City, Frito-Lay scrap plan to give firm water bill breaks
Monday, December 19, 2011
Vancouver and Frito-Lay Inc. are scrapping a controversial plan that would have given the private manufacturer $585,000 in breaks on its water bill over the next three years.
The deal was designed to help Frito-Lay stay competitive and upgrade packaging and water conservation equipment at its Fruit Valley Road location.
But the timing was iffy — one city councilor noted the deal was arriving at the same time the elected policymakers were being asked to increase utility rates for all other city customers.
Leaders also didn’t dispute that installing automatic packaging equipment at Frito-Lay could cause layoffs at the 500-employee plant. However, without the equipment, the plant had claimed it will lose its competitive edge and possibly close, eliminating all the jobs there.
City Manager Eric Holmes said the deal was pulled after the council raised “good questions” about the plans.
All options are now on the table to find a solution that “focuses on equity for all ratepayers, and balancing that with what is equitable for a user class like Frito-Lay,” Holmes said.
Holmes did not say what other options, such as a tiered rate system for heavy users, were now being discussed.
If approved, the agreement would have credited the utility $195,000 in water bills a year for three years. After three years, the company would have paid its water bill in full, which is expected to be about $150,000 to $200,000 a year after installing the water conservation equipment.
Frito-Lay has been receiving water bill breaks since 2002, when a deal was struck to keep the plant from putting in a private well, which would have siphoned $495,000 a year from the city’s water billings.
That deal gave Frito-Lay $195,000 to $225,000 in water credits a year, a discount on its approximately $345,000 annual water bill. But it also required the company meet several criteria, including a $700,000 one-time contribution to the city; keeping wages above $33,000 (today the actual pay is $43,000); investing $7 million in the plant (it has invested $33 million); and keeping a payroll above $15 million (today’s payroll is $23 million).