City Manager Bill Lindsay of Richmond, home to Chevron’s oldest California refinery, reportedly says the oil company used to hold up the city of El Segundo as an example―during contentious negotiations over municipal taxes―of how an appreciative and cooperative city government ought to act.

Now, according to the Los Angeles Times, a Los Angeles County civil grand jury is looking at how El Segundo might have earned that reputation for congeniality.

Doug Willmore, an El Segundo city manager who was fired in February after suggesting that Chevron owed the city a lot of money, told the Times he was interviewed by a knowledgeable grand jury in September. Willmore was let go, without explanation, 10 months into his new job after proposing that Chevron pay a higher acreage tax on its refinery.

A month after the firing, the Times unearthed documents from the 1990s concerning a preliminary audit by Municipal Resource Consultants that showed Chevron owed El Segundo $9.5 million in back taxes. Auditors had found that Chevron underpaid its taxes on natural gas by $4.2 million, electricity by $3.3 million and telephone by $79,300, not including interest and penalties, over a three-year period.

El Segundo killed the 1990s audit and signed an agreement with Chevron that capped its user utility tax at a low $150,000 a year and forgave the past taxes. A lawyer working on the audit said the city had “stonewalled” the process, did not act in “good faith” and shown more resistance than any other state he had encountered “regarding the collection of such substantial and much needed tax revenues.”

Willmore, who sued El Segundo after the firing, told the Times, “At best, it's one of those sweetheart deals for Chevron to do whatever they want. At worst, it’s much worse than that.”

Subsequent agreements resulted in the city collecting considerably less money than its municipal brethren hosting comparable facilities.    

El Segundo receives around $5 million a year from Chevron, one-third of what Richmond gets. Torrance, another South Bay city, gets $9.8 million from the Exxon Mobil refinery and Carson pulls in $10.2 million from its BP refinery. El Segundo’s 951-acre refinery covers 36% of the city’s commercial land but is responsible for just 10% of the city's commercial tax revenue.

Chevron fought with Richmond and Contra Costa County for years over what an auditor said was a vast underpayment of taxes on the refinery there. Richmond put an initiative on the local ballot that would have removed a statutory cap on taxes and Chevron put one on the ballot repealing the tax entirely. Chevron settled the matter in 2009, agreeing to pay the city $28 million in back taxes $119 over 15 years.

–Ken Broder

To Learn More:

Grand Jury Investigating Massive Tax breaks for Chevron in El Segundo (by Jeff Gottlieb, Los Angeles Times)

El Segundo Ignores Millions in Potential Taxes from Chevron, Records Show (by Jeff Gottlieb, Los Angeles Times)

El Segundo Council Votes to Fire City Manager Willmore (by Kristin S. Agostoni, The Daily Breeze)

El Segundo, Chevron at Odds over Oil Company's Taxes (by Jeff Gottlieb, Los Angeles Times)

Chevron: Corporate Rap Sheet (by Philip Mattera, Corporate Research Project)