County hearing looks at Reinvestment Zone

Dave Rogers

For The Record

Another big step toward the possibility of Orange County landing the granddaddy of new local investment spending arrives next Tuesday, Aug. 27.

At 10 a.m. that morning, Orange County Commissioners’ Courtroom will host a public hearing regarding the creation of a Reinvestment Zone to encompass a 1,572-acre tract across from the county airport that could become an $8 billion plastics plant.

More than two dozen adjoining parcels were purchased in the first half of this year by Chevron Phillips Chemical.

Qatar Petroleum partnered with Chevron Phillips Chemical in July and the two announced the project, dubbed the U.S. Gulf Coast II Petroleum Project, would include one of the world’s biggest ethane crackers, capable of turning out 2 million metric tons of ethylene per year, and two polyethylene units, each with a 1 million metric ton capacity.

It’s all just a projection, though, one that may not come to Orange County or ever be built in any location by the two petrochemical giants.

The Chevron Phillips Chemical stance on that has been unwavering since the long-rumored project became public in January.

“Orange is a finalist, however the location is only one of the alternatives on the Gulf Coast,” the company has repeatedly put forth. “It is premature to say that Orange is definitely where we would put a petrochemical facility, if we decide to build one.”

But Orange County government wants to do everything it can to make itself attractive.

Establishing a Reinvestment Zone enables a county to grant tax abatements to property owners for up to 10 years in length and 100 percent of its property tax bill.

“Before we can do an abatement on the properties that are in question, we have to establish a reinvestment zone,” County Judge John Gothia explained.

While a public hearing giving taxpayers the opportunity to encourage or discourage the action is required to establish a Reinvestment Zone, no such hearing is needed before the granting of a tax abatement.

“We’ll have a hearing on the Reinvestment Zone next week,” Gothia said. “Then we’ll start working on whatever abatement requests that could come from that.”

The project has been the subject of several closed door sessions between county commissioners that included Chevron Phillips Chemical representatives and/or Jessica Hill, director of the Orange County Economic Development Corporation.

But no terms of any proposed abatements have been made public.

The most oft-mentioned abatement approved by recent commissioners is a 10-year, 100-percent tax deferral for Jefferson Entergy terminal on the Orange County side of the Port of Beaumont.

The company’s January presentation showed that Jefferson Entergy had paid $11.5 million in taxes to Orange County taxing authorities in five years, 2014-2018. Entities in the western end of the county, near the terminal, received most of the taxes with $8.5 million going to Vidor schools.

In 2018, Jefferson Energy paid Orange County $112,500 in PILOT payments (payments in lieu of taxes), with $12,500 going to the Orange County Economic Development Corporation.

But most of the company’s January presentation consisted of other, smaller Orange County companies describing the trickle-down spending that went to service industry contractors. One said Jefferson Energy had spent $268 million with his company since 2013.

Benefits of a tax abatement, according to the Texas Comptroller’s website, include reduction of unemployment, strengthening other businesses, increasing tax revenues from employees and contractors and long-term growth after the abatement expires.

“When you abate a huge project, there are other businesses that come in and support those efforts,” Commissioner Robert Viator said Tuesday. “It also stimulates current businesses and they prosper.

“When other businesses prosper, we prosper more as a county.”

In October 2018, a discussion about the County’s tax abatement policy in Commissioners’ Court noted that it lacked any requirements for new developments to hire local workers or employ local contractors.

Everyone in the meeting that included County Judge Dean Crooks, Commissioners Gothia, Johnny Trahan, Barry Burton and Jody Crump, and Hill agreed that the policy needed to be changed to include requirements to hire and shop local.

But the court voted 4-1 to just carry over the earlier policy, with no changes.

“There will be some [local hiring] requirements, I’m sure,” Trahan said about an abatement for the $8 billion plant. “It’ll be tied to local workers. It’ll be tied to working with local companies.”

The commissioners have two other public hearings in the next week, both on the proposed tax rate of 54.2 cents per $100, which is the same rate as the past two years.

The first public tax rate hearing will be at 1 p.m. Friday, Aug. 23; the second at 1 p.m. Tuesday, Aug. 27.