chevron_versus_upstream.pdf

Flanked by environmentalists and parks advocates, ChevronTexaco spokesman Dean O’Hair  announced at an August 13 press conference that ChevronTexaco had offered to purchase Point Molate from the City of Richmond for $34 million and “enter into a working relationship to create an open space and a wildlife habitat located at the Point Molate shoreline and the surrounding hillside.”

O’Hair said that the offer had been tendered to the City in writing earlier the same day, but late yesterday afternoon, no one at City Hall could locate it or had any knowledge of it. However, a letter from ChevronTexaco dated August 13, 2004, to the Richmond City Manager and faxed to Council members this morning states that “this letter sets forth the key terms and conditions upon which ChevronTexaco would be willing to initiate negotiations with the City for the sale of the Properties, subject to ChevronTexaco and the City reaching agreement on other terms and conditions and documentation that would be necessary to complete a transaction.” The proposed purchase price would be $5 million with another $29 million paid in annual installments of $1 million.

I was the only person connected to the City of Richmond in an official capacity attending the press conference, which was held not at Point Molate but instead on nearby ChevronTexaco property near Point Orient.

The offer was likely spurred by a pending offer from Upstream Development to purchase the property for what has been described as $400 million over the next few years, including a $20 million cash down payment, a note for another $30 million and $10-$20 million annual payments in “municipal service fees” that would be calculated to roughly equal the taxes on the proposed project that would be taken into trust by the U.S. Department of the Interior for an Indian tribe.

The ChevronTexaco plan, as represented in the diagram to the left, would create a shoreline park predominantly west of Western drive for the entire length of the San Pablo peninsula. The remainder of the Point Molate property, shown cross hatched in green would become open space with no public access whatsoever. Neither ChevronTexaco nor their new environmental partners were able to explain any of the following:

• Who will pay for the development and maintenance of the shoreline park?
• What will happen to the historic Winehaven complex, which is listed on the National Register of Historic Places and is badly in need of major rehabilitation?
• What commitments can ChevronTexaco make for the approximately 800 acres of upland land it owns on the peninsula that are currently designated open space in the Richmond General Plan?
• How much of the Point Molate property would be developed for industrial use?

Upstream Development currently holds an Exclusive Right to Negotiate (ERN) with the City of Richmond that was first authorized by the City Council in December of 2003, and extended for 60 days when it expired at the end of July 2004. Based on a search of my files, I believe that the City Council was never provided an actual copy of the ERN. The terms of the ERN are in dispute, with ChevronTexaco maintaining that it had a loophole that allowed the City to negotiate with ChevronTexaco as well as Upstream.

ChevronTexaco also maintains that the City cannot proceed to approve the agreement with Upstream until it first offers the property for sale to the East Bay Regional Parks District pursuant to California Government Code 54200 et. seq. Despite several requests, the Richmond City attorney has provided the City Council with no legal opinion regarding ChevronTexaco’s claim.

In the press conference, several speakers alleged that alternate proposals to that of Upstream properties had never been publicly considered by the City of Richmond, which is not accurate.

In 2003, the City circulated an RFP nationwide. ChevronTexaco did not respond, but a number of development teams did. Upstream was selected because of the qualifications and experience of its team members and its ambitious projection of potential value.

At the time development proposals were being solicited and considered, the City Council was informed that ChevronTexaco had expressed an interest in leasing the property for a sum that ranged from a few hundred thousand to as much as a million dollars annually, during which time the City would agree to hold it off the market. The ChevronTexaco offer was either never made in writing or was never provided to the City Council, and it was assumed that it was not a bona fide offer in response to the RFP.

Questioned about the fact that both the Upstream and ChevronTexaco proposals had roughly equal amounts of parks and open space within the Point Molate property, the parks and environmental advocates responded that the scale of the Upstream proposal, the number of people and the incorporation of a casino would be incompatible with the desirable context of a public shoreline trail.

Despite the appearance of Save the Bay co-founder Sylvia McLaughlin on the speakers platform, a Save the Bay spokesperson emailed me yesterday that “Save the Bay is not supporting either proposal at this time,” explaining that “the public is largely in the dark about what exactly either of these entities is proposing.” An East Bay Regional Parks District director acknowledged that the board had previously authorized its staff to participate in secret negotiations with ChevronTexaco and had authorized the public endorsement of ChevronTexaco’s plan. Sierra Club contacts also acknowledged that the organization had taken a similar official position.

