ISSUES | Chevron and Taxes

Richmond City Council Resolution asking Chevron to drop its property tax appeals

Whereas, Chevron Corporation. (formerly Standard Oil) has successfully operated an oil refinery in Richmond since 1904, thus contributing to the corporation’s high profitability for over 100 years; and

Whereas, Chevron declares that it wants to be a good neighbor to Richmond and Contra Costa County residents; and

Whereas, Chevron has posted record profits in each of the last five years, and its profits of $7,830,000,000 ($7.83 billion) for the third quarter of 2011 are double its profits for the third quarter of 2010; and

Whereas, the Chevron’s charitable contributions to worthy local organizations in 2010 amounted to $3.7 million, which represents a mere 0.047% of the profit it made in just three months (July – September) in 2011; and

Whereas, Chevron is currently trying to get a refund of approximately $50-$60 million on its Richmond refinery property tax payments for 2004-2006 through litigation in the courts, in addition to the $18 million refund it already received for that time period as ordered by the County’s Assessment Appeals Board; and

Whereas, Chevron is currently trying to get a further refund of approximately $100 million on its Richmond refinery property tax payments for 2007-2009 through a claim to the County’s Assessment Appeals Board; and

Whereas, the total potential refunds for 2004-2009 of approximately $150 million that Chevron is seeking represents only 0.15 % of its profits of $97.3 billion for those six years; and

Whereas, considering Chevron’s consistently high rate of profits and the prime location of the Richmond refinery, we believe its claims of significantly declining property values are baseless; and

Whereas, if Chevron were nonetheless to prevail in both cases (2004-2006 and 2007-2009) and the City and County are ordered to pay refund of over $150 million to Chevron, there would be drastic consequences, including the cuts in public safety, basic services and social uplift by the City of Richmond, Contra Costa County, the West Contra Costa Unified School District and other special districts, and

Whereas, these cuts would fall most heavily on our most vulnerable and disadvantaged populations:  seniors, youth, people living in poverty, people with disabilities and people without access to health care; and

Whereas, these cuts would inevitably result in the layoffs of city, county, school district, fire and water, etc. workers at a time when we are already experiencing record unemployment and the worst recession since the 1930’s Depression; and

Whereas, these layoffs would result in less income available to purchase goods and services contributing to a downward economic spiral damaging our business community; and

Whereas, Chevron has stated it wants to maintain good a good relationship with Richmond and that it specifically wants to help ameliorate the very problems that the cuts triggered by its potential refunds would exacerbate; and

Whereas, if Chevron were to withdraw all of its property tax appeals it would remain a highly successful and profitable corporation and would experience no negative consequences;

Be it therefore resolved, that the Richmond City Council respectfully asks Chevron Corporation. to withdraw and dismiss all of its property tax appeals on past years’ assessments and pay the full amount due on current and future property tax assessments for the Richmond refinery.

Be it also resolved, that the City Council place on the closed session agenda for November 22 consideration of directing the city manager and city attorney to enter into negotiations with Chevron and other parties to seek a negotiated settlement that would leave Richmond whole with respect to past and future Refinery property taxes.

Putting Chevron's "Generosity" Into Perspective

We all know that times are tough. Unemployment soars, families lose homes to foreclosure, and the City and County are constantly  squeezed for funds to provide even the most basic public services.  Times aren't tough for everybody, however, as we watch income and wealth inequality increase.  In other words, the rich get richer, while the rest of us get poorer, exacerbating a host of social ills.

How does this happen?  Because people let it happen.  We see this phenomenon unfolding right here in Richmond, where an already super-wealthy corporation claims that it paid too much in taxes in recent years and wants to get a refund, all the while mounting a PR campaign to portray itself as a "good neighbor".

As if Chevron weren't already making enough money with it's billions of dollars in profit every three months, the Richmond refinery is currently attempting to require the City of Richmond and Contra Costa County to write a check made out to Chevron for $168 million dollars in refunds on its property taxes from 2004-2009, through multiple claims it has submitted. 

