Assembly to tackle appraisal bid issues

Posted: Tuesday, November 01, 2005

Mayor Dale Bagley has asked the Kenai Peninsula Borough Assembly to OK a no-bid contract hiring an Eagle River company to appraise the value of several Nikiski-area industrial plants.

In 2004, Dudley A. Platt and Associates fulfilled a $54,000, three-year contract for valuing the ConocoPhillips LNG Plant, BP's Gas-To-Liquids Plant, Agrium's fertilizer plant, the Tesoro Product Pipeline and the Tesoro Refinery. It was subsequently handed the sole-source valuation project for 2005 to determine the value of all those facilities except the refinery.

Capital Appraisal Group was hired to appraise the Tesoro Refinery in 2005, 2006 and 2007, chosen for that job for its broader experience at valuing refineries. Shane Horan, the borough assessor, said Capital does about a dozen refineries a year in Texas.

Both Dudley's 2004 appraisal and Capital's 2005 appraisal of Tesoro's refinery are the subject of Alaska Superior Court suits filed by Tesoro appealing decisions by the Kenai Peninsula Borough Assembly acting in its capacity as a Board of Equalization (BOE) upholding borough property tax assessments of the refinery based on those valuations.

Tesoro's most recent motion, filed Sept. 1, appealed an appraisal of $124 million, claiming the refinery was worth just $60 million. Tesoro had sought to avoid a suit telling the BOE this summer that it would accept the disputed 2004 appraisal of around $93.4 million. The board, however, declined and stuck with the larger $124 million assessment. Tesoro then filed suit.

Dudley has a good record of meeting its contractual obligations and performed its 2005 duties well under its budget, Horan said.

"We recommend that DAPA continue with the valuation support services" of all plants except the refinery, Horan told the assembly in an Oct. 20 memo. "Also, DAPA's experience in valuing all the state of Alaska's oil and gas facilities and the firm's four-year experience with the Tesoro Refinery make DAPA the best candidate to assist the borough assessing department in the support and oversight of the Tesoro Refinery appraisal (conducted by Capital)."

The borough assembly is expected to approve the 2006 contract, which is not to exceed $17,000. The contract issue is on the assembly's consent agenda, which usually includes measures not generally requiring debate and which are handled with one vote. If it so chooses, the assembly can choose to remove items from the consent agenda for any reason and deal with them individually as it does other agenda items.

Sole-source, or no-bid contracts are often employed as a timesaving measure, typically with smaller expenditures or where the number of available providers of desired services is limited.

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