Eagle Point Tax Appeals 1988 - 2012

Eagle Point Tax Appeals1988 - 2012

1 Committeeman Cianfarini 4/3/2012

• Background

• Financial Exposure

• Debt Amortization

• Budget Impact

• Professional Findings

Eagle Point Tax Appeals


Eagle Point Tax AppealsBackground

• 24 Years of Litigation• Spent more than $3 million over last 10 years (legal and expert fees)

• Nothing reserved for settlement

• Multiple opportunities to settle over the years not pursued

• West Deptford vs. Coastal /El Paso 1988-2003

• West Deptford vs. Sunoco 2004-2011-2012

• Refining operations shut down 2010

• On January 6th 2012 new committee was confronted with a firm Feb.14th trial date


Eagle Point Tax AppealsBackground

• WD Trial history in 1985 thru 1987 tax appeal with Coastal resulted in 5 million ruling against WD.

• Ruling demonstrates that sale of a refinery will be a strong factor in court’s determination of value.

• Assessment on CoGen facility located on Eagle Point is clearly vulnerable to drastic reduction.

• 2011 assessment is extremely difficult to defend because of the closure of the refinery.


Eagle Point Tax Appeals Trial - Financial ExposureWorst Case Scenario

• Up to $47.5 million Sunoco refund

• Up to $42.5 million El Paso refund

• Likely Bond rating drop to near junk status

• Sunoco 2012 assessment drop to $50 million, down from 2011assessment of $313 million

• Trial outcome payment would be due 60 days from judgement


Eagle Point Tax Appeals Trial -Financial Exposure

Best Guess Scenario• Up to $28.5 million Sunoco refund

• Up to $26.5 million El Paso refund

• Likely Bond rating drop to near junk status

• Sunoco 2012 assessment drop to $50 million down from 2011 assessment of $313 million

• Trial outcome payment would be due 60 days from judgement


Eagle Point Tax Appeals Settlement without Trial

Financial Exposure

• $13.9 million Sunoco refund

• $18.5 million El Paso refund

• Bond rating preservation very possible

• Sunoco 2012 assessment drop to $100 million, down from 2011 assessment of $313 million

• Tailored financing, reasonable market rate bond funding, minimized budget impact, environmental cleanup addressed


Eagle Point Tax AppealsTrial Debt Amortization - Worst Case


Sunoco Sunoco & El Paso

Par Amount of Bonds:Bond Term & Structure:Borrowing Rate:

West Deptford Township Tax Appeal Refunding Bonds, Series 2012

Preliminary Analysis of Tax Impact - SUMMARY

Combined Scenario I: $90M Appeal, 10 Years Level Debt Service Schedule at 3.50%

Assumptions/Inputs

$90,800,00010 Years Level

3.50%

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

Existing�D/S New�D/S Impact�on�Avg�Home�Increase�over�2012 Total�Tax�Impact�on�Avg�Home

Phoenix Advisors, LLC 3/1/2012




Sunoco Scenario I: $47.5M Appeal, 10 Years Level Debt Service Schedule at 3.50%

Assumptions/Inputs


3.50%

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

2012 2014 2016 2018 2020 2022 2024 2026 2028 2030



Eagle Point Tax AppealsTrial Debt Amortization - Best Guess


Sunoco Sunoco & El Paso




Combined Scenario II: $55.59M Appeal, 10 Years Level Debt Service Schedule at 3.50%

Assumptions/Inputs


3.50%

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

$18,000,000

2012 2014 2016 2018 2020 2022 2024 2026 2028 2030






Sunoco Scenario II: $28.5M Appeal, 10 Years Level Debt Service Schedule at 3.50%

Assumptions/Inputs


3.50%

$0

$200

$400

$600

$800

$1,000

$1,200

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

2012 2014 2016 2018 2020 2022 2024 2026 2028 2030



Eagle Point Tax AppealsSettlement - Debt Amortization


Sunoco Sunoco & El PasoPhoenix Advisors, LLC 4/3/2012


2012 Assessed Valuation:Assessed Valuation Growth: 1.00%

Growth Rate 1: 1.00% Final Year: 2023

West Deptford Township Sunoco - Tax Appeal Refunding Bonds, Series 2012

Preliminary Analysis of Budget Impact - SUMMARY

20 Years Wrap Debt Service Schedule at 3.842% With Growth @ 1.00%

Assumptions/Inputs

$13,900,00020 Years Wrap

3.842%

$2,493,769,515

!$400

!$200

$0

$200

$400

$600

$800

$1,000

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032Existing2D/S New2D/S Impact2on2Avg2Home2Increase2over22012 Total2Tax2Impact2on2Avg2Home



2012 Assessed Valuation:Assessed Valuation Growth: 1.00%

Growth Rate 1: 1.00% Final Year: 2023

West Deptford Township Combined Sunoco & El Paso/Coastal - Tax Appeal Refunding Bonds, Series 2012

Preliminary Analysis of Budget Impact - SUMMARY

20 Years Wrap Debt Service Schedule at 3.842% With Growth @ 1.00%

Assumptions/Inputs

$32,400,00020 Years Wrap

3.842%

$2,493,769,515

!$200

!$100

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032Existing5D/S New5D/S Impact5on5Avg5Home5Increase5over52012 Total5Tax5Impact5on5Avg5Home

Eagle Point Tax AppealsBudget Impact


Trial SettlementWorst Case Best Guess Without Trial

Total Settlement

SunocoEl Paso

Maximum Budget Impact/ Avg. Assessment

Projected Bond Rating

Ongoing Sunoco Property Tax Income

Carried Debt after 2013 County Credit

$90 M $55 M $32.4 M

$47.5 M $28.5 M $13.9 M$42.5 M $26.5 M $18.5 M

$913.76 / 43.9¢ $566.15 / 27.2¢ $87.35 / 4.2¢

BBB BBB A-

$1.26 M $1.26 M $2.55 M

$83 M $50.6 M $26.6 M

Eagle Point Tax AppealsOur Professionals Find

Settlement Without Trial to be Prudent

• Special Tax Counsel - John Lloyd

• Solicitor - Anthony Ogozalek

• Financial Advisor - Dave Thompson

• Business Administrator - Eric Campo


Eagle Point Tax AppealsOur Professionals Recommending

Go To Trial


Eagle Point Tax AppealsSummary

• The day of reckoning has come. WD is exposed, unprepared, and spent millions by kicking this can down the road. Imminent trial date mandates that action must be taken now.

• Sunoco has simply moved our cheese. The refinery is shut down, but the logistics operation can grow if we are business friendly and reasonable.

• Trial will waste another potential $1 to $1.5 million dollars and leave us without viable financing options. Sunoco’s going forward property assessment will be far below what is being offered in settlement. Our budget, bond rating and our schools will suffer greatly.

• 100% of our professionals agree - This settlement is a prudent choice. The settlement minimizes budget impact and smooths out debt amortization.

• Budget impact does not necessarily equate to a tax increase. We still have much work to do on the budget.


Eagle Point Tax Appeals 1988 - 2012

Documents

Transcript of Eagle Point Tax Appeals 1988 - 2012