While one hand of Chevron boasts about the small donations it makes to local organizations, the other hand is directing it's high-priced lawyers to find a way to rob cash-strapped local government's blind.  Chevron's grants in the thousands of dollars to struggling non-profits may seem generous to some, but such amounts are clearly insignificant to this multi-billion dollar corporation.  These amounts are also miniscule in comparison to the millions of dollars Richmond will have to pay if Chevron gets its way.  In the worst case scenario, City services would be severely disrupted--much worse than the crisis of 2004--likely resulting in massive lay-offs in public safety, library, recreation, public works, as well as termination of service contracts with local businesses and non-profits.  It could bankrupt the City.

Do major corporations who say they care about the community go out of their way to cause irreparable financial harm to that community?  Chevron does.

Let your elected officials know that you are aware of what Chevron is trying to do and that it's not acceptable.  Urge them to continue to pursue every means at their disposal to uphold Chevron's original property assessments and insist that it pay its fair share of taxes to protect jobs and essential community services.

Statement of RPA Steering Committee 9/30/11

Jobs? 

Good Neighbor Chevron

Everybody knows that good, healthy, decent paying jobs  are required to move Richmond forward. Yet  right now Chevron has brought in  more than 1600 workers to work a six to eight week period  on a "Turnaround" at the Richmond Refinery.  A Turnaround is a period where a section of the refinery is shut down and drained for intensive maintenance work. Most of the work pays well and usually includes considerable overtime. It could have meant a big boost to the local economy.

Instead, Chevron chose to use contractors who are hiring much of their labor  from well outside the area. By Chevron's figures  about 40% come from beyond 50 miles. And the 50 miles for the other 60% is a pretty long way to go.     

It takes lots of jobs to keep a refinery operational.

Don Gosney, a frequent advocate for the local building trades unions, put it this way at the September 27  City Council meeting.

Chevron may tell you that the Bay Area can't  supply qualified workers . But that is nothing but bull doogie ... They may try to tell you that out-of-area workers cost them less but that is not true either especially when you factor in the travel and lodging costs  The real reason is that Chevron doesn't like unions and their staff  wants to micromanage their workers as though they are children and don't know what they are doing.

 
Chevron, after inquiries from City Council members about this un-neighborly hiring policy, responded  that they were providing the visiting workers with lists of Richmond restaurants.

--Mike Parker

photos by Don Gosney  

Why This is a Very Big Victory

We have been in a battle with the fifth largest corporation in the world, one noted for its aggressiveness in building its operations and profits. Our aim in this battle was not to wipe Chevron out but to force them to pay a “fairer” share of taxes to the community. We accomplished that. Did we make them pay enough? I don’t think so.

Why they belittle the victory

For Chevron and the corporate media the biggest danger in what happened in Richmond is that people will learn that we have the power: when we organize and stand-up, we can beat back the corporate domination of our communities. Chevron does not want the 140 or so communities around the world demanding what Richmond residents demanded and won. The Corporate media and establishment don’t want people to get the idea that if we mobilize to close the loopholes in state taxes that we can actually win. They don’t want people thinking to themselves “We beat Chevron, what else can we can do if we act together?”

So all the shills for corporate power in our state have different messages but with the same theme: People power did not win anything: we got this agreement because Chevron was willing to bail out the city, or because we had good negotiators, or because we really didn’t win very much, or because we folded. All of these messages are designed to tell people that they really have no power and to reinforce the defeatism in people which allows the tiny corporate minority to run things.

Chevron a partner?

Does this agreement make Chevron a partner or good neighbor? No, Chevron is still basically the same corporation it always was. Its bottom line is still profits. Hopefully it means better relations in the city because perhaps Chevron now knows it has to treat the community with respect since it will not rollover for every Chevron initiative.

It’s not a question of the character of the refinery managers but of international corporate policy driven by profits.

