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GALVESTON, Texas -- San Antonio-based Valero Inc. has filed suit against the Galveston Central Appraisal District challenging the $10.5 million appraised value of about 50 Diamond Shamrock convenience stores countywide.
The valuations stem from the refiner-marketers 2002 merger with Ultramar Diamond Shamrock (UDS), which propelled it to one of the top three refining companies in the United States. At the time of the merger executives announced the merged companies were expected to generate annual revenues of $32 billion with total assets of approximately $14 billion.
Valero yesterday said it hired a third-party appraisal firm after executives learned Diamond Shamrock had never attempted to save money by challenging appraisal districts, said Denise Brady, a company spokesperson, told the Texas City Sun. The firm is making its own determination of the taxable values of Diamond Shamrock convenience stores nationwide.
The current lawsuit, which is the second Valero has filed against the Galveston District since 2000, was done in anticipation that the company's appraisers might determine the District's appraisal is too high, Brady said. "It was done just in case," he said. "We are still having the evaluations done and we don't know the results yet."
Reviews of Valero's property values are common, "We do it all the time," Brady said, adding that if Valero's appraisers determine the district's values are correct, the lawsuit could be dropped.
Two years before the Diamond Shamrock merger was announced, Valero took the appraisal district to court in a jury trial to dispute the 1999 value of its Texas City refinery. The trial ended before the jury deliberated when the parties reached an agreement that reduced Valero's 1999 assessed taxable value by a total of $26.9 million, which is about $450,000 in taxes.
The trial was the forerunner to a series of industry-generated challenges. Those lawsuits have now peaked with a BP plc arbitration hearing that elected officials have said could bankrupt taxing entities if the company wins. The arbitrators' ruling in that case is expected to be delivered on or before July 15.