City to lose $1.6 million on AES

Jenny Marder

State tax authorities agreed to give power producer AES Corp. a break

on taxes that will cost the city more than $1 million in expected

funding.

The State Board of Equalization agreed last week to reassess the

property value of the company’s four power plants from $1.3 billion

to $591 million. The Huntington Beach plant, previously assessed at

$260 million, is now valued at $93 million, slashing $1.6 million in

property taxes that would have gone directly to the redevelopment

agency to pay for improvements in the Southeast area, said David

Biggs, the city’s director of economic development.

City planners had been counting on a large chunk of AES property

tax dollars to pay for roadwork, storm drain improvements, pedestrian

lighting and landscaping in the 172-acre southeast section of

Huntington Beach, which was formally declared a redevelopment area in

June 2002.

With its narrow sidewalks, drab landscaping, crumbling brick walls

and uneven roads, much of the neighborhood is in need of a face-lift.

Now, prospects of cleaning up the blighted area any time soon look

bleak.

“It’s the redevelopment agency that’s suffering the biggest hit,”

Biggs said. “The biggest impact of the State Board of Equalization

decision is that it eliminates any redevelopment agency revenue to do

projects we had planned. ... Basically, we had anticipated that we

would have $1.2 million to do capital improvement projects. Now we’ll

have zero.”

The city had also considered using funds to help the Huntington

Beach Wetlands Conservancy acquire and restore additional wetlands,

Biggs said.Assistant City Administrator Bill Workman said that he was

shocked by the decision, given the $250 million recently spent on

improvements at the plant.

“Here’s a piece of prime property in Southern California adjacent

to the beach,” Workman said. “It’s much more valuable today than it

was when it was basically mothballed in the year 2000.”

C.J. Thompson, president of the four AES plants, said that the

state assessment was more accurate than last year’s county

assessment, which simply tacked the amount spent on improvements to

the previous value.

To determine value, state tax assessors used a method that based

90% of assessment on income generated and 10% on replacement value.

“We think that the approach that the State Board of Equalization

used was a fair method for valuing the four AES plants, including

[the] Huntington Beach [plant],” Thompson said.

City Treasurer Shari Freidenrich, who attended the state board’s

meeting in Sacramento, said she expected both land value and the cost

of improvements to be weighed more heavily in the plant’s assessment.

“After just putting $250 million into the project and having the

value come back at $92 million, the math just doesn’t come back right

to me,” Freidenrich said.

Many Huntington Beach residents feel the power plant, which looms

well over the horizon and detracts from the ocean view, is an added

eyesore in an already blighted area.

“Everyone thought that if the Southeast area had to bear the

burden of unattractive land use, it should at least capture some of

the property tax generated in the area,” Biggs said.

The city is getting the worst of both worlds, said City Councilman

Dave Sullivan, who sits on the city’s Southeast Area Committee.

“We end up still having this dinosaur plant and not making any

money tax-wise off of it,” Sullivan said.

* JENNY MARDER covers City Hall. She can be reached at (714)

965-7173 or by e-mail at [email protected].