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DO THE COSTS OF ENVIRONMENTAL CLEANUP ALLOW A REDUCTION OF THE ASSESSED VALUE OF A PROPERTY?

December 29, 2010

Category: Arkansas Environmental, Energy, and Water Law

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Author: Walter G. Wright An issue that comes up occasionally in various states is whether the assessed value of facilities, for property tax purposes, can be reduced due to the costs of cleanup mandated by environmental rules and regulations. A November Washington Court of Appeals decision addressing this issue is Tiger Oil Corporation v. Yakima County which can be found here. The case involved an oil company's ("Tiger Oil") petition to recover property taxes paid on closed gasoline convenience stores in Yakima County, Washington that had petroleum contamination required to be addressed under the State of Washington's Model Toxics Control Act. Tiger Oil sought a reduction of the assessed value of these properties for costs of cleanup and market resistance factors. The trial court held that because, at that point, there was no information on the extent of the contamination or method or timeline for cleanup there was not a reasonable basis for determining an appropriate reduction in value. The Washington Court of Appeals decision upholding the trial court's ruling contains a lengthy discussion of the issues associated with determining whether expenditures on pollution control qualified as a deduction from a property's value.
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