Locally, Chevron is still trying to get its county property taxes reduced, shifting the burden onto homeowners and other businesses in the city. It has still refused to negotiate its flawed EIR so that the expansion project can be made safe for the community and it can start up the jobs again. Internationally its devastation in some countries is only limited by the developing opposition. Following the logic of the oil industry, it is shifting to the cheaper, cruder, more polluting, oil sands and resisting attempts to increase controls on carbon emissions.

Chevron represents in every way an institution that must change if the world will survive. We must end our use and dependence on huge quantities of fossil fuel. We must end the system where the world’s natural resources are used for private profit and the real costs are shifted to those who can least afford them with polluted communities.

So Chevron is neither a friend nor a partner in creating a better Richmond or world, but our victory and our recognition of our power may also allow the community to solve more problems in negotiation with them as we move forward.

Our hands are not tied

This agreement was very specific. What we won from Chevron, and committed the city to, covers the next 15 years. But this only applies to certain city taxes (excluding sales and property). Nothing stops us from fighting Chevron on its property tax appeal. Nothing stops us from challenging Chevron’s polluting our community or its attempts to break the construction unions or manipulate its workforce. Nothing stops us from campaigning for a state oil severance tax, an increase in the top level of the state income tax or and end to the corporate perks in Prop 13.

Most importantly it does not stop us from remaking the City Council so it no longer is a patsy for whatever Chevron wants.

Trade-Offs

While appreciating the relief this settlement will definitely bring in the next five years, my enthusiasm is tempered by two trade-offs that came along with it:

1) the fact that there was essentially no public input in shaping this negotiation or reviewing its conclusion, since one of the implicit terms of the deal was that it had to be voted on by the City Council just three days after it was first announced to the public, or else Chevron would back out.

2) the fact that beyond the additional $114 million (averaging $7.6 per year but with most of it up front), it will not be possible to raise Chevron's taxes in Richmond for the next 15 years, no matter what circumstances might arise 5 or 10 years from now.

Yes, we struck a deal, but did we find common ground? To me finding common ground implies some shared values and a level of mutual respect that I don't see here, since the ultimate objectives of Chevron and the City remain so divergent: maximizing profits even if it means hurting Richmond residents vs. meeting the needs of Richmond residents via the democratic process. The City has always acknowledged Chevron's right to own property and operate its business within our city, but Chevron has shown little regard for the City's right to set reasonable rules and expect compliance.

What we have is an agreement on a price as a result of cut-throat negotiations. Cut-throat because one party tried to cut the other party's throat half way through with its signature campaign that could have bankrupted Richmond.

Chevron agreed to pay $114 into the City's general fund over the next 15 years in exchange for protection from any additional tax increases during that time. Is that a good price? Maybe it is, but I'm not sure. It is quite a lot less than splitting the difference between the opening bids. We've been told that Richmond initally asked for $300 million over 15 years and Chevron offered $40 million, so $170 million would have been right down the middle.

Was frontloading the payment schedule the wisest thing to do? It seems so now, but what about 10 years from now, when the revenue stream will have nearly dried up and it's so unpredictable what our needs and Chevron's activities will look like then (it's ironic that this deal is touted as providing "predictability"). Only time will tell.

Could we have done better with more public input I wonder if some level of public process could have started before the first negotiating session in early March, so that our team could get input not from the community about what the City's initial ask should be. Clearly the fact that negotiations were happening, though not widely publicized, was not confidential.

I'm not sure why the City's initial ask of $20 million per year wasn't higher. In order to leverage the full power that our movement and the voters had already demonstrated, it seems to me the City could have started out asking for the absolute maximum we would get if everything went our way (Measure T appeal and our End Chevron's Perk UUT ballot measure), namely something like $40 million a year.

