Aera’s small tax team works with county assessor offices to help fund vital public services
Aera Tax Advisor Wayne Vaughn opens a folder, removes four sheets of paper and slides them across the table to share their contents.
The pages are from the four counties where Aera produces oil and gas: Kern, Monterey, Fresno and Ventura. Each lists the top 10 secured-property taxpayers in those counties.
A matter of public record, the listings also show each taxpayer’s net value and the total amount of taxes they must pay for the 2018-19 year.
Aera appears on each of those top-10 county listings – and the dollar-numbers are eye-opening. In property taxes for 2018-19, Aera paid:
- $28.019 million to Kern County, where its Belridge and Midway Sunset fields are located;
- $3.141 million to Monterey County, home to its San Ardo oilfield;
- $2.346 million to Ventura County, the site of its 4,300-acre oilfield near the city of Ventura;
- $1.909 million to Fresno County, where its Coalinga field sits.
In all, Aera paid more than $36 million in California property taxes for 2018-19. Included in that total is nearly $49,000 for Santa Barbara County, where Aera’s East Cat Canyon project awaits permitting approval. In fact, although Aera produces oil and gas in only four counties, it owns property assets in eight others and pays property taxes in those too.
“The numbers speak for themselves,” says Vaughn, who oversees Aera’s property-tax compliance and payments. “If we weren’t here, there would be far fewer public services in our counties.”
Property-tax money goes to each county fund, where it’s used for schools, law enforcement, fire protection, hospitals, road building and maintenance, parks, cemeteries and many other public services.
Vaughn, who joined Aera in 1997, works closely with Aera Tax Manager Randy Teel to provide the required documents that help county assessor offices determine by July 1 of each year the “assessed value” of property assets.
Vaughn, Teel and their small Aera tax team must compile a complex, in-depth collection of operating expenses, revenues, capital expenditures, oil and gas reserves, production data, well abandonments and forecasts for the life of each property.
“It’s big task to do every year,” Teel acknowledges.
Using that information, each county assessor’s office assigns a property tax based on 1% of the owner’s assessed value. In Aera’s case, that involves 1,200 property parcels. These are lumped together into one bill per county. Then, just as homeowners do, Aera pays those property taxes twice a year, in December and April, to county tax collectors’ offices.
Oil and gas interwoven with many tax rolls
While Aera’s property tax bill of over $36 million is sizeable, it’s not even half of 2013’s amount. That year, when oil prices ranged from $90 to $100 a barrel, Aera paid a hefty $88.417 million in property taxes. In 2014, Aera’s property-tax bill totaled $87.222 million.
Since then, of course, oil prices have dropped and now trade near $58 a barrel. That’s led to a drop in property taxes.
Few people understand that better than Lee Smith, assistant assessor for Kern County. Smith works with property owners like Aera to assign a assessed value to their assets to determine their property-tax bill.
Oil and gas are part of Kern County’s “Roll 2” property-tax group. Smith is well aware that Kern’s oil and gas industry – the largest in California — accounted for 16% of the county’s total property-tax income of $1.02 billion for 2018-19. Seven of the top 10 secured-property taxpayers were oil and gas companies, including Aera at No. 3.
“But the oil and gas Roll 2 assessment of 16% doesn’t tell the whole story,” Smith says.
He points out that there are six rolls on which Kern County levies property taxes. And most of them depend on the oil and gas industry in some way. Some are related to real-estate holdings, including houses and hotels. Other rolls encompass utilities; unsecured property such as machinery and equipment; mobile homes; and government-owned properties such as government lands.
These property-tax payers are the employees of oil and gas companies. They are the related businesses and contractors. They own the houses, the commercial warehouses, the vehicles and machinery required to support the oil and gas industry.
“If you were to remove oil and gas from Kern County, it would be a big deal,” Smith says. “My assessment rolls would drop by $16 billion.”
But that’s not all. Related tax rolls also would feel the loss, resulting in lower property-tax payments across the board.
“People’s jobs would no longer exist,” notes Smith. “Property and equipment would go on the market for fire-sale prices because nobody would have a need for them. It would be like shutting down an auto plant that employed most of a community. Who’s going to pay for police, teachers, firefighters and road builders if we don’t have an oil industry?”