Some hope for Flint Hills

While the city of Odessa officially pulled out of possibly taking over the former Odessa Petrochemical Complex Tuesday night, the city council made an effort to get site owner Flint Hills Resources to negotiate with a group looking to restart the plant as a specialty polymers maker.

Before an overflow audience made up of many former plant workers, council voted to turn down a proposal from Flint Hills that would have the city take over the plant while it prepared to transfer it to other investors, but asked that city officials send a letter asking Flint Hills, which shut the plant down last year, to hold off on issuing contracts to demolish the plant because the city has an interest in various options that would allow the plant to be acquired. It will also ask the subsidiary of Wichita, Kan., based Koch Industries to give potential investors permission to tour the plant and set up a meeting between Flint Hills, the city and representatives from a reformed Rexene Corp.

City Manager Richard Morton said there was no way the city could take over the plant under stipulations from Flint Hills, which would require the city to assume all liability for unknown contamination at the site, outside of a $15 million deductible and $150 million cap until 2017. After that, the city would be fully responsible for liability of unknown contamination at the site.

The agreement would also have released Flint Hills from an $18 million contract for wastewater treatment with Gulf Coast Waste Disposal Authority.

But, while saying that future negotiations would have to be directly with Rexene or other investors, Morton was hopeful that Flint Hills would respond favorably to the letter.

“We would expect the (Rexene Employee Association) group to take on those liabilities,” he said. “Flint Hills is not going to sell or give that plant to anyone they feel cannot handle that liability.”

Bill Gilliam, who was chairman of Rexene from 1988 to 1992, commended council for its action. He is now, as senior advisor for Novato, Calif., based Constellation Capital Management LLC, putting together investors to restart the plant under the Rexene name.

“We keep working,” Gilliam said. “There’s lots of folks in the community, lots and lots of interested parties inside and outside the Rexene Employee Association.”

Several attorneys involved with Rexene addressed council during the meeting, expressing agreement with council not wanting to accept the plant under Flint Hills’ stipulations, while requesting the city send a letter to Flint Hills.

“I believe it’s in Flint Hills economic interest, we believe it’s in everybody’s economic interest to get a deal done,” Gilliam said. “We feel that we have the ability to do the type of transaction that Flint Hills would expect and the city would expect.”

Gilliam also said Rexene was a pioneer in environmental aspects of the industry when he was chairman, and a new company would work on environmental issues regarding the plant.

Flint Hills closed the plant last year amid deteriorating market conditions, costing 395 company workers plus over 100 contractors their jobs. Rexene claims that it would be able to restart the plant later this year with over 500 employees.

Reached Tuesday evening, Flint Hills spokeswoman Katie Stavinoha sad the company will look at the council’s proposal.

“Flint Hills Resources will welcome the opportunity to review the city council’s request,” she said. “The company values its good working relationship with the city, and will give the letter, once received, the appropriate evaluation.”

Mayor Larry Melton encouraged the Rexene employee group to continue to try to work with Flint Hills, which had previously wished to work exclusively with the city.

“And we would further call upon Flint Hills to work with Rexene,” he said. “Should any proposal clearly demonstrate the long-term viability of the employee association, while completely absolving the city of any liability, I fell confident that this council would revisit this issue.”

Prior to discussing Flint Hills in a 20-minute closed session, council had a lengthy discussion before approving by a 3-2 vote a $139,000 contract with the Odessa Chamber of Commerce to recruit more sports events that are intended to bring visitors to town. Of the money, which is paid for with hotel-motel tax funds, up to $100,000 will go toward incentives for events to come to the city’s sports facilities, and $39,000 will be for administrative expenses, including possibly adding a second sports employee at the chamber.

Councilman Benjamin Velasquez, who voted against the final proposal along with Councilman Bill Cleaver, proposed an unsuccessful amendment that would have required those interested in getting funds for sports event to come before council, just as promoters of fairs, rodeos and other hotel-motel tax funded events do. The item that passed, allows events to be reviewed by a board at the chamber.

Javier Joven, himself running for council, addressed councilmen to tell them they should table the measure until more is done to bring other entities that have sports fields, such as Ector County Independent School District and Odessa College, into the fold.

“There are huge groups that travel and we can get them here,” Joven said. “But we have to have a coordinated effort.”

But Mike George, chamber president, said the way the agreement is written would protect the city by projecting how many hotel room nights an event will bring in. If that number is substantially different from the total number of nights, it will give the city the right to lower the amount of funding the event receives.

Councilman James Goates said the agreement was important for the city.

“We have more hotels now, so we need to get more people in more beds,” he said. “It’s not like the old days where we had five hotels.”

The meeting was enough to make you want a beer, and Marwan Khoury, city planning director, told councilmen that they’d soon be able to get a cold one brewed in Odessa. Though he didn’t yet know the identity of the eatery, he said that a zoning change that received first approval Tuesday will lead to a restaurant with an on-site brewery for on-premises consumption at the southwest corner of Tres Hermanas Boulevard and San Machell Drive, near the intersection of Highway 191 and Billy Hext Road.

In other action, council approved:

>> A resolution for the Odessa Police Department to apply for its own academy through the Texas Commission on Law Enforcement Standards and Education.

>> Purchasing replacement equipment.

>> Second and final approval with Lufkin Industries Inc. for original zoning of planned development-industrial on 22.5 acres and planned development-surface drainage on 5.3 acres at its site in Leeco Industrial Park.

>> Second and final approval for Betenbough Homes to rezone from single family three to planned development-single family three on 28.8 acres north of the intersection of East 93rd Street and Lamar Avenue.

>> Second and final approval to rezone 2.1 city-owned acres southeast of South Dixie Boulevard from light industrial-drill reservation to light industrial.

>> Calling the 2010 city general election.

>> Authorizing the Odessa Police Department to apply for 2011 STEP speed, intersection traffic control and seatbelts grant for $70,572, which requires a $37,996.14 city match.

>> Placing the names of Jim Parker Jr. and Bessie Ola Parker, Neil McDonald, John Conrad Dunagan, Earl G. Rodman, Ellen and Bill Noël and Vance Gipson in the Rotary Club Walkway at Memorial Gardens Park.

>> A contract renewal for chemicals and general lab supplies for $51,025.

>> A change in hotel/motel tax funding procedure that would go from an estimated available fund balance to a cash on hand available fund balance.

>> Improvements to McKinney Park that would add 4,500 feet of concrete splash pad around its sprayground for $62,140.

>> Purchasing lighting for the new baseball fields at Sherwood Park for $242,500.

>> Partial street abandonment of Avenue A for the development of an assisted living complex. The street, which hasn’t been constructed, would be cul-de-saced.

>> The appointment of Libby Campbell as alternate to the zoning board of adjustment.

The city is asking Flint Hills Resources for the following:

>> “The city respectfully requests that FHR hold off on issuing the imminent demolition contracts as the city has an interest in various options which would allow the plant to be acquired by another party.”

>> “That FHR give permission for potential investors to tour the plant facilities.”

>> “That FHR meet with city representatives and representatives of Rexene to negotiate possible transfer of the plant facilities and properties.”