Fairbanks would spend $1.2 million more to defend the pipeline's value in court

The Fairbanks North Star Borough would spend another $1.2 million defending its share of the Trans-Alaska Pipeline System tax base under an ordinance Mayor Grier Hopkins introduced Thursday. The money would come from the General Fund balance and go to a project account called "Legal – TAPS Valuation."

The borough had previously set aside $200,000 for that account. The new request is six times that amount.

The fight is over the pipeline's 2026 assessed value, now contested in Alaska Superior Court. The borough levies property tax on TAPS for areawide education and other services. It sets mill rates using estimated values that are later adjusted for appeals. A lower court-ordered value would shrink the tax base residents depend on to fund schools.

The ordinance states the borough "must continue to defend and support its assessment" of the pipeline, and says it has retained outside counsel for the litigation and any resulting appeal. Borough Attorney Jill Dolan recommended the Assembly adopt it.

The fiscal note, signed by Chief Financial Officer Joanne K. Pascoe, says future costs are "possible, but undeterminable at this time."

The dispute stretches back decades. The North Slope Borough, the Fairbanks North Star Borough and the City of Valdez filed a joint administrative appeal June 22 challenging state assessments on pipeline infrastructure. Pipeline owners have argued in earlier proceedings that declining throughput and a shortened remaining life justify values in the low single-digit billions. The municipalities have argued the pipeline is worth far more. After a five-week trial, the superior court set the 2006 value at about $9.98 billion, more than twice the State Assessment Review Board's figure. The Alaska Supreme Court affirmed it. The board later certified the Jan. 1, 2014 value at $10.2 billion.

The Assembly Finance Committee takes up the appropriation Sept. 3 at 5:30 p.m. and may recess into executive session with counsel to discuss case strategy, expert witnesses, discovery costs and trial. Citizens' comments at that meeting are limited to the contract and bid awards on the agenda.