Orange council OKs Chevron incentive

February 28, 2020

Beaumont Enterprise - By Kaitlin Bain

ORANGE — The city of Orange officially has taken the baton from Orange County in signaling the area is ready for big things.

The City Council on Tuesday evening unanimously approved its own incentive agreement with Chevron Phillips Chemical for a potential $5.6 billion investment the company has considered bringing to Orange County.

It passed with much less fanfare compared to a similar approval in Orange County Commissioners Court last week.

Only Chevron Phillips Real Estate and Property Tax Manager Chaney Moore and Mayor Larry Spears Jr. spoke about the decision immediately after the vote, although Orange County Economic Development Corp. Executive Director Jessica Hill, Orange County Judge John Gothia and others involved in the potential deal were in the audience. Other council members later thanked Chevron for being at the meeting.

“For me and all of us that are here, council and the city staff, this is a historical night,” Spears said.

“It started last night with our friends in the county taking care of their end … to see something that potentially can change lives for years to come. To not say anything besides potentially, we thank you for this opportunity.”

Like Orange County, the city of Orange declined to give any specifics about the agreement until it’s signed and finalized, at which point it becomes a public record.

Agreements like the one approved Tuesday evening, specifically called an extraterritorial jurisdiction non-annexation agreement, can guarantee the city will not annex the property into the municipality, set procedures if the city should decide to annex the territory back into the city limits and authorize enforcement of certain city land use and development regulations, among other provisions.

They also often include some sort of payment or other incentive from the company to the governing body in exchange for not annexing the land.

The Orange City Council last summer approved the deannexation of more than 400 acres owned by Chevron Phillips Chemical to allow Orange County to establish a reinvestment zone, making way for the county’s tax abatement agreement with the company.

Moore told the council, as he told the commissioners court last week, that the company was expecting an investment decision in the fourth quarter of this year or early in the first quarter of next year.

Chevron Phillips Chemical is still working out an agreement with Qatar Petroleum — a company working with CP Chem on this project.

“This is a very clear signal to our leadership at CP Chem and our parent companies that Orange is the place to be,” he said. “We appreciate that.”

Since 1955, Chevron has employed about 200 people at its plant at 5309 FM 1006. There, it produces three chemicals that are sold to make plastics and other products.

The estimated $5.6 billion in new investment includes $60 million in land cost, $50 million in business personal property and $100 million in taxable inventories.

The proposed new facility would convert the natural gas liquid ethane into ethylene, the building block of most plastics.

Chevron expects as many as 10,000 temporary jobs to be created during the construction phase. Upon completion, no fewer than 500 permanent jobs paying an average of $100,000-plus would be added.

The tax abatement agreement approved last week by Orange County offers the company a 10-year 100% tax abatement, although the company is delaying the start of the abatement to add improvements between $200 million and $400 million, which it will pay property taxes on during the term of the abatement.

Hill said that brings the abatement down to about 90% to 93%.