By Camilo Smith
By Craig Malisow
By Jeff Balke
By Angelica Leicht
By Jeff Balke
By Sean Pendergast
By Sean Pendergast
By Jeff Balke
In letters to the union and local politicians, refinery officials insist they've done no more than try to make money. Indeed, profits have soared. According to the company's figures, the refinery's income rose from $24 million in 1999 -- admittedly a slow year -- to $213 million in 2002.
As the refinery's chief counsel, Nancy Corbet, wrote to PACE officials in May, the plant has seen significant improvements in every category: employee safety, environmental safety, reliability and profitability. "To achieve this dramatic improvement, we have made significant changes in how we operate our business By nature, change is challenging."
Employees have shared in the wealth. Their bonuses in 2001 and 2002 were at 8 and 9 percent of their annual salaries.
That still didn't alter the view many workers have about the company. "People just hate it now," says Larson.
The union has been crusading against the changes. It says the management is pushing even minor issues into costly arbitration, that it's firing too many workers, that it's making unfair changes to their contract without renegotiating. Recently, the union has been protesting management's edict that workers wear pagers when off-duty, an issue that's won the support of Congressman Green.
Union members have picketed Lyondell night at an Astros game. They picketed at the River Oaks estate of William T. Butler, chairman of Lyondell's board. Since Butler is chancellor of Baylor College of Medicine, they also picketed there.
The prospect of CITGO's relocating its headquarters to Houston has intensified their efforts. The AFL-CIO's Shaw urged Pam Lovett, president of the Greater Houston Partnership's economic development division, not to offer the company any tax breaks. " Houston does not need another bad corporate neighbor," he told her in a letter.
Union representatives also have attacked the potential tax abatements. Ten years ago, Harris County and the city of Houston gave Lyondell-CITGO a major tax break in exchange for its upgrade. It was a typical plan: The refinery was to get a big discount for ten years, then would pay more in taxes because the improvements would make it worth far more. And, as in most similar deals, the refinery promised to add new jobs as a condition for the tax break.
The union is convinced that the refinery reneged on the deal and actually cut jobs. Today both Harris County and the city of Houston insist the refinery has met the terms of the deal. But there's good reason for the confusion: Those terms don't match what was publicly stated about the agreement in 1994.
When then-mayor Bob Lanier pushed the plan, it was supposed to be a $720 million investment. Quoting the company, the Houston Chronicle also reported that the upgrade would create "120 to 140 permanent jobs."
In 1994, the refinery had about 1,200 workers, according to its tax abatement application. Today it reports 1,033 full-time employees -- certainly not an increase, much less one of 120 to 140 jobs.
But, despite the Chronicle story, the actual contract with the county requires only that the refinery retain 1,400 jobs and add 80 "new permanent" ones. As Harris County development director David Turkel explains, "permanent" is a relative term. It includes subcontractors who work at the refinery for at least a year, even though they lack union protection or status on the company payroll.
If the county's math seems fuzzy, it's still an improvement over the city's. Despite written promises of at least 80 new jobs, the city's formal agreement with the refinery requires only that it keep at least 25 employees. That's it.
Suzy Hartgrove, a spokeswoman for Houston's economic development office, says that until the city changed its policy in 1995, such contracts used only the minimum investment required by law -- not a company's promises.
Beyond the jobs, the promised tax bonanza has failed to materialize. Houston, for example, had estimated that the project would increase the value of the refinery within its city limits by some $260 million, according to records. By the time the tax break expired in 2005, the refinery would be paying some $3.5 million in property taxes annually.
It hasn't happened. First, the value of the upgrade in the city proved to be only $53 million -- less than a quarter of what was promised. And time and new technologies have dramatically lowered the assessment of the plant's value. Even without the tax break, it's paying just $1.78 million in property taxes to the city -- less than it paid in 1993.
The reasons are complex. The plant has depreciated significantly, lowering its overall value. What's more important, explains Jon Neely, an appraiser who has examined the site for Harris County, the state granted the new upgrade a big break of its own. It determined that a large part of the project would help the environment, he says, and deemed about 40 percent of it exempt from property taxes.
"It's probably the biggest exemption that's been granted in Texas," he says. Unlike the city and county deals, the state tax break is permanent.
Despite the AFL-CIO's entreaties, the Greater Houston Partnership continues to see CITGO as a prize to be won. Lovett says CITGO's 800 jobs would likely have an impact of about $520 million on the local economy -- every year. "We're talking a lot of high-paying jobs, a lot of Class A office space," she says. "It would be a tremendous benefit to the Houston region."