ChevronTexaco delivered a revised offer to City Hall today, an executive summary of which is attached. Each ChevronTexaco offer has improved the previous one, but there remain serious gaps that must be fleshed out.

Following are my comments on the latest offer:

1.              The non-contingent $50 million is good.

2.              I never understood the point of the $5 million for jobs. You can’t create jobs with money alone. Jobs require sustainable businesses.

3.              The $25 million in annual payments of $1 million is good, but is this in lieu of taxes or supplemental? If ChevronTeaxaco buys the land for $50 million to $80 million, depending on how you allocate the money, will that be the assessed value for taxation?

4.              The commitment to spend money for a land use plan is pointless without some commitment to what will happen conceptually. What will happen with Winehaven, and when? What will happen with the development parcels, and when? And who will pay for it? What will happen to the 191 +/- acres of upland open space? Chevron has a history of agreeing to study things or cooperate in some effort but never following through with any action.

5.              The $2 million to construct the park is good, but has anyone ever calculated what the cost will actually be? Who will operate and maintain the park, and how will that be paid for?

6.              How much land outside Point Molate will be made available? How will improvements, maintenance and operation be funded?

7.              The refund for un-conveyed remediation property is questionable. I am under the impression that Chevron is basically buying security. What difference does it make whether Chevron owns the property or the Navy owns it?

8.              Why does Chevron want to own the shoreline and then lease it to the City? Why not just let the City or some public agency own it and avoid the liability and legal complexity of a lease?

9.              Where is the 25-acre property, and what are the terms of the lease?

10.          Where is the money for the Plunge?

I think ChevronTexaco is moving in the right direction, but the deal is not quite there yet. I have my own suggestions in the attached file.

KEY CHEVRON OFFER POINTS

♦    Chevron will pay the City of Richmond $50,000,000 for Point Molate. Chevron will pay this sum as early as December 23, 2004. Chevron’s offer is essentially non-contingent;

♦    Within ten days of the execution of the Agreement, Chevron will pay the City of Richmond the non-refundable sum of $5,000,000 to fund jobs.  The City will maintain complete and unfettered discretion over how this money is to be used;

♦    Chevron will agree to a special tax assessment of $1,000,000 per year for 25 years. The money will be placed into the City’s general fund for use as the City may deem appropriate;

♦    Chevron will establish an account for $1,000,000 to be used immediately for the development of a comprehensive land use plan, in concert with the City and other interested parties, that incorporates the light industrial and support commercial elements of the Navy’s Reuse Plan for Point Molate, public open space, recreational uses, and historic preservation;

♦    Chevron will establish an account for $2,000,000 (funded by five annual payments of $400,000 each) to be used for the development, construction and maintenance of a shoreline park and trail system;

♦    Chevron will make available land that it currently owns that is adjacent to Point Molate for shoreline trail;

♦    Chevron will take the Point Molate property “as is” and will pay regardless of whether the 51 acres currently under remediation by the Navy are available at the close of escrow. If these 51 acres are not ultimately conveyed to Chevron by 2011, the City will agree to partially refund the pro-rata portion of the purchase price attributable to this acreage (calculated by taking the total landed acreage and dividing by the portion of acreage not conveyed by that date). In no event will the City be required to refund any time value or interest payment on this money, effectively providing the City with a seven year interest free loan;

♦    Chevron will accept a lease of shoreline property from the City; and

♦    Chevron will make available to the City for long term lease a valuable 25 acre commercial/industrial property currently owned by Chevron.

PROPOSED DEAL POINTS FOR CHEVRONTEXACO.doc