If the City had started out higher, I wonder if the the price ultimately agreed upon could have been a lot higher. Or would Chevron have walked away if the City had started out asking for a substantially higher price? I tend to doubt it, because my sense is that they really didn't want our UUT measure to pass at the polls. Chevron's eagerness to settle the confidential UUT audit question in 2009 leads me to believe they would be vulnerable in the courts in trying to challenge a requirement that they pay 10% of all their gas and electricity use.

Could Chevron afford to pay a price higher than the $114 million that we got? I'd say yes, in spite of their lamenting about not doing so well on downstream activities (refining), while making a killing upstream. Note that the settlement agreement that the City signed is with "Chevron U.S.A. Inc., a Pennsylvania Corporation" (not the Richmond refinery).

Could our team have insisted on taking a full week or two to check in with the community at the end of negotiations when it looked like a deal had been struck? I wonder how much of a priority it was to have the price include some time for public review, in addition to the dollars.

I don't have experience in negotiating high stakes financial issues on behalf of a large constituency, like with labor negotiations, so I don't want to second guess those who do. Left on my own, I doubt if I'd be any good at it, as I'd probably start out with a price that seems fair and reasonable, which could then be taken advantage of by a savvy and calculating counterpart. That's where it seems to me the power of the collective comes in--having the community give our most skilled negotiators a steady stream of feedback and support so that they can hang tough. Especially when our counterpart is a corporation with limitless resources and no scruples.

With this agreement and thanks to our grassroots efforts, we're getting a huge profitable corporation that has been taking advantage of us for the last 25 years (with its UUT perk) to take advantage of us less for the next 15 years, which will give some welcome relief to Richmond residents, mostly in the next 5 years.

While we have achieved something here, we still have a long ways to go. In interactions with our corporate neighbor, we have to be fully aware of what we're up against, remind our leaders to always include the community in the conversation, and step up our organizing efforts to harness the full power of informed and engaged Richmond residents to stand firm in insisting on acceptable behavior from that neighbor, just as we would from any other neighbor in our city. I invite all of you who read this to join with the RPA in mobilizing for a better Richmond!

RPA Statement on Chevron - City Tax Deal (when it was first announced)

A Big Step Forward for the Richmond Community -- A Victory for Democracy

Negotiators for the city of Richmond and Chevron have reached an unprecedented agreement that settles several major tax issues. Chevron has agreed to pay millions of additional dollars to the city if the city will drop its appeal of Measure T and proposed changes in the Utility Users Tax. (See below for details.)

The settlement goes to the City Council next Tuesday where the Richmond Progressive Alliance expects and supports its adoption. As in all settlement agreements, the city did not win everything it rightfully deserves. But we did win a substantial increase in financial support for the city from Chevron and we can move on to other issues that we need to deal with like crime, jobs, education, public health and the environment.

No one fought for this victory like the RPA; No one put the pressure on Chevron for fair taxation like we did. We receive this victory reaffirming our commitment to fairness, justice and health for all Richmond residents and we expect our city to put a significant part of the income from this victory into programs our citizens need, determined by democratic process. Those were the goals of our succesful Measure T and of the End Chevron's Perks Campaign.

As Mayor Gayle McLaughlin says. "This agreement shows that the Richmond community can be succesful in gaining more fairness when we stand strong and together. The people of Richmond organized and mobilized to pressure Chevron to do better. Chevron realized it could not defeat the people of Richmond. It gave in to many of our demands.Not everything we wanted, but this partial victory marks the beginning of a new phase in our ongoing struggle for a better, more just, and healthier Richmond."

This agreement does not resolve all issues with Chevron. Chevron has still not agreed to come to the table to resolve environmental protections on its expansion project and get workers back on the job on those projects. We expect that the fifth-largest multi-national company whose bottom line is profits will be at odds with communities that its refining facilities dominate.

Chevron is still attempting to get reductions in its county property tax. Chevron benefits from Proposition 13 loopholes for all corporations, and the failure of California to have an oil severance tax like other oil producing states.

