| What Happened to the Pepsi Money?
By Wes Hare, City Manager
Spring of 2010 sometimes
seems like a lifetime ago instead of a little more than three years
past. Many new residents who have moved to Albany during that period and
many more long-term residents probably don't know that the City of
Albany received a check that year for $18.5 million from SVC
Manufacturing, a division of the folks who bring us Pepsi, to settle a
contract that obligated the company to build a new plant in Albany. The
City also received a commitment for an additional $5 million when SVC
sells the property they purchased for the plant, plus an agreement to
remove the land from tax-deferred status which results in increased tax
payments to Linn County of more than $200,000 annually. This additional
revenue is distributed to all the taxing jurisdictions (city, county,
LBCC, schools, etc.) where the property is located.
The settlement money was
and is different from most money the City receives because there are
very few conditions on how it can be used. Albany's City Council has the
authority to allocate the money for any public purpose as long as it is
done in accordance with state budget laws. The Council made a decision
shortly after receiving the settlement that it would not be used for
operating purposes but would be reserved for capital or one-time
expenses. Among the highest priorities was to put settlement money back
into the utility funds that covered the cost of bringing infrastructure
to the SVC site. The cost of putting in water and sewer lines was $1.16
million, and that amount was returned to the capital fund for the
utilities. An additional $1 million was allocated to the City's
liability reserve fund to help cover the costs of reaching the
settlement agreement. This money has not been spent but is reserved for
future use.
Saving money also seemed
like a good use of settlement proceeds, and the City Council directed
staff to look at the savings that would result from paying off
outstanding debt obligations. The City was able to net savings of about
$1 million by paying off a bond early with the use of $790,000 in
settlement money. Councilors also recognized that utility rates can be a
heavy burden for residents and chose to use $840,000 to offset a
proposed sewer rate increase.
Cities often use Local
Improvement Districts (LIDs) to help finance the cost of new
infrastructure for projects like the improvement of Oak Street or Timber
Ridge Street. Settlement money was loaned to these projects in the
amount of $4,629,782. Most of this money will be recovered as
assessments are repaid or, in the case of the Timber Ridge improvements,
property is sold.
Perhaps the most
controversial use of the money from SVC was a Council decision to
purchase land near East Thornton Lake for use as a natural area. The $1
million allocation leveraged an additional $700,000 from state and
private sources and settled a dispute over use of the land that might
otherwise still be in litigation. The City has spent about $215,000 on
small businesses assistance, facilities studies, and other small
economic or community development projects in Albany. The most recent
expenditure of settlement money was authorization of a $174,000 loan to
purchase software that will allow for electronic submission of
development plans.
The current available
balance that is designated for new facilities and economic development
is more than $8.5 million, with an additional amount of nearly $5
million to be repaid from LIDs and other loans.
Albany now has close to
51,000 residents, and there are probably close to that many opinions
about how the City should spend money to serve or improve the community.
Most of the SVC settlement money has been invested in improvements that
will serve Albany residents for a lifetime and beyond. New businesses,
new streets, and new parkland are all part of what makes a community
livable and prosperous. Additionally, the majority of the settlement
proceeds remain to help reduce the cost of needed facilities and promote
economic development.
| 
Drinking water quality report on-line 
