By LESTER CHANG
The city of Sunnyvale and the Fremont Union High School District are bracing for impacts from a tax dispute of as much as $40 million between Lockheed-Martin Missiles and Space and the Santa Clara County Assessor's Office.
FUHSD would bear the brunt of any tax reduction for Lockheed because it relies chiefly on property taxes for its operations, County Assessor Larry Stone said.
"It is monumental for the schools," he said.
If Lockheed wins its appeal, FUHSD could lose $1 million in the first year and more revenues in years to come, said Mike Raffetto, who heads FUHSD's business division. "The appeal is bad," he said. "We have relied on property tax revenues since 1989."
A tax appeals hearing is set for March 31. The thrust of the appeal focuses on computer and production equipment Lockheed has at facilities in Sunnyvale and in other areas the school district serves.
The city of Sunnyvale could shoulder losses better because it gets funding from other sources, including those from sales and gas taxes, Stone said.
City and FUHSD officials say the reduced revenues could affect their programs for many years. The Palo Alto Unified School District also would be affected because it receives tax revenues from Lockheed, which has buildings and equipment located within the district, Stone said.
The situation could compound financial woes facing FUHSD, Raffetto said.
The district is embroiled in a contract dispute with the Fremont Education Association, which represents about 400 teachers.
How much the city could lose isn't known at this time, said Mary Bradley, finance director for Sunnyvale. "We won't know the actual amount until the appeals hearing."
The Assessment Appeals Board's scheduled five-day hearing will be held at a county building at 70 West Hedding Street in San Jose.
The city of Sunnyvale has modified budget plans to cope with any loss, Bradley said.
"It isn't something that has caught us by surprise. We are keeping a close watch on it," said David Vossbrink, the city's community relations officer.
The city has a $151 million operating and capital improvement budget for this fiscal year. Of that, the city received $14 million in property tax revenues, including those from Lockheed, Vossbrink said.
Stone said Lockheed filed appeals between 1990 and 1995, and is contesting up to $3.5 billion in assessments for assets primarily located in Sunnyvale. They include a Lockheed plant at Moffett Park.
Lockheed has filed appeals but not for the amount Stone's office claims, said Katherine Strehl, public affairs manager for Lockheed.
Strehl said she didn't have the figures immediatedly available, but noted that the appeal figures cited by Stone "are out of the realm of possibility."
"This was action that was initiated by the county assessor's office after [the Lockheed, Martin-Marietta] merger [two years ago]," she said.
The assesor's office toured properties by Lockheed and reassessed them, over the objections of the company, she said.
"The office told us that we were going to realize a tax reduction," she said, "and that was the last we heard."
Stone said his office subpoenaed Lockheed's records for the last six years.
"They haven't given us evidence to support their opinion of value on their properties," Stone said. If Lockheed can provide it, "we will certainly take a serious look at that."
Stone said the $3.5 billion in evaluation Lockheed has contested is significant because it is coming from one property owner. It represents 2.9 percent of the county's $120 billion dollars in assessments, he added.
Stone said he stands by the assessments leveled against Lockheed. In reassessing the company's equipment, appraisers looked at their initial cost and depreciation. They also looked at the value of some buildings under construction, Stone said.
This article appeared in the Sunnyvale Sun, February 12, 1997.
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