The City Council has accepted a $10 million payment to conclude a longstanding settlement between the city and the former owners of the Paper Mate factory.
Proctor & Gamble had been making annual payments and had up to 22 years to pay off the entire sum but chose to make a single payment this year to conclude the case.
The company was on the hook for the payments following a series of mergers related to the property at 1681 26th St. that housed a pen factory for several years.
Gillette Co. purchased Paper Mate in 1995 and opened the manufacturing facility in 1997. Proctor & Gamble bought out Gillette in 2005 leaving them responsible for clean-up efforts at the site after chemicals leached into the ground contaminating the nearby water supply.
Alan Seltzer with the City Attorney’s office said after the threat of litigation, the company entered into the settlement to facilitate cleanup. Seltzer credited Interim City Attorney Joe Lawrence for negotiating the settlement.
“What happened recently was Gillette offered to accelerate the payments and pay all the amounts due over the next 22 years in one payment this month,” he said. “So instead of getting a couple of hundred thousand dollars over the next 22 years totaling about $13 million, the City will get this month, $10,400,000 which is the current value of the money over time,” he said.
Seltzer said it was a “pretty good arrangement” that will aid the city as it incurs more costs to treat groundwater.
“Having the money up front allows you to do more rather than the pay as you go financing,” he said.
Councilman Kevin McKeown made the motion to accept the payment.
“We took the option of a lump sum now rather than a stretched-out payment schedule for money we were owed for groundwater remediation,” he said. “This $10 million goes into Santa Monica’s separate water fund, to help us get water independent, so it’s not a windfall — it’s more of a waterfall.”
Santa Monica draws water from several wells located along Olympic Blvd. and due to the nearby factory, water from those wells now contains what is known as Volatile Organic Chemicals (VOCs). To remove those contaminants from the water, it’s pumped to the City’s Arcadia treatment facility at the intersection of Bundy Dr. and Texas Ave. in West Los Angeles.
At the Arcadia facility, water from several city sources is mixed purified to remove VOCs, contaminants from gasoline products and other sources of pollution. The water is filtered for heavy metals and sediment before being passed through reverse-osmosis (RO) filters that remove minerals like calcium and magnesium.
The water’s pH level is adjusted, fluoride is added, it is disinfected and aerated. The local water supply is tested more than 10,000 times a year to ensure safety.
A separate settlement with gasoline companies provided the city with funds to remove contamination from gasoline products and that settlement included the city taking ownership of property near the Arcadia plant near Wilshire and Bundy.