ALBANY — City Manager Wes Hare remains optimistic that a Gatorade plant will be built in South Albany.

ALBANY — City Manager Wes Hare remains optimistic that a Gatorade plant will be built in South Albany.

"They make frequent visits, made a $5,000 pledge to United Way, and will be back in mid-May to distribute products to schools and fire stations to help support the community," he said.

SVC, the PepsiCo subsidiary planning the project, "treats us as if they had a plant here and that's a positive sign," Hare said.

In 2006, Albany, Linn County and the state signed an agreement calling for SVC Manufacturing to build a $250 million plant to make Gatorade and Propel fitness water. In May 2007, the company announced the project would be delayed by at least a year because of sluggish sales.

A new agreement stated that the firm would pay the city for each year the project was delayed for up to three years. The payment was $710,000 per year and a one-time payment of $200,000 to cover the city's inconvenience and the staff time involved.

The first payment totaling $910,000 arrived in February.

"The company seems to be putting a lot of money into trying to sell more Gatorade," he said. "Their sales can be monitored at the PepsiCo Web site. We'll see the first quarter of 2008 posted soon and we'll know if profits are up."

SVC must notify the city in January 2009 if it does not plan to build next year and would thus owe the city another $710,000. That would be repeated the following year if construction is postponed again.

"That would be the end of it," Hare said. "The following year they either would be obligated to build the plant or meet the terms of the contract and that would be very, very expensive for them. Certainly that would mean millions of dollars of liability."

Although the plant has not been built, the city now receives some tax revenue from the property. When SVC bought the 243-acre site, much of it was in farm deferral and producing no tax revenue, he said. Now the land is zoned industrial.

Parts of the project have been challenged at the Oregon Land Use Board of Appeals. The appeals board heard arguments from Workers of Livable Oregon, a labor group, and property owners near the site objecting to the creation of an urban renewal district to help finance public improvements for the project.