DATE: May 17, 2022
TO: Board of Supervisors
SUBMITTED BY: Daniel C. Cederborg, County Counsel
Oscar J. Garcia, CPA, Auditor-Controller/Treasurer-Tax Collector
SUBJECT: Settlement Agreement with BNSF Railway Company to Resolve Property Tax Refund Dispute
RECOMMENDED ACTION(S):
TITLE
Approve and authorize Chairman to sign Settlement Agreement with BNSF Railway Company to pay a total of $132,564 in property tax refunds for fiscal years 2015-16 through 2018-19 in the form of credits against BNSF Railway Company property taxes in fiscal years 2022-23 through 2024-25.
REPORT
Approval of the recommended Settlement Agreement will resolve a property tax dispute with BNSF Railway Company ("BNSF") regarding property taxes paid by BNSF in fiscal years 2015-16 through 2018-19. Under the recommended Settlement Agreement, the County would pay a total refund of $132,564.49 in the form of credits against BNSF's property taxes. Those credits are expected to be completed over the next three fiscal years. BNSF would waive statutory interest on the refund.
ALTERNATIVE ACTION(S):
There are no viable alternative actions. If your Board does not approve the recommended action, then BNSF is likely to commence property tax refund litigation against the County for the disputed amount, and binding federal case law is against the County.
FISCAL IMPACT:
Approval of the recommended Settlement Agreement will reduce the amount of property taxes collected from BNSF by the amount of $44,188.17 in each of the next three fiscal years.
DISCUSSION:
In 2019, BNSF filed a federal lawsuit against 15 counties, including the County of Fresno. The lawsuit alleged that the property tax rates applied to certain property of BNSF under State statute violate the federal Railroad Revitalization and Reform Act of 1976, also known as the "4-R Act." The 4-R Act prohibits discriminatory taxes on railroad property.
In 2020, the federal court issued a preliminary injunction in favor of BNSF. Since then, ...
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