Hood River News: Cascade Locks prepares for Nestle with due diligence

http://www.hoodrivernews.com/ns/news-headlines/9028/cascade-locks-prepares-for-nestle-with-due-diligence

Julie Raefield-Gobbo
April 16, 2012

A new joint committee for economic development (JCED) in Cascade Locks held its first formational meeting April 12 at City Hall. The partnership, created between the port and city, is aiming for a new era of prosperity for the riverside town.

Sen. Chuck Thomsen, R-26, and Columbia River Gorge Scenic Commission Executive Director Darren Nichols were on hand to witness the event, and provide initial support and guidance along with Port Manager Chuck Daughtry and Interim City Manager Paul Koch.

The new committee's goal? A unanimous agreement to create jobs, promote economic development and revitalize the town.
Once initial discussions on structure were addressed, the group dove into one of the most prominent economic opportunities on the Cascade Locks table - Nestlé's proposed water bottling facility which promises 50 local jobs plus utility purchase revenues and eventual property taxes.

The meeting was chaired by Mayor Lance Masters, with Port Commission President Jess Groves serving as co-chair. Other JCED members present included Port Commissioner Brenda Cramblett and City Councilors Mark Storm and Randy Holmstrom. Additional port and city staff joined the thirteen guests in attendance.

Masters began the "Nestlé strategy discussion" for JCED by calling forward former City Administrator Bernard Seeger, to provide a historical review of the project, and prepare members for the long, slow process of collecting data.
Seeger was joined by Nestlé representative Dave Palais, in summarizing discussions and activities that have occurred on the project since dialogue began with the Swiss corporation in September 2008.

With a mixture of data and affirmations for Nestlé, Seeger painted an enthusiastic picture of Nestlé's arrival and continued presence in the community. Seeger said, "Wow, we are getting a world-class corporation to come to Cascade Locks."

Seeger outlined his estimates of revenue for the city, including returns from water sales, electricity sales and property tax revenues that would kick in after five years in an enterprise zone, along with job creation. No written agreement had been solidified between the city and the corporation.

As questions began to be asked by Mayor Lance Masters, city council members and port commissioners on details, promises, hopes and areas of concern, Seeger relayed answers based on his recollections, sometimes deferring to Palais for clarifications.

Palais was then invited to provide his summary of the project status. He addressed several points in response to expectations or concerns voiced by JCED members about the project.

Regarding questions about truck traffic, Palais indicated that during peak times, each day, 200 semi-truck trips (100 trucks in and out) would take place through town - with Palais specifying Nestlé's preference to use WaNaPa Street for the traffic. He also clarified that the truckers would be contractors and not Nestlé employees - making it difficult for Nestlé to ensure the routes drivers would choose through town.

Answering members' concerns about semi-truck traffic through residential neighborhoods or commercial zones, Palais suggested the city install traffic signs.

Palais then provided a correction to previous estimates of income from the purchase of city water, reducing the prior figure of $350,000 per year to $225,000 per year.

He indicated that the original estimate was based on an assumption of peak bottling year-round. Instead, he stated that peak bottling periods and highest water use would occur through the summer period, "between Memorial Day and Labor Day."

While the Oxbow Spring water flow is at its lowest during summer months, the implications of a shift to city well water use to meet Nestle' demand was not discussed.
Though not at the meeting, Oxbow Fish Hatchery Manager Duane Banks, in a phone call earlier in the day on April 12, indicated that the hatchery also hoped to gain access to city wells during its low-flow periods to ensure year-round hatchery operations. He indicated the spring drops to its lowest levels beginning in July and remains low until rains return in October.

Water expert and consultant Larry Toll also joined Seeger and Palais in front of the JCED and indicated that a full study of city well capacity would need to be completed to answer questions of sustainability and meeting peak demands.

Palais was asked by Masters whether the company's plastic bottles would be made at the plant. He responded that P.E.T. material capsules would be converted into the bottles at the plant but no petroleum would be processed on site. He also indicated that Nestlé hoped to begin using recycled P.E.T capsules in the future.

Holmstrom asked about wastewater effluent from the plant. After some discussion and no specific figures, Palais acknowledged that packaging water does require washing processes, leading to wastewater discharge. No discussion occurred on costs.

Groves repeated at several points in the meeting a desire to "get the facts" out to the Cascade Locks citizenry and the JCED unanimously agreed that public education was a top priority for the group.

Several members spoke up, asking additional foundational questions about the project. Storm then asked Palais to outline what "the contract would look like."

Palais clarified that Nestlé "preferred to have a memorandum of understanding instead of a contract." Masters later stated that it would be the JCED's job to conduct the research to create the terms of the agreement.

Palais responded to a question about the possibility of the city retaining a right to cancel an agreement or contract. He stated multiple times that Nestlé would not be interested in a contract which provided the city the right to cancel, citing the need for securing water access when building a $50 million plant.

Masters asked Palais to indicate the expected length of the contract and asked if a 50-year term would be expected. Palais indicated that Nestlé preferred the longest terms possible to ensure their continued return on investment.

When asked about Nestlé's expectations during a water shortage, Palais said Nestlé would comply with the same restrictions placed on other utility users. He also said Nestlé would expect to have no special conditions or restrictions placed on their use.

Terms related to long-term reimbursement rates for the water itself were not discussed in detail. Palais did clarify that two water lines would be installed, providing access to both city well water and spring water. The total proposed draw would equate to 100,000 million gallons per year between both sources.

As the evening progressed, Groves noted that the group was "somewhat behind" on conducting its due diligence - a term meaning a methodical process of background research, data collection and fact checking.

Nichols encouraged the JCED to utilize existing economic development experts in the area for guidance in their research and decision-making process.

Thomsen said, "I am always available to help. If this is what Cascade Locks wants, then I support it."

Groves added closing remarks with a reaffirmation of his desire to move the Nestlé proposal forward. JCED members were asked to bring one additional name to the next meeting, scheduled for 7 p.m., April 26, as a way to form working subcommittees for due diligence research.

Masters concluded the Nestlé strategy discussion by advising JCED members to begin contacting other communities that have engaged in similar water contracts or exploratory proposals with Nestlé, both satisfactory and not.

The JCED meeting continued on to address other economic activities underway in Cascade Locks, with discussions on downtown revitalization plans, a proposed revision of the industrial park plan and strategies to attract anchor businesses to the downtown.

A newly completed 20-year vision document was reviewed for downtown development. Discussions on micro-breweries, food carts, green energy-slow wave electricity generation, water sports, a family-friendly indoor water park, fiber-optic connectivity and other business ventures were reviewed.