A perspective from Oregon’s mid-Willamette Valley

‘HIP’ project in South Albany: Taking a look

Written April 24th, 2019 by Hasso Hering

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Inside a deep pit near the end of Southeast Marion Street, construction is well underway on the foundations of a high-pressure furnace for the Albany metals industry. On Tuesday I took a look at the site.

Gerding Builders is constructing the facility for Stack Metallurgical of Portland, which plans to install an HIP furnace at the site. The initials stand for “hot isostatic pressing,” a manufacturing process to reduce the porosity of metal such as titanium by subjecting it to temperatures up to 2280 degrees F and pressure — exerted with argon gas — of up to 29,000 pounds per square inch.

The project came to light in February, when the Albany City Council held an executive session closed to the public and then, in open session without further explanation, voted unanimously “to direct staff to develop a proposal for Stack Metallurgical.” There has been no public explanation of what this “proposal” entails, and whatever it is has not been presented to the council for action.

Seth Sherry, the city’s economic development manager, continues to be mum about it. “I don’t have anything to report at this time,” he told me this morning.

What is known about the project comes from a memo by John Pascone, president of the Albany-Millersburg Economic Development Corp. He wrote the memo in support of granting Stack a five-year property tax exemption, which both Albany and Linn County as sponsors of a local enterprise zone have approved.

The memo said Stack was planning to make an Albany investment of almost $30 million, the biggest part of which would be the $20 million HIP furnace already on order. (The machine is made in Sweden.) The Albany facility would hire six to 18 employees.

The construction at 4322 Marion St. S.E. is proceeding under a preliminary building permit. The permit is for the foundation, accessible routes and parking, and underground plumbing only. A full building permit would not be approved, the version available online says, until the city approves “building design and engineering, along with a hazardous materials inventory statement for gas storage, cooling towers, and cryo unit areas.”

So how deep it that construction pit for the foundations? I’m not sure, but there’s a staircase of 27 steps from the bottom to the top.(hh)

The pit for housing the HIP project at 4322 Marion St. S.E. as it looked on Tuesday.




19 responses to “‘HIP’ project in South Albany: Taking a look”

  1. J. Jacobson says:

    Intentional or not, this sentence, quoted from the Development Director, Pascone letter wherein he wrote, “… Stack was planning to make an Albany investment of almost $30 million, the biggest part of which would be the $20 million HIP furnace already on order. (The machine is made in Sweden.)

    So, then”investment in Albany” is $10-million, which Stack would have needed to make regardless. So, Stack receives a 5-year reprieve from property taxes and Albany gains “six to eighteen jobs.”

    Would be interested to know what the property taxes would have been without the giveaway. Seems like the Swedish furnace manufacturer comes out ok. The Stack folks come out ok.

    As to what kind of bath Albany will take depends on how much each of those 6-18 jobs cost local property taxpayers, folks who don’t generally see any “reprieves” on their rates.

    Remember that Stack’s principal reason for locating in Albany is because Stack needs to be physically, economically and synergistically “close” to ATI. Stack’s desire was the only real bargaining chip the City Council had during whatever “negotiations” over property tax reprieves that took place.

    One hopes the City Moms and Pops had their best Deal-Making hats on when this giveaway went down.

    • Derek says:

      The 2018 property taxes on that piece of property were about $1,300, so i’m guess without the reprieve, the taxes on a bare piece of property would go up 3-5% annually depending the millage rate. I’m guess that the property taxes (both real and personal property from the property owner & operating company if they are separate) are going to be a bit more than $1,300 – $1,700 after five years.

  2. Tom Cutsforth says:

    Dear Hasso,
    This is Tom Cutsforth. I’m always impressed with the way you are able to bring so many important news articles to the people of Albany. You truly have a “nose for the news” in a very positive aspect of the noun “nose”.
    Today, I’m writing about a different news item(s). Between the old Bureau of Mines and the Albany Tennis Club is a field of grass. Part of it is a Superfund site, I believe. Two interesting things are happening there today. One, it is currently filled with the blossoming of one of the Mid-Valley’s most important early food crop (Purple Camas). Early Indigenous people from central Oregon would travel here to trade their scarce boulders of obsidian for the dried bulbs of the Camas flower to use as food. The field is very beautiful right now. Second, the field is also used as a breeding ground for a group of wild turkeys recently. A couple of years ago 3 female turkeys started walking around here (Fir Oaks neighborhood). Last year a male Turkey “joined” them and we had two groups of young turkeys-one of 7 and another of 11. Those baby birds grew up and last winter they made a large group total of about 11 female and 4 male birds. The females have disappeared recently (nesting?) and if my math is close to being correct, there could be 50 60-70-80 or more running around soon. Could be an interesting story soon as they were cute when there were only 3; somewhat bothersome when they became almost 20 last year; and will be very hard to handle at numbers exceeding 50 or more because they don’t seem to have any predators around. Just thought you’d like to know. Also, this is about the time someone from the old Bureau cuts the grass in the field. If I’m right, things could get dangerous there if that happens to a bunch of young birds.

    Please keep up your good works.

