faced by a county department that every year must deal with tight deadlines, complex rules and very high stakes.
County Assessor-Recorder Jim Fitch blamed the mistake on a clerical error by an experienced staffer who used the wrong spreadsheet to calculate Occidental Petroleum Corp.'s tax bill for property it owns in Elk Hills.
Another factor was miscommunication by a second, highly experienced member of his staff, Fitch said, as well as the relatively recent discovery of Oxy's vast Gunslinger project in Elk Hills. He declined to identify the staffers involved.
The Assessor's office itself caught the error -- its biggest in at least 15 years -- during a routine double-checking process.
"This wasn't a fluke," he said. "It's something that we caught and would've caught."
The glitch was noticed late but not too late: The county had already issued its annual tax roll, which then had to be corrected. By law, the county has four years to go back and make fixes such as this one.
Also, the county audits assessments on large companies' property every four years anyway, he said.
Oxy, Kern's largest property taxpayer, appeared to have noticed the mixup "immediately," Fitch said, and it probably would have called the county's attention to it if his office hadn't contacted the company first. He added that Oxy isn't disputing the assessment, as far as he knows.
"These are good corporate citizens," he said. "Who knows? They may have come forward and said, 'Hey, we have an issue here.'"
Oxy declined to comment.
'A little alarming'
The executive director of the Kern County Taxpayers Association, Mike Turnipseed, said the error sounded understandable, given the complexity of the assessment process involved. Even so, he said there was something "disconcerting" about the fact that the county overlooked oil and gas property worth $1.26 billion.
"They're very complex computations," he said. "But to leave it out altogether? That's a little alarming."
A spokeswoman for the state Board of Equalization agreed that petroleum producing properties, like agricultural land, present special challenges for county assessors. Such parcels must be re-evaluated yearly in the context of changing economic conditions, spokeswoman Cristina Herrera said.
She added that tax roll corrections are routine.
Fitch emphasized that timing issues beyond his office's control played a big role in the error.
Large commercial property owners like Oxy have until May 9 to report to the county what kind of fixtures and other improvements have been added to their land. This gives Fitch's office less than two months to do much of its hardest work, because the tax roll is due by the end of June.
In August the Assessor's office noticed the mistake, Fitch said. It was obvious on one level, he added: Oxy's Elk Hills tax bill was lower than the previous year, which would have been an anomaly.
About 15 years ago, the office overlooked land worth about $1 billion, but Fitch said it was caught before the tax roll went out.
Sometimes the office doesn't notice land improvements until more than four years later, and by then it's too late to correct the property owners' past tax bills, Fitch said. But he said those tend to be very small cases, such as homeowners adding a patio cover.
The Elk Hills property was a special case. Oxy has been on a land-buying spree in Kern County since discovering the Gunslinger reservoir sometime in late 2008 or early 2009. Also, the company has been developing the area to make the most of the find amid high oil prices.
The Gunslinger property made it onto last year's tax roll, Fitch said, but initially was left off this year's roll, hence the need for a correction.
Oxy's local spokeswoman, Susie Geiger, declined to say whether the company caught the assessor's error on its own or whether the company will dispute its bill.
A small piece of the pie
Oxy's Kern County land holdings came to about $8 billion in 2010, Fitch's office reported. Initially, the assessor's office reported the value this year at $7.3 billion, and then in August tacked on $1.26 billion.
Property taxes total about 1 percent of the total land value -- $12 million in this case. But only about 40 percent to half of that stays with the county.
This means the initial error affected a little less than 2 percent of the $352 million the county expects to raise in property taxes based on this year's tax roll.
The county's overall budget this year is much higher -- $2.27 billion -- though much of that goes to special programs.
Fitch's office has a staff of 104 positions. But to evaluate beyond question every single property in the county -- more than 400,000 individual parcels -- he said he would need 10 times as many people as he has, which "wouldn't be cost-effective."
It may be that his office will need to retool its system, which Fitch said has already undergone much fine tuning since he took over nine years ago.
"I'm not going to say that we have a perfect system," he said. "But our system did catch the error, and we are going to put more controls in."
