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Oiling the Skids for Chevron in Houston

Perry's Texas Enterprise Fund coughs up $12 million for Chevron.
by Published on
An artist rendering depicts a new Chevron tower (left).
An artist rendering depicts a new Chevron tower (left).

Chevron is one of the world’s largest corporations, earning more than $240 billion in revenue last year. CEO John Watson raked in almost $25 million in compensation in 2011. And as of July, Chevron is the proud recipient of a $12 million grant from the state of Texas. For most people, or even a small company, $12 million is an enormous amount of money. For Chevron, it’s about what the company earns every four hours.

The $12 million in public funds came from the Texas Enterprise Fund, the stated purpose of which is to create jobs and spur investment. But critics have accused Gov. Rick Perry, who oversees the fund out of his office along with Lt. Gov. David Dewhurst and House Speaker Joe Straus, of using the $500 million pool as a slush fund to reward allies and campaign contributors. But there’s another nagging question hanging over the Texas Enterprise Fund: Does it actually create jobs? Is it really a “deal-closer,” or just a way for corporations to wring more money out of taxpayers?

The Chevron example is instructive. The $12 million grant is earmarked for a 50-story office tower Chevron plans to build in downtown Houston as part of the company’s expansion plan. The project will create 1,752 jobs, according to the governor’s office. But would Chevron have created those jobs regardless of winning a grant from the Enterprise Fund?

Chevron has had plans for the property for at least five years. In 2008, Chevron announced that it would purchase 1600 Louisiana, the block where the 50-story tower will be located. “It leaves us flexibility and options for the future,” Edward Spaulding, a Chevron spokesman, told the Houston Chronicle at the time.

In June 2011, Chevron purchased Four Allen Center, a 50-story, 1.3-million-square-foot tower that was once Enron’s headquarters, for $340 million. It did so without help from the state.

“Chevron is pocketing millions in taxpayer handouts to do something they would do anyway,” said Craig McDonald of Texans for Public Justice. “This is pure handout. That incentives are needed to induce behavior is just a charade.”

Asked what locations other than Houston Chevron had considered, a company spokesman responded by email: “It was determined that building a new building downtown is the best way to accommodate our business growth and expanding [the] Houston workforce. Chevron’s demand for office space in downtown Houston has exceeded the availability of owned space.”

Well, bully for them. But the question remains, if the state of Texas hadn’t coughed up $12 million, would Chevron have packed up and moved somewhere else? It doesn’t seem likely.

To access the state grant, Chevron also had to line up an incentive from local government. City council members have hardly addressed the “but-for” question. In a city council meeting on July 24, the council members fell all over themselves to lavish praise on Chevron and express support for a $2.7 million tax abatement for Chevron’s property. “They deserve our help on this,” said councilman Jack Christie, citing the company’s charitable projects.

Council member Melissa Noriega had the most expansive explanation. “This is exactly the kind of project that is appropriate where we take local match and leverage that to a much large amount of money that’s given by another entity that benefits Houston, that benefits our jobs, that improves our skyline, that makes a real opportunity. As we talk about the role of government there are places where it’s appropriate for us to intervene. This is that kind of thing.”

The council has largely talked around the nagging “but-for” question. The Observer put the question to James Rodriguez, the councilman whose district encompasses Chevron’s downtown Houston headquarters. “I didn’t have those particular discussions but we trust our economic development team, our staffers to look at the proposals and again they look at them case by case. They provide information to council and then they make their recommendations.”

The Houston Chronicle, while criticizing the incentives as “a race to the bottom … without any thorough cost-benefit analysis,” all but conceded that the city would greenlight the subsidies and encouraged the council to squeeze more amenities out of Chevron.

Attorney General Greg Abbott, who is the frontrunner to replace Perry as governor, has already expressed ambivalence about the benefits of the Enterprise Fund and the Emerging Technology Fund. “What I can say is that I don’t want to be involved in government picking between winners and losers,” he told the Associated Press in July.