    Best, Tom

  3. Jon Stratton says:

    A fine point, I know, but I’m curious if the property tax exemption is for real property (basically a given) only, or both real property and personal property. If the latter, the fact that the $20 million furnace will be installed in Albany is meaningless.

    Additionally, any money (of the remaining $10 million) spent building the site is going to a company in Corvallis, not Albany. So, really, there’s jack-squat being invested in Albany. Once again, the people in charge show how much they don’t care about the people who live here and would rather just serve themselves.

    • Hasso Hering says:

      To answer your question, the exemption is on added value such as buildings and productive equipment. It does not exempt the owner from ad valorem taxes on the original value of the property, nor from personal property taxes on routine stuff like office equipment. The original exemption is for three years. If the jobs at the place pay more than 150 percent of the average wage in Linn County, the owner can apply for the exemption for an additional two years. There may be additional wrinkles in this tax break, but that’s the gist as I understand it.
      Whenever the exemption expires, after three or up to five years, keep in mind that the entire property value lands on the tax rolls. Not exactly “jack-squat” then, as you put it.

    • Rich Kellum says:

      Prior to development we get tax on the value of the land. We still get that with the deferment, so we are out nothing, we just do not get the additional tax for the deferred time is up.

      • Ray Kopczynski says:

        Sounds like TIF…

        • Rich Kellum says:

          Ray, unlike TIF, there is no transfer from tax to URD for the properties adjoining this project, so others do not have to pay more to backfill the need

  4. Richard Vannice says:

    Re Tom Cutsforths comment on the turkeys. If they are causing problems, roosting on cars, tearing up flower beds, indiscriminate deposits of fecal matter, etc make a call to the Oregon Department of Fish and Wildlife.
    We had a problem last year and found that you can obtain a “HAZZING” permit via e-mail, at no cost. It sets forth what you can do to get some relief caused by a non-native species that has been introduced to the state.
    It takes some time and effort but if applied whenever the birds are around it does have some results. We’ll see what happens this year

  5. Bill Kapaun says:

    So a couple “highly paid” executives can hire 6 minimum wage employees and easily have the “AVERAGE WAGE” exceed 50% of the “prevailing rate” and get up to a 5 year waiver?
    Sounds like fiduciary irresponsibility by the city.
    What guarantees are in place to insure this doesn’t happen?

    • Rich Kellum says:

      they have to be 150% of the AVERAGE wage of the area not their wage

      • Bill Kapaun says:

        WHO do you mean by “they”?

        With a couple “fat cats” and 6 peons, their company can have an “AVERAGE WAGE”, easily making the 150% mark of the rest of the community.

        How many $/day will they save in tax benefits?

        Even if they have to pay 6 employees an extra $50/day, would they receive over $300/day in tax benefits.

        The bottom line-
        Why give them ANY tax break? They’re already committed!

      • Rich Kellum says:

        150% of LINN County’s average wage, not the companies average wage… so if the average wage in linn county is 14.32 per hour Stack has to pay over $21.48per hour..

        • Bill Kapaun says:

          So the ENTIRE workforce of the company only has to AVERAGE $21.48/hr. and could possibly only total 6 employees?

          • Rich Kellum says:

            Bill, I think you are messing with me here, 21.49 would be the minimum pay for any employee IF the average pay in Linn County is 14.32. if the average wage in Linn County is 19.00 then the minimum that they would have to pay is 28.51.

        • Bill Kapaun says:

          No more replies left down below, so I have to insert here-
          Rich, I’m not trying to mess with you. I’m just trying to get information.
          So, let’s rephrase my question-
          What’s The MINIMUM amount the company has to spend on payroll (what’s the minimum amount of employees at the 150% rate) and HOW MUCH of a TAX BREAK would they receive?

          They claim 6-18 additional jobs, but what if they don’t produce these additional jobs?

          • Rich Kellum says:

            Their tax break is for 5 years on the improvements only. they still have to pay for all of the fees, System development charges etc. The jobs they produce must be paid at 150% of Linn county average, I do not know what that actual number is, but it is based on what we already have as an average. If they do not produce the jobs they lose the tax break.

            So, we still get the taxes that we got before, We get paid for the regular expenses of permits, hook ups, inspections etc. We get new jobs for the economy, and most important, we get a service industry that our local Titanium industry needs very badly to make it more likely that they will not move to North Carolina to do their melting and casting.

          • Bill Kapaun says:

            “….I do not know what that actual number is, but it is based on what we already have as an average. ….”

            In 7 years, their “$20 million HIP furnace” will be depreciated to $0.

            What is their ACTUAL tax break in $/year?
            Does anybody know?

          • Derek says:

            If I understand correctly, they would continue paying based on the existing assessment for the lot until the five years is up, at which point their taxes will be based on the assessed value of the new construction. Since the improved site hasn’t been assessed yet, there isn’t really a way to know what they would be paying without the tax break. I don’t know what a comparable existing property would be, but I looked up Metal Technology at 173 Queen as a W.A.G. Their 2018 tax bill was $13,217 for real property taxes and $25,782 for personal property taxes.


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