Chevron wants SLO to pay $11 million for development
September 22, 2011
By JOSH FRIEDMAN
The San Luis Obispo City Council reviewed and endorsed Tuesday a proposed 322-acre Tank Farm development project designed by the Chevron Corporation, but would not commit to reimburse the developer $11.1 million in costs.
Chevron plans on constructing business parks and manufacturing centers on its property located on the north and south sides of Tank Farm Road between Broad and South Higuera streets. Amenities are to include bike paths, hiking trails and city sanctioned open space
Planners are also considering building baseball fields and luring a hotel to the area in close proximity to the San Luis Obispo County Regional Airport.
Due to San Luis Obispo Municipal Code Subdivision Regulation 16.20.110, adopted in 2006, Chevron actually stands to collect payments from the city when terms are reached. On the grounds that the project is improving neighboring properties, the city intends to “reimburse” the company a prorated amount.
To determine the amount owed to Chevron, the city hired a third party, Goodwin Consulting Group, which calculated the “fair share” Chevron must invest in order to implement the project. Goodwin concluded that the project should cost Chevron $6.1 million, which is $11.1 million short of the company’s projected cost of $17.4 million.
Hence, Goodwin suggested the city “reimburse” Chevron $11.1 million to remain in compliance with its own regulations. The consultant group wrote in its report that the project was only feasible if the city paid Chevron the full amount.
“Without reimbursements, it looks like the project doesn’t work; with reimbursement the project looks to be feasible,” the report says.
Chevron agreed with Goodwin’s findings, and one of its representatives lobbied the council Tuesday night to commit the $11.1 million in its entirety.
“We overspend, and we ask for those fees to come back to us,” said Bill Almas, Chevron project manager. “We’re not asking for anything from the city except to spend money to reimburse us.”
Though the city council did not commit to “reimbursing” Chevron the entire $11.1 million, each council member endorsed the project as a whole and the idea of compensating the company for its effort in improving the community.
Assistant City Manager Michael Codron said the city is exploring the idea of paying Chevron through fee credits from future development plans and inspections in the project area.
Like the council, members of the community expressed overwhelming support for the Chevron project. During public comment, only one San Luis Obispo resident opposed the development plan.
“A deal with Chevron is a deal with the devil,” Will Powers said. “[They are] polluters, human rights violators, murderers of indigenous people… generally terrible stewards of planet earth.”
Vice mayor John Ashbaugh disagreed.
“I see so many benefits from this agreement that I don’t see how we can tell Chevron to take a hike,” Ashbaugh said.
Ashbaugh also warned that choosing to turn down Chevron’s proposal would surely lead to the assumption of the project by the county. The property is currently located in the county and the council intends to have it annexed.
Likewise, Mayor Jan Marx said it is time to move forward on the project.
“This will be like our version of Central Park,” Marx said. “Not that we are New York City, but it is like having a big park in the middle.”
In order to reduce traffic congestion and make the area more accessible, much of the proposed project consists of road expansion. If Chevron’s plan comes to fruition, Tank Farm Road will expand to a four-lane street with a center divider, and Prado Road and Margarita Avenue will each extend to Broad Street.
The energy giant also promises to clear an old and dangerous reservoir, known as “the coliseum,” which is located beside the airport runway along the flight path.
Chevron anticipates construction beginning in two years and taking 25 years to complete. Although Chevron’s project application was accepted by the San Luis Obispo Planning Commission in 2009, the corporation still must negotiate a contract with the city before construction can begin.