Chevron funds to potentially pay off millions in Richmond pension debt

In what officials say would be a financially responsible move, the city may use a portion of a $550 million payout from Chevron to settle some of its unfunded pension liabilities.

An annual $50 million payment from the Chevron Richmond Refinery will flow into Richmond’s general fund for the next 10 years as part of a settlement agreement that led to the city pulling a measure off the November 2024 ballot that would have heavily taxed Chevron’s oil-refining operation.

The city and Chevron entered into the agreement after the measure faced legal challenges over its ballot language. Had it been approved, it would have provided the city an estimated $60 million to $90 million of additional tax revenue annually to help fund a variety of improvements and a clean-up plan in the event the refinery shuts down.

Under a proposal put forward Tuesday by councilmembers Claudia Jimenez, Sue Wilson and Doria Robinson, some of the settlement funds would be used to pay down the city’s pension obligations, potentially freeing up money to be spent on services.

“This, if we research it, may make it so these funds that are coming in become more flexible. We can use them for more things like youth services, like other things,” Robinson said. “This opportunity here allows us to stretch money over a much longer period of time and gives us more money than what we got in the settlement, which was already a windfall. And what I want to know is, is this real?”

Presented by Kristen Schumacher Nascimento, lead research specialist with government employee union IFPTE Local 21, the proposal calls for staff to research increases to the city’s annual payment to the California Public Employees Retirement System by about $20 million, which would pay off the city’s $392 million debt in 10 years.

Richmond’s current plan would pay off the debt in 20 years. That would cost the city about $260 million extra in interest, or $652 million total, according to figures from a 2023 CalPERS report. The shortened plan would be about $535.7 million in total and save the city about $117 million. Those savings would free up an estimated $33 million in long-term funding for other city initiatives, Nascimento said.

Updated figures from CalPERS and additional analysis would be necessary though, she noted.

“This would create an ongoing and consistent budget savings that you can treat as available right now and that’s not going to go away after 10 years,” Nascimento said.

The recommendation garnered support from both Richmond Police Officers Association President Ben Therriault and the Asian Pacific Environmental Network Action, an organization that partnered with Communities for a Better Environment to form the Polluters Pay Coalition.

But the environmental organization is also eager to see the community engaged on the matter, said Emma Ishii, a local policy coordinator with Asian Pacific Environmental Network Action.

“Richmond residents deserve to see all of the options available to them, and weigh in on how these funds are spent,” Ishii said during the Richmond City Council meeting Tuesday. “APEN will be advocating for the city to continue making decisions on settlement funds in an open and democratic manner that empowers Richmond residents as much as possible.”

Concerns about community involvement in decision-making were also raised by Councilmember Jamelia Brown and echoed by Vice Mayor Cesar Zepeda.

Brown, who noted she was not on the council when the tax measure was considered and the settlement agreed upon, said she supports the idea. Her main concern, she said, was that the public should be consulted on the issue, as well.

“This Chevron tax settlement is not a reward for the city’s budgeting strategy. It is the people’s payday, and they should have a say in what goes on and where that money goes,” Brown said. “We should not pay off the city’s pension debt without robust community input. This decision should not be made by the council members solely, but by considering what the community’s needs are and what they choose to do.”

Jimenez, Robinson and Mayor Eduardo Martinez pushed back on assertions that decisions were being made behind closed doors. The recommendation was to direct staff to look into the matter, they reiterated, and Jimenez and Martinez noted the public would have an opportunity to weigh in on the idea during future council meetings.

Robinson and Wilson also argued that the proposal would be a fiscally responsible way to reduce the city’s looming debt while also freeing up money to pay for immediate and long-term initiatives.

“I had those same concerns when I first heard about this,” Wilson said. “But if we use this Chevron money to pay down the debt, we are simultaneously taking the money that we normally right now use to pay that debt and freeing it up for other purposes over 20 years.”

The proposal ultimately received approval from six of seven council members with Councilmember Soheila Bana absent. Bana said she had to leave the meeting early for a family emergency. City Manager Shasa Curl said staff could return within 45 days with an update on the research process, but it’s unclear exactly when a formal decision on the proposal will be made.