Forrest Wilder, a native of Wimberley, Texas, is associate editor of the Observer. Forrest specializes in environmental reporting and runs the “Forrest for the Trees” blog. Forrest has appeared on Democracy Now!, The Rachel Maddow Show and numerous NPR stations. His work has been mentioned by The New York Times, the Washington Post, the New Yorker, Time magazine and many other state and national publications. Other than filing voluminous open records requests, Forrest enjoys fishing, kayaking, gardening and beer-league softball. He holds a bachelor's degree in anthropology from the University of Texas at Austin.

  • JLH

    Meanwhile in Ecuador, Chevron still hasn’t paid up for deliberately dumping more than 18 billion gallons of toxic wastewater, spilling roughly 17 million gallons of crude oil, and leaving hazardous waste in hundreds of open pits dug out of the Amazon forest floor. It is one of the worst environmental disasters in history and Chevron has been ordered to pay about 19 billion…to date they have done nothing. They have never cleaned up or even apologized. Local indigenous people have suffered from various cancers, birth defects, miscarriages, etc. We should not be giving a dime to Chevron for anything, much less to build an office building.

    • SoberMoney

      Make sure we never buy their petrol either. They are fossil fuel pigs.

    • Jon Cassidy

      Actually, Texaco (since acquired by Chevron) paid for its share of the cleanup ages ago. The utterly corrupt Ecuadorean government recognized as much, but refuses to pay for its share (it was a joint venture). The “court” that ordered the judgement is a cinder block room at a strip mall in the middle of the jungle, presided over by a drunk.Go down there some time — the dirtiest operator by far is Petroecuador. If you want to get mad at Chevron for something legit, this office deal deserves contempt. So does the shale development deal they just cut with the Argentine government, making them complicit with the expropriation of Repsol’s property. Repsol is suing in US and Spanish courts and deserves to win.

      • JLH

        No, they paid 40 million for cleanup, but that did not finish the work. Then in 1993 indigenous Ecuadoran leaders filed a separate lawsuit about the destruction of the natural environment and health-related problems because of the pollution caused by Texaco. Chevron inherited the lawsuit and has fought it and refused any responsibility although they have lost in every court to date. I don’t think your facts are correct about the Ecuadoran judicial system. Chevron thought they would win there, so they fought to have the case heard in Ecuador where they lost. If you research the case, you will find your observations are incorrect. Even 60 Minutes did an expose several years ago on Chevron’s culpability.

        • Jon Cassidy

          Texaco had a joint venture with the gov. It paid its half, as it was a 50/50 venture. Government signed off on it. Corruption is a fact of life in Ecuador. I lived there for two years and never met anyone who didn’t take it for granted. Look up the piece The New Yorker did on the suit around two years ago. You’ll find it fascinating reading.

  • SoberMoney

    The right wing corporate welfare whores who run the State coffers continually expose their arrogance – with not a whimper from their Republican voters who pay for the dirty energy welfare.

    I guess the ability to drive a used truck on credit is good enough for the good ol boys. Why don’t they just say “tell me how to bend over, Mr. Perry, and please let me vote for you while you lubricate my economy.”

  • James Klassen

    http://governor.state.tx.us/files/ecodev/TEF_Listing.pdf Here is a list of the activities since the Funds inception. Some call this the “Phantom Jobs” report. What you really want to look at is the amount pledged(TEF awards).

  • SoberMoney

    The term “economic development’ has become just another phrase to describe a whore house.

    Who’s economy does it develop? What honest politicians looking for a lobbying job once his or her incompetence get him or her voted out of office can say “NO” to a big corporation’ promise of jobs and free tickets to the professional sports teams in the area?

    What America needs is more economic development? Hell, we can’t even support all the current corporate strip malls and their tacky products made in China and Vietnam.

    Texas “economic development” in most instances is nothing more than corporate welfare for the Wall Street elite – or whoever can buy Rick Perry and his crony right wing gangster politicians in Austin.

    Watch this video, if you want to see what real citizens are doing:

    http://www.thebankattack.org