Chevron just wants its fair share. And according to the oil and gas conglomerate, that amounts to the city of San Luis Obispo forking over $11.1 million.
- PHOTO BY STEVE E. MILLER
The company wants SLO to help pay for millions of dollars of infrastructure it wants to build in and around its Tank Farm property south of the city. It unveiled a rough outline of its infrastructure plans to the SLO City Council on Sept. 20.
Chevron owns 320 acres of mostly desolate land south of Tank Farm Road near the SLO County Regional Airport and wants to develop some of it, perhaps in an effort to make up for the big money it will have to spend in cleaning up the property.
The land was the site of a massive oil spill and fire in 1926 that made history because of its size and ferocity. More than 6 million barrels of oil spilled, and some of that oil still rests beneath the surface. Chevron, which took over the land when it merged with Unocal in 2005, has pledged to clean up the area and convert most of it to open space.
Chevron wants to develop a small portion of the land and pledges to spend $17.4 million to build infrastructure—roads, water, and sewer lines—to support future development on its property. Under city rules, developers are supposed to pay their “fair share” of infrastructure costs, which, according to city formulas and an outside consultant, would come to $6.3 million for Chevron. The oil conglomerate claims that it can only develop its property if there’s an investment of $17.4 million in infrastructure, $11.1 million more than the city would require Chevron to pay. Chevron said it would be willing to pay for the whole amount if the city would eventually reimburse the additional $11.1 million it plans on spending.
“We’re not asking for any special treatment,” Chevron Project Manager Bill Almas told the City Council. “We are just asking to receive money above our fair share to make a feasible program.”
Almas said Chevron’s doesn’t want a guarantee for the full amount; it just wants a guarantee of a steady flow of income from the city over the next 25 years to help pay for the additional infrastructure.
The deal may be risky for the city: If the area around the Chevron property never gets developed, the city could be left holding the bill for the infrastructure. On the other hand, the infrastructure would make it much easier to draw development to the southern areas of SLO, an area city leaders have long planned for future growth.
The infrastructure improvements proposed by Chevron are enticing. If the city agrees to the offer, it wouldn’t—in theory—have to pay for the infrastructure out of its general fund; money from future development fees in the area would go to pay back the company. Tank Farm Road, a major east-west thoroughfare for the city, would be expanded to four lanes and would include bike lanes and new intersections. Large waterlines would be installed.
There are other potential benefits for Chevron: Not only would the city be reimbursing Chevron for infrastructure built around the land, according to the staff report on the potential deal, the city would be required to reduce or eliminate a wide variety of fees for the company, as well as consider a “phased payment schedule for Affordable Housing Fees to reduce upfront costs.” The city would also be required to channel incoming Transit Occupancy Tax to Chevron if a hotel is built in the area.
In a sense, the city has little choice but to go along with the oil company’s plans if it wants to incorporate and develop the area around the airport.
The Chevron property is outside city limits, and Chevron hasn’t decided whether it wants its property to be annexed into the city or remain in the county. The company has said it wouldn’t be able to develop the area unless the city agrees to the reimbursement deal. City staffers have said if the Chevron land isn’t incorporated into the city, future development south of the city would be threatened.
The City Council was enthusiastic in its support of Chevron’s idea.
Mayor Jan Marx compared the future of the Tank Farm property, slated to be made into parks and open space, as a future Central Park for San Luis Obispo.
“Not that we are New York City,” she said, “but it would be a big park in the middle.”
Only Councilmember Kathy Smith seemed to have trepidations about the idea.
“Is there a risk this could explode on us?” she asked.
The city staff said the possibility was unlikely—though they made it clear the arrangement was still in the preliminary stages and too early in the process for a full-scale analysis of the proposition.
“There are so many benefits from this agreement,” said Councilman John Ashbaugh, who was wholehearted in his support. “I don’t see how we could let this go.”
Staff Writer Robert A. McDonald can be reached at firstname.lastname@example.org.