|Richmond To Keep
Millions In Revenue With Chevron Deal
November 3, 1997
WEST COUNTY TIMES
Monday, November 3,
RICHMOND The City Council has agreed to a deal with the Chevron Corp. that delays until mid-2001 an expected drop in city property tax revenue from the oil company's Richmond refinery.
The agreement, approved unanimously last week, would prevent the city from losing about $4 million per year if a property tax re-assessment requested by Chevron is granted, according to city officials. Chevron would also give the city $1 million in cash and services for an efficiency study to improve city operations.
In return, Chevron has won a promise from the city government: The company can scuttle the agreement if it is hit by additional Richmond taxes in the next four years. Measure H, a proposed tax to finance seismic retrofitting and public safety programs that voters will decide Tuesday, is exempted from the deal.
"We put this together really to assist the city and provide stability for ourselves," said Hal Holt, public affairs manager at the refinery.
Mayor Rosemary Corbin was credited with assembling the deal after learning Chevron's property value had decreased and the company would seek a tax break. With about 1,500 employees, Chevron is the city's largest business. It supplies 38 percent of the city's property tax revenue, Holt said.
Despite the unanimous vote, not everyone was pleased with the agreement. Councilman Tom Butt on Friday criticized the city's inability to levy new taxes on Chevron. Butt said he has previously suggested revising the city's utility tax to require Chevron to pay more. Chevron now pays a disproportionately lower amount than other industrial companies, he said. As part of last week's deal, Butt dropped that proposal.
He also blasted a provision of the agreement that will cut Chevron's payments to the city if the efficiency study reduces city expenses. Fifty percent of the value of any savings would be subtracted from Chevron's payments. Butt argued that Chevron could claim credit for ideas that had been or would be suggested by city staff, council members or residents.
"It sounds like you're signing on to a litigious future," Butt said.
He also complained about the equal role Chevron will play with the city administration in conducting the study, suggesting the company could exercise an undue influence. The City Council would decide whether to implement any cost-cutting measures suggested by the study.
Despite his criticisms, Butt joined the 8-0 vote in favor of the agreement. He said that if he had gone against other council members and blocked the agreement, it might have cost the city millions of dollars.
"I felt like Chevron had me over a barrel, that they controlled this city's destiny. I had no choice," Butt said.
Holt said he does not expect the study to become a source of conflict between the city and Chevron.
Although the agreement apparently bolsters city finances in the short term, a sudden drop may come after the 2000-2001 tax year, when the agreement expires.
"At that point, we fall off the cliff," Butt said.