Although presentations of the Upstream proposal have been made to a number of organizations and to the City Council over the last couple months, the agreement with actual details about the proposal remains under wraps and is still in the drafting stage. Statistics and deal points have been gleaned from a number of statements made by Upstream representatives to the media. Consideration by the City Council, first discussed for as early as August 3, was put off to August 17. Now, it appears that the earliest vote would be August 24 but more likely August 31.

Despite the murkiness and bad timing of the ChevronTexaco proposal, as well as its apparent lack of economic competition, the concept has some interest. In the broadest context, it is similar to proposals I floated to ChevronTexaco over five years ago and also urged City staff to explore. I knew that they have always coveted control of Point Molate as a refinery buffer. Why not acquire it the old-fashioned way, I asked, and buy it at the market value it would fetch if ChevronTexaco’s ammonia storage had not precluded housing? At the time, I estimated that to be about $30 million. As a part of the deal, ChevronTexaco would swap the Point Molate uplands adjacent to the western refinery boundary for a strip of shoreline of comparable size to be used as a shoreline park and the Bay Trail. Provisions would also have to be made to provide infrastructure and to rehabilitate the historic Winehaven complex.

Fleshed out and substantially enhanced, the ChevronTexaco proposal might be worth considering. While it would not provide the economic boost of the Upstream plan, one has to remember that there is substantial uncertainty in the Upstream plan. Without the casino compact and establishment of the Indian reservation, both laden with uncertainty, Upstream’s destination resort is nothing but a dream. In the worst case scenario, Upstream would pay the City $5 million over the next five years and then return the property in its present precarious condition.

Everything considered, the most interesting aspect of the current developments is that property the City staff deemed to be of too little value and too much liability for the City to acquire from the Navy a year ago is now being fought over by giants for tens of millions of dollars. That has to validate what many of us have been saying for some time, that Richmond’s incomparable resources, especially its 32 miles of shoreline, will one day change the image and the economy of this sometimes star-crossed city.

ChevronTexaco offers $34 million for site

By Scott T. Corey
CONTRA COSTA TIMES

Posted on Sat, Aug. 14, 2004

Oil giant ChevronTexaco has teamed with Bay Area parks and conservation groups to offer Richmond officials $34 million for the shuttered Point Molate naval fuel depot.

The deal, delivered in a letter of intent to City Hall on Friday morning, would eliminate any chance of a resort hotel and casino complex on the scenic point, preserving it as public open space, company officials said.

Chevron would pay the city several installments totaling $34 million for the deed, then cooperate with the East Bay Regional Park District to develop a shoreline park and trails, said Chevron external affairs manager Dean O'Hair.

"We are excited about being able to take an active role in preserving Point Molate as a natural scenic resource," O'Hair said.

Representatives of several Bay Area environmental groups, including the Sierra Club and the Golden Gate Audubon Society, joined Chevron officials Friday at a news conference overlooking Point Molate to announce the offer.

City officials, who said they had yet to see Chevron's offer letter, were open to the company's concept but wary of the lack of specifics.

"It's great if Chevron wants to make an unsolicited bid," said Shilen Patel, an analyst in Mayor Irma Anderson's office. "If Chevron want to put a bid in, (Anderson) would like to see the details, then she'll consider it.

"Right now, all we have is a press conference," Patel said.

Anderson was vacationing out of town Friday.

"If Chevron was so altruistic, why don't we see shoreline park right where we are standing?" asked Councilman Tom Butt after the media event on the bluff just north of Point Molate.

The land surrounding Point Molate and its historic village is owned by Chevron as a buffer zone to its refining operations.

Butt noted that the much more lucrative proposal by Upstream Development LLC would preserve existing open space as well.

Construction of a luxury hotel, shopping center and Indian casino would take place on property previously developed by the Navy, said Upstream principal Jim Levine.

Upstream is negotiating purchase of the 300-acre parcel with the city, offering $50 million for the site. Thousands more jobs and up to $20 million a year for the city will be generated by the casino complex, Levine said.

Upstream is working with the Guidiville Band of Pomo Indians and Nevada gaming companies to develop the project, Levine said.

While details of an agreement are worked out with city staff, no official documents have been released.

The council was expected to consider the matter during a meeting next Tuesday, but that session was scuttled because the contract wasn't ready, according to the city clerk's office.

It may be reset for later this month, Butt said.

Richmond officials may be prevented from considering Chevron's offer, Butt said, because Upstream has an exclusive contract to negotiate with the city.

