VALERO FIRE: A CALL TO ACTION FOR PERMANENT CLOSURE OF THE REFINERY

By Dirk Fulton, May 8, 2025
[and appearing in the Benicia Herald on May 11, 2025]

Last Monday’s Valero Refinery fire and shelter-in-place order provided Benicia residents-including Robert Semple Elementary School students and teachers- with a real time reminder that the refinery should be shut down for good while the opportunity exists.

The fire allowed us to visualize the risks we face. Beyond this, there are known risks we cannot visualize: For at least 16 years, the Valero refinery secretly polluted us with cancer-causing toxins such as benzene, toluene, and xylene—all known to cause cancer, reproductive harm and other negative health effects. After discovery, the Bay Area Air Quality Management District (BAAQMD) imposed a record-setting $82 million dollar fine against the refinery. The settlement highlighted Benicia as an “air dump” for the State of California, further tarnishing the city’s image.

The fire and secret toxic emissions are stark reminders that it would be a grievous mistake to replace Valero with another operator. When Shell Oil Martinez recently ceased operations, the refinery was taken over by another company. Since then, shelter-in-place orders have become a regular occurrence. We can avoid such a result by pursuing a modern vision for Benicia without a refinery. By doing so, we can enjoy toxic-free air, nurture healthy children and realize higher home values as the “refinery town” stigma is eliminated.

We cannot surrender to published scare tactics that closure will cause a “financial doomsday”. This is wrong. We are no longer a small 1960s town of 5,000 dependent on the Benicia Arsenal for jobs, nor are we Vallejo of the 1990s dependent on the Mare Island Naval Shipyard for economic survival. The present Benicia economy is diversified and does not rely solely on a single military installation or oil company for its prosperity. We are a commuter-oriented residential community where our 13,100 working residents commute from Benicia or work from home. Less than one percent (1%) of our city’s residents work at the refinery and fewer than 100 of Valero workers live in town. Accordingly, the predicted job loss following closure, although unfortunate, is not material to our local economy.

Proponents of the refinery, including some city officials, falsely state that the city will immediately lose $12 million in revenue if the refinery closes. This is wrong. Taxes and fees do NOT immediately vanish when a business closes, or a home becomes vacant. Real properties maintain inherent value. Valero’s property taxes should largely stay the same, as its 900 acres, infrastructure and improvements continue to hold value. Additionally, Valero has already benefited from significant Prop. 8 property tax reductions after extensive litigation with the County Assessor.  Further, any projected property tax loss should be offset by higher property taxes as post-closure, higher value homes turn over and new homes are built.

Additionally, without a refinery, there are many revenue streams available to Benicia:

1. 1. New Development Fees. On the 900-acre refinery site, new housing construction along the East 2d Street corridor and clean energy projects sited in the refinery footprint will result in millions of dollars in new development fees.
   2. Water Revenue. Valero pays the city a nominal rate of $2 million for 50% of the city’s total water supply compared to the almost $7 million that residents pay for the remaining 50% of our water supply. Accordingly, this newly available water resource once treated has a multimillion-dollar value when offered on the free market to other municipalities.
   3. UTT. The Utility User Tax (UUT) generates ongoing revenue. Since 1989, Benicia residents have paid UUT at a rate of 4%. Valero has never paid its fair share of UTT as its predecessor Exxon sued the city to receive a special rate of approximately 1%. Valero remains under a reduced rate UUT agreement negotiated in 2018. Upon closure, the refiner should be forced to buy-out of its 2018 agreement or pay fees to rectify its 35 years of underpayment, which could result in millions of dollars to the city.
   4. Increased Sales & TOT (Hotel) Taxes. Following refinery closure, Benicia will be more attractive to tourists, thereby increasing visits and business at shops, restaurants and hotels allowing the city to capture increased sales and TOT (hotel) tax.
   5. Port Tax. Port tax is a potential source of revenue for port communities. The Port of Benicia handles approximately 260,000 imported vehicles annually accounting for about 20% of California’s seaborne vehicle imports. A $50 port use fee imposed on each vehicle entering the port could raise $13,000,000.00 annually for the city. Such fee could be passed on to consumers as an inclusion in the “vehicle prep” fees common on all new car invoices.
   6. BAAQMD Funds. The BAAQMD’s Settlement Agreement with Valero provides $56 million to the city as pollution mitigation fees. The funds may be viewed as a safety net to bolster the city during the transition away from the refinery. The funds can be used to support various city projects, including refinery closure costs, oversight of environmental cleanup, assistance to schools, development of parks and open space, and the like.