Some of the lessons of recent events are: It is possible to stand up against the power of a multi-national company. The additional money for vital city services comes in part from voters challenging Chevron's money, power,and public relations by passing measure T in 2008; from the City Council's placing the End Chevron's Perk measure on the ballot for this fall; and from the community mobilization against Chevron's cynical plan to try to strangle the city with its own ballot measure to slash city income. It helped that the entire City Council on May 4th (Nat Bates was absent) strongly denounced Chevron's actions. Standing up and organizing makes the difference. It levels the playing field and makes possible settlements and outcomes that promote the community's wellbeing.

Councilman Jeff Ritterman: "This is a real advance for the City of Richmond. In the current economic downturn we have won significant new financial support for the city, which will prevent layoffs of city workers. It will enable us to work harder on the many other problems that face us."

Jovanka Beckles, RPA nedorsed candidate for City Council: "There is no power like the People's power! It does not quit. I'm proud of this step forward that we have achieved and even when I know that the road ahead is long today I am hopeful and joyful. How do we get justice for the Richmond residents? How do we change our City into paradise? One struggle, one victory at the time. I'm happy today with this progress."

Agreement Specifics

The city had a negotiating team consisting of City Manager. Bill Lindsey; City Attorney, Randy Riddle; Finance Director, James Goins; and three council members Jeff Ritterman, Jim Rogers, and Tom Butt. They met with Chevron using professional mediation over a period of months.

The agreement calls for Chevron to pay the city $114 million (with no inflation adjustment) in revenue over the next 15 years on a "front-loaded" schedule.

Chevron will guarantee its level of Utility Tax payments for the next 5 years. Chevron affirms certain CBA obligations like support for the Bay Trail and Ground Level Air Quality Monitoring.

Chevron agrees to drop its campaign for cutting the utility tax.

The agreement calls for the city to drop its appeal of the Measure T decision, and withdraw the proposed End Chevron's Perks measure. Chevron's payments in this agreement cover any increases in city taxes (other than sales or property) that would be applied to Chevron.

More details can be seen in the unofficial report here. The full package should be available on the City's website

To protect its special perk:

Chevron's New Dirty Trick

Download Flyer: Think Before Signing

For 25 years Chevron has paid a lower rate of utility users tax than we all pay. Every household and small business pays a 10% utility users tax that supports basic services in Richmond. To avoid paying its fair share, Chevron is trying to put a measure on the ballot that will devastate Richmond's schools, streets, parks and police. Chevron calls it "The City of Richmond Utillity Users Tax Reform Act."

The Richmond City Council had scheduled a ballot measure for the fall which will end Chevron's Perk. It simply says that Chevron has to pay the same tax rate on its utilities that everybody else pays. (It ends a special flat rate that only Chevron can use). Knowing that it can not beat this measure which calls for simple fairness, Chevron is trying to ride the hardship Richmond voters are facing by proposing to cut everybody's taxes a little in order for Chevron to save big. Chevron's measure will cut the Utility Tax in half and exempt poor and seniors from paying any utility tax at all. All of us will save a few dollars a month while Chevron saves millions.

But we will all pay the cost because this will force cuts in our schools, our roads, our parks and our police protection.

Chevron hopes at least to confuse voters to get them to vote both measures down.

Chevron will have to get the measure on the ballot by paying a petition firm two to five dollars a signature. (The actual signature gatherers only get a small part of that.)

Don't sign Chevron's Petition

How you can help.

• If you see petition circulators, try to convince them not to help Chevron hurt Richmond.
  
  
• Call the RPA at 510-595-4661. We will be sending out truth squads to provide information to people in any signature gathering location.
  
  
• Help us let people know. We will be leafleting shopping areas and going door to door.
  
  
• Drop us an email with your name, phone number, and times you are available.
  
  

Remember the only answer to Chevron's money and PR is when we all participate.

See Statements by Council Members Lopez, Ritterman, Rogers, and Butt