Chevron tax deal changes ballot landscape in Richmond
By Katherine Tam
Contra Costa Times
Posted: 05/12/2010 03:19:41 PM PDT
Updated: 05/12/2010 05:34:30 PM PDT
It started in March.
A team of Richmond officials and Chevron representatives sat down with a mediator to hammer out a deal aimed at providing financial certainty to both parties and avoiding a battle over dueling ballot measures in the fall. They met for hours on at least four occasions, eventually crafting a $114 million tax deal the City Council approved Tuesday.
"All of us at one point or another got a little emotional," Councilman Tom Butt said. "At the end of the day, it was a business decision. We are getting a lot more than we might have gotten had this settlement not been reached."
Chevron will pay utility taxes under city law, plus $4 million to $13 million a year under a set schedule spanning 15 years. The largest payments will come the first five years as part of the city's plan to avoid drastic budget cuts and layoffs as the economic downturn continues.
The parties will nix competing ballot measures in November. The city's utility tax measure would have eliminated a method used by Chevron for calculating payments that results in the refinery paying less than it would under another formula other ratepayers use. Under Chevron's initiative, the refinery would pay roughly what it does now while halving taxes for others.
Tuesday's deal changes the landscape for Councilman Jim Rogers' "Save Our Schools" initiative, which would funnel $1.5 million from a successful utility tax measure toward keeping open under-enrolled neighborhood schools. Rogers and supporters of this measure are assessing how to move forward now that the city's utility tax measure is dead, he said Wednesday.
When mediation began, the city and Chevron were "incredibly far apart," Butt said. The gap closed with the mediator's help.
"We are pleased that both Chevron and the city of Richmond were able to forge an agreement that provides certainty on so many issues in such uncertain economic times," said refinery manager Mike Coyle, who sat at the negotiating table.
City leaders were interested in mediation. If Chevron's counter-initiative were to pass and the city lost its appeal of the county's ruling on Measure T, it could cost the city up to $20 million a year.
"If we had not done this, the only other place to go would be to double down and bet the city," Butt said.
The city agreed to withdraw its appeal of the Measure T ruling, which invalidated the 2008 voter-approved manufacturers fee.
Butt, Vice Mayor Jeff Ritterman, Rogers and staff members represented the city in negotiations.
Officials didn't get everything they wanted, such as more money, additional provisions in the derailed "community benefits agreement" forged in 2008, and a settlement over property taxes. Chevron is appealing its property tax assessment to the county. If successful, it could result in cities being asked to refund money.
"We just had a certain amount of leverage," Rogers said. "We couldn't get everything we wanted."
Chevron will complete three provisions in the community benefits agreement, including fence-line air quality monitoring, land for the Bay Trail and $2 million to cut greenhouse gas emissions.
The vote for Tuesday's agreement was 6-0. Maria Viramontes abstained, saying she wants Chevron to fulfill all provisions in the community benefits agreement.
Katherine Tam covers Richmond. Follow her at Twitter.com/katherinetam.