According to O'Hair, the agreement included an exception that would allow the city to consider Chevron proposals.

But an extension of the agreement approved by the council earlier this month does not include that exception, said the city attorney's office.

While Levine said swaths of land would be converted to parks in Upstream's plan, environmentalists said the casino project is too dense for the site.

"From what has been previewed, the casino plan contemplates uses that will overwhelm the site and prevent the kind of public access and shoreline parkland that Point Molate can and should provide," said Robert Cheasty, president of Citizens for the Eastshore State Park.

O'Hair said a controlled and managed park would provide better security for the Bay Area's largest refinery than a casino. Thousands of people milling around the property at all hours would make it more difficult to protect the area against possible terrorist attacks.

Upstream's proposal was the only one submitted when city officials sought development ideas for Point Molate, which the city got from the Navy this year.

RICHMOND
Chevron tries to buy casino's planned site
- Cecilia M. Vega, Chronicle Staff Writer
Saturday, August 14, 2004

Chevron made an 11th-hour bid to stop a Las Vegas-style Indian casino from being built next to its Richmond refinery, offering to buy the land at Point Molate from the city for $34 million.

The purchase would block the Guidiville Band of Pomo Indians and an Emeryville developer from building a mega-resort with 1,100 hotel rooms and 3, 000 slot machines on a former Navy base.

But city officials did not appear eager to accept the proposal from the Bay Area's largest refinery and said an offer from the developer -- $20 million up front and $15 million to $20 million over the next two decades -- was more competitive.

The Richmond City Council is expected to approve the casino deal in coming weeks.

"It's not competitive," City Councilman Tom Butt said of Chevron's offer. "In economic terms and in income to the city, this is no comparison at all. ... In terms of the intangibles, it's probably worth looking at."

But refinery officials said building a casino that would attract thousands of visitors a day to the shorefront land would pose a threat to the refinery's security. Chevron instead wants to convert the land to an open- space preserve with possible industrial space.

"If I went forward to the city and said I wanted to put the largest refinery in the Bay Area next to an already existing resort ... I don't think I'd get much of a listen," said Chevron spokesman Dean O'Hair.

The refinery's offer -- made Friday morning to the cash-strapped city, and consisting of a lump sum and a series of annual payments -- may have been turned in too late for city officials to consider.

Assistant City Manager Rick McCoy said Richmond is locked into an exclusive negotiating agreement with the casino developer, Upstream Investments.

"Counsel advised us not to read it (Chevron's offer), don't discuss and just put it in the file," McCoy said. "It just sits there. ... We take no action on it."

Chevron disputes that position and says a clause in the negotiating agreement allows the city to consider offers from the refinery.

Though Chevron would not say what percentage of the 350 acres of Point Molate land it would convert to open space, it would work with the East Bay Regional Parks District to convert the deserted land into something the public could use for hiking and coastal trails.

During a news conference announcing the offer Friday, Chevron refinery executives shared a stage in an unlikely and unprecedented alignment with leaders of environmental advocacy groups who want to see Point Molate preserved.

"Chevron does not have a stellar environmental record," said Jonna Papaefthimiou, conservation manager with the Sierra Club's San Francisco Bay chapter.

And though the group has not taken an official stance on the casino or Chevron's proposal, "at first flash, we would rather see a public entity control this part of a shoreline than a private developer who wants to build a casino," she said.

If Richmond approves the Point Molate casino, there could be three Nevada- style casinos built within a 4-mile stretch of west Contra Costa County. Casino San Pablo plans a major expansion to include slot machines, and the Scotts Valley Band of Pomo Indians bought 30 acres in North Richmond earlier this year in hopes of building a casino.

Jim Levine of Upstream Investments said the Point Molate plans included building four hotels, a 300,000-square-foot shopping mall, 85 stores and a separate casino with an auditorium for musical and theatrical acts. The resort would bring about 6,500 jobs, he said.

Point Molate, situated just north of the Richmond-San Rafael Bridge, is a former naval fuel depot that the Navy gave to Richmond last year.

On Friday, environmentalists and Butt expressed concern that the city was moving too quickly and secretively on the deal, and had not provided the public with enough opportunity to comment.

City leaders have yet to make public the details of the casino proposal but say they plan to do so before the council votes this month.

"We believe that we should not move too fast before this property is locked up under one specific proposal," said Bob Doyle, regional manager for the East Bay Regional Park District. "There should be an open and thoughtful process on what happens here."

E-mail Cecilia Vega at cvega@sfchronicle.com.