Midtown EcoEnergy
From:
Carol Greenwood
Date:
Mar 28 16:53 UTC
Short link
March 28, 2008
Minneapolis “Midtown burner” plan could go up insmoke
by Burl Gilyard <mailto:burl.gilyard@finance-commerce.com>Staff Writer
for Finance & Commerce
*Burl Gilyard*, real estate/retail writer
Burl joined Finance & Commerce in April 2004 after working as a staff
writer for City Pages, Corporate Report magazine and the Twin Cities
Reader. As a freelancer, he has written for numerous regional magazines
and The Wall Street Journal, New York Times, Rolling Stone, Slate.com
and American Journalism Review. A Minneapolis native and a graduate of
the University of Minnesota, Burl lives in Minneapolis with his wife,
Nicole Cina.
<email obscured>
<mailto:burl.gilyard@finance-commerce.com>
*$92 million proposal may be dead as the developer and the cityfight
over why it hasn’t happened*
Michael Krause has long been promoting a wood-burning power plant in
South Minneapolis, and his development idea is known as the Midtown
EcoEnergy facility.
But today, Krause is feeling burned up.
So,too, are officials for city of Minneapolis, which owns the
1.6-acresite where the plant would be built, home to a still-in-use
garbage transfer station.
And the councilmember for the Midtown area, Gary Schiff, doesn’t want to
spend any more time on the project.
In fact, Krause, a principal with Minneapolis-based Kandiyohi
Development Partners, said that his firm is weighing legal action
against the city. Kandiyohi has a contract to purchase the city-owned
garbage transfer station at 2850 20th Avenue S. for the $92 million
project.But the contract requires Kandiyohi to meet a list of option
requirements before a looming March 30 deadline.
City staffers don’t believe that Kandiyohi has met all of
theconditions. GregGoeke, director of property services for the
city’s Department of Public Works, sent a certified letter to the
developers on Wednesday,outlining the city’s concern that Kandiyohi
has no deal in hand from a utility to buy the power generated at the
proposed plant. A separate,internal city memo noted that the city
does not believe that Kandiyohi has secured financing for the project.
“[The letter] came as a surprise. We clearly think we’ve met all
therequirements for the option,” Krause said. In response, Krause
said that his firm is considering suing the city. “Yes. If we need
to,” Krause said of potential legal action. “And Ithink that’s clear
to everybody.” City representatives met with the Kandiyohi team on
Thursday to discuss the project’s status. “Weare continuing to work
and communicate with the developer, but the power purchase agreement
requirement hasn’t yet been met,” said Matt Laible, a spokesman for
the city.
Krause said that Kandiyohi believes it has demonstrated that
XcelEnergy is interested in the project. AMarch 17 letter from Xcel
Energy to Kandiyohi acknowledges that the utility is “negotiating
the terms of a power purchase agreement” at the site, but makes it
clear that there is no definitive agreement yet. Xcel spokeswoman
Mary Sandok declined to comment beyond the letter.
CouncilmemberSchiff, who has supported the project in the past, has
become frustrated with the protracted project. The Midtown Eco
Energy site is in Schiff’s Ninth Ward. “They have not made progress
on numerous points — we basically have had no communication or
progress from them since August,” Schiff said. “They’re stuck in the
water, and I don’t think we should be spending more time on it.”
Schiffnoted that the developers were already granted a one-year
extension on the deal to buy the site, an extension that expires on
Sunday.
In a March 2007 letter to the city requesting the extension,
Kandiyohi principal Kim Havey wrote, “The primary necessity of the
extension is that power purchase negotiations entail a great deal of
time and their conclusion is not on any predetermined schedule.”
A year later, Kandiyohi still does not have a deal. Plansfor the
long-gestating project date back to 2001, when the nonprofit Green
Institute first floated the idea. Krause was then executive director
of the Green Institute. He later left the Green Institute and formed
the private Kandiyohi, which took over the burner project and bought
the Green Institute’s research.
The city ofMinneapolis issued an RFP (request for proposals) in the
spring of 2006 to sell the transfer station property and develop a
biomass plant. The city drew a single response: from Kandiyohi.
Kandiyohi’s plan calls for a 24.5-megawatt facility that would
generate both electricity and heat. The primary fuel source would be
wood, but a past Kandiyohi submission to the city also mentioned
agricultural byproducts such as cornstalks and corn cobs.
Although the biomass project is touted as eco-friendly, an ad hoc
coalition of neighbors, MinneapolisResidents for Clean Air, is
organizing against the project. JullonneGlad, a member of the group,
said that neighbors are concerned about the potential environmental
impact of the power plant. “That area is saturated already, and my
concern is the cumulative toxicity. The reason people live there is
they don’t have the means to live elsewhere,” Glad said. “We do not
feel that our interests and our concerns have been taken into account.”
Krause said that Kandiyohi has been judicious in its environmental
review of the project. “The neighborhood does not have a veto over
this project,” Krause said.“We’ve looked at absolutely every detail.”
Two other as-yet unresolved issues for the project are state
environmentalreview and the status of federal production tax credits.
TheMinnesota Pollution Control Agency (MPCA) is currently reviewing
Kandiyohi’s submitted environmental assessment worksheet (EAW) on
the project, which developers submitted in January.
Kevin Kain, an MPCA project manager, said that the MPCA is waiting
for some additional information on air emissions from Kandiyohi. He
estimates the proposals will be ready for a public comment period in
May. Kain said the comment period should last 45 days, after which
the MPCAwould review the comments and make its findings.
Federalproduction tax credits, a financing tool widely used by
renewableenergy developers, are currently set to expire at the end
of the year. “It’s become a political football,” Krause said of
prospects for extending the tax credits.
But those issues are moot if Kandiyohi doesn’t have a site to develop.
Nevertheless,the project still has political support. Jeremy Hanson,
spokesman forMinneapolis Mayor R.T. Rybak, said Thursday that Rybak
remains a supporter of the plan. “Mayor Rybak continues to support
the Midtown energy project and thinks it’s going to create a good
source of alternative energy to help us address global climate
change and will provide great jobs in an area of the city that’s
very important,”Hanson said.
.