By Matthew Hirsch

How did Mirant Corp. come up with a $40 million estimate for its Potrero power plant and the waterfront property on which it sits? That's what the Assessment Appeals Board will consider Feb. 4 when the San Francisco Assessor-Recorder's Office challenges the company's property tax appeal.

Mirant claims its property value has dropped sharply since 1999, the last time it was appraised. If the board sides with Mirant, the company could be refunded as much as $8.5 million in local property tax revenues, making this one of the biggest assessment appeals of the year (see "Ballpark Figures," 1/19/05).

Assessor Mabel Teng has already said she thinks the Mirant land alone is worth more than $40 million, and based on information supplied by real estate brokers familiar with the central waterfront, she may be right.

David Becker, a broker at HCM Commercial Properties in Potrero Hill told us properties along Third Street, which runs west of the Mirant property, have recently been going for $75 to $200 a square foot. If you calculate the price per square foot for Mirant's 25-acre plot of land – not including the facilities – it's claiming each square foot is worth less than $37.

But there are a few reasons why the land might be heavily devalued, Becker said. A potential buyer might have difficulty developing the property for nonindustrial uses. And if the cost of environmental remediation is high, that could wipe out the land value altogether. Testing in 1998 showed the land was already contaminated when Mirant bought the property.

The Assessment Appeals Board prehearing conference on Mirant is Fri/4, 10 a.m., City Hall, 1 Dr. Carlton B. Goodlett Pl., S.F. (415) 554-6778, www.sfgov.org/site/assessment_index.asp.

E-mail Matthew Hirsch