HUNTINGTON BEACH : Shell Yields in Tax Dispute With City

Do the city limits stretch out to sea?

They most certainly do, says the city, for 3 miles out to sea. And because it could prove it, the city will collect $385,654 to settle a 3-year-old tax dispute.

At issue was the city’s claim that its seaward boundaries take in Shell’s Platform Emmy, an oil platform situated about 1 1/2 miles off shore.

Shell initially disagreed but after three years of haggling finally conceded that the city was correct. Now Shell is ponying up $281,052 in back oil production fees plus a $104,602 penalty. The City Council ratified the settlement with Shell at its Sept. 4 meeting

“It’d be nice if we had more positive things like this coming in,” City Treasurer Don Watson said. He noted that city budgets are all too often hit by “negatives,” such as unplanned expenditures, rather than “positives,” such as unexpected income.

The dispute with Shell has been without rancor, according to city officials.

“Shell, when it bought the oil properties from Phillips a few years ago, started checking on all the records,” said one city staffer who asked not to be identified. “When it found that Phillips had been paying production fees for its offshore platform, Shell thought there must be some mistake. After all, most cities don’t have boundaries that go 3 miles out to sea.”