In sum, to ensure clean air, healthy kids, and safe homes with rapidly appreciating values, we should heed the call to action presented by the Valero fire, envision a new modern-era Benicia without a refinery and resist scare tactics that promote its continued operation. As set forth above, the city can financially endure the transition in a just way.

Change admittedly can be challenging for all of us: I do miss Mabels, the art glass studios, Tia Theresa, the Brewery and Sam’s Harbor restaurant, but I will not miss refinery fires, secret toxic air emissions or shelter-in-place orders.

Dirk Fulton, Lifelong Benicia resident
Former Solano County Planning Commissioner, Benicia Vice-
…..Mayor, City Councilman & School Board President
Visit: www.Greatdayforbenicia.com

Read Dirk Fulton’s series, A Great Day for Benicia

A Great Day for Benicia

By Dirk Fulton, April 23, 2025
[and appearing in the Benicia Herald on April 25, 2025]

Valero Refining’s recent announcement to idle its petro-chemical plant next year is very encouraging news for our town and quite the opposite of the financial doomsday depicted by some fear-mongers.

As a lifetime 71 year resident, former elected public official, and local business owner, I have watched the refinery negatively impact us for over 55 years with extremely high levels of toxic air and water pollution, visual blight, and use of 50% of our city’s water resources at nominal rate.

These factors have exposed us all to severe health risks, caused a negative image of our city resulting in lower home values, and contributed directly to higher domestic water rates. This has been made even more alarmingly clear by the record-breaking $82 million fine recently imposed upon Valero for its air pollution violations in Benicia that also captured negative media-attention for our town.

The costs of having a 1960s-era oil refinery dominate our town should no longer be tolerated. We can embrace this rare chance to uplift an image of Benicia as an inviting historic waterfront community with a small town atmosphere, artist community, great schools and a welcoming downtown, rather than a pollution-filled refinery town whose far-fetched executives try to influence our local elections.

Our Benicia economy is stable and much more diverse than it was 60 years ago when the Arsenal closed. We are a commuter, residential community and no longer a company town dependent on one military installation, one company, or one refinery complex. We cannot repeat the doomsday thinking of the mid-1960s following the Arsenal closure, which led to the siting of the Humble Oil refinery (now Valero) and the nearby toxic waste dump to support it.

Short-term financial impacts related to a Valero closure have been exaggerated and can be mitigated. Since Valero does not produce sales tax for the city, the short-term revenue loss will result primarily from a Proposition 8 “temporary real property tax reduction”. This reduction will be less than 20% of factored base value since Valero has already received generous tax reductions through years-long litigation with the City and County Assessor, and because its land and improvements (office buildings, tank farms, pipelines, utility infrastructure, etc.) retain their inherent market value. Once alternative land uses occur, full property values will be restored. Just some examples of clean alternative uses are: housing, mixed use commercial, commercial retail, and clean energy. Additionally, the city will enjoy enhanced tax revenue from increased residential real property values as homes change hands. Benefitting both directly the city and its homeowners, local real estate professionals estimate a rapid 15-20% appreciation in values once the refinery- town stigma is eliminated.

Idling the refinery also provides many new financial opportunities beyond increased property tax revenues: The 50% recapture of our water resource supply can be marketed to growth-oriented municipalities at substantial annual profit; Tourism and related TOT (hotel tax) and sales tax revenue should increase as the town becomes a more attractive tourist destination; Development fee revenues will increase as new and alternative land uses occur in the industrial park; and importantly, there is the opportunity for a long-overdue port tax (common in many west-coast port cities) as our port facility will now gain additional capacity.

Lastly, regarding concerns over diminished contributions from Valero Refining to community non- profits, I believe that Benicia residents and businesses have been and will continue to support our local non-profit agencies, and this effort will be augmented by the recent creation of the Benicia Community Foundation and its already generous grant funding of local needs.

In summary, Valero’s announcement to idle refining operations bodes well for our town and creates a bright future, provided the mistakes of the 1960s following the Arsenal closure are not repeated by city leaders.

Read Dirk Fulton’s series, A Great Day for Benicia