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Houston Chronicle: Updated: County challenges Shell Oil's tax break lawsuit

Officials dispute firm's claim that fees were unfair
By BILL MURPHY
A county official assailed Shell Oil Co. on Tuesday for suing to avoid paying $2 million annually in county taxes on its local inventory.
Commissioners Court authorized the county attorney's office to seek to intervene in Shell's lawsuit to try to prevent the tax relief.
“Shell Oil doesn't think they have to pay taxes,” Commissioner Steve Radack said. “We have hospital district costs going up, and we have all kinds of costs going up. We expect more from our corporate citizens like Shell.”
In 2004, Shell sued the Harris County Appraisal District, looking to revisit a 1993 agreement requiring it to pay county taxes on oil and other inventory in a foreign trade zone at its Deer Park complex. It is this suit that the county now will try to enter.
Shell spokeswoman Destin Singleton wrote in an e-mail, “Shell has always paid its share of taxes. In 2005, Shell and related companies paid more than $50 million in property taxes to Harris County and other taxing jurisdictions within Harris County.”
Shell paid the taxes at the center of the court dispute and is arguing that it should receive a refund because the assessments were “unfairly applied and unlawful,” Singleton wrote.
Shell received a county tax bill of $1.5 million on its $300 million inventory in the zone two years ago. Its bill rose to about $2 million last year, County Judge Robert Eckels said.
The trade zone was created in 1993 after the county sponsored Shell's application for the zone in exchange for the company's commitment to pay county taxes on inventory within it. The sponsorship was needed to get federal approval for a zone, which provides certain tax breaks to trade-related activity and property.
As a matter of policy, the county has protected its tax base by declining to sponsor applications for firms that won't agree to pay county taxes on inventory.
The city of Deer Park and the Deer Park Independent School District do not receive tax payments on such inventory.
The agreement with Shell was to stay in place as long as the county did not let competing oil firms avoid paying taxes on inventory in foreign trade zones created after Shell's pact, Harris County Appraisal District Chief Appraiser Jim Robinson has said.
Shell argues that a competitor, Valero, is not paying county taxes on its foreign trade zone inventory, Eckels said.
The appraisal district contends that the agreement allowing Valero not to pay taxes on its inventory predates the Shell pact, Robinson said. That agreement was in place before Valero bought the property and, as a matter of law, remains intact after a sale, Robinson said.
The lawsuit “is just a blatant abrogation by Shell on the agreement that they made,” he said. “I don't object to a company making money. But I think they are acting in bad faith on this.”
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