WRIGHT COUNTY BOARD MINUTES
FEBRUARY 17, 2009
The Wright County Board met in regular session at 9:00 A.M. with Sawatzke, Mattson, Russek, Eichelberg and Thelen present.
The minutes of 2-10-09 were corrected as follows: Page 7, 4th paragraph, 3rd & 4th sentences should read, “As of 8-01-08, all roadways that are paved will be allowed to carry 10 tons per axle or 80,000 lbs. unless otherwise posted. Therefore, the map reflects spring weight restrictions.” Eichelberg moved to approve the minutes as corrected. The motion was seconded by Russek and carried unanimously.
Petitions were accepted to the Agenda as follows: Item For Consid. 4, “Correspondence from MCIT RE: AMC Training, “Building Foundations: Making Solid Land Use Decisions” (Sawatzke). Russek moved to approve the Agenda as amended, seconded by Thelen. Mattson said in his early years as a Commissioner, there were not as many meetings. He felt that AMC would cut back on meetings or try to use videoconferencing because of cost. Sawatzke said there is not a fee to attend. He understands that MCIT endorses the training as the education provided may result in better choices, therefore the potential of fewer lawsuits. Mattson said there is still mileage and per diem costs associated. The motion carried 5-0.
The Consent Agenda was discussed. Sawatzke referenced Item B1, “Add 2008 Year End Review To Scheduled February 24th Budget Committee Of The Whole Meeting Agenda.” He asked Richard Norman, County Coordinator, if adding this item will make the Budget Committee Of The Whole meeting considerably longer. Norman responded that he asked Hiivala to provide a summary of the Year End Review and estimated it would take about 10-15 minutes. At that time, the Committee can decide whether they would like a more detailed review. If so, the meeting can either be recessed to a date and time specific or another meeting can be scheduled. On a motion by Russek, second by Thelen, all voted to approve the Consent Agenda:
1. Performance Appraisals: K. Horsch, Aud./Treas.; J. Ahlm, C. Curtis, M. Olson, T. Pippo, P. Standafer, K. Triplett, T. Wachter, Sher./Corr.
2. Claim, Frank Madden & Assoc., $990.20 (Service For Jan., 2009).
3. Schedule Boy/Girl County Day For 4-21-09.
1. Add 2008 Year End Review To Scheduled February 24th Budget Committee Of The Whole Meeting Agenda.
2. Approve Renewal Of 2009 Tobacco License For Thrifty Drug #743 (St. Michael City).
C. PLANNING & ZONING
1. Authorize Signature Of Board Chair On MPCA Feedlot Program 2009 Annual Feedlot Officer & Performance Credit Report (Period 7-01-08 to 12-31-08).
Denise McCalla, Property Tax Administrator/Chief Deputy Auditor/Treasurer, presented the claims listing for approval. Mattson referenced Page 12 and costs associated with running the Jail. He hoped these expenditures relate to the new Jail facility. He did not want things purchased for the current Jail that will not be moved to the new site. Sawatzke said the expenditures are out of the regular operating budget. The mattresses in the current Jail will be moved to the new Jail. Additional mattresses had to be purchased due to the size of the new facility. Russek noted that Wright County inmates that are housed in other counties will be brought to the new Jail once that facility is open. The expenditures on Page 12 appear to be related to inmate clothing and mattress covers. Mattson wants to make sure that these same items are not repurchased when the new Jail is opened. On a motion by Mattson, second by Russek, all voted to approve the claims as listed in the abstract, subject to audit.
A Personnel Committee Of The Whole Meeting was held on 2-10-09. At today’s County Board Meeting, Eichelberg moved to approve the minutes and recommendations. The motion was seconded by Russek and carried 5-0:
Elected Officials Participation In The Defined Contribution Plan & Social Security.
The issue arose as Commissioner Thelen would like to participate in both the Defined Contribution Plan and make contributions to Social Security. Norman said a law was passed in 2006 reflecting that public officials must be in the Defined Contribution Plan. Being in the Coordinated Plan is no longer an option for new Commissioners. In order for elected officials to be able to contribute to Social Security, a resolution must be adopted. If adopted, the resolution will bind all future Wright County Commissioners to the same rules and it cannot be changed once passed. The change can be retroactive up to five years. The resolution will be forwarded to the State. PERA will conduct an election, in this case with a vote of one, and a ballot will be sent. There is a 90-day waiting period prior to the election to allow Thelen the opportunity to change her mind. Recommendation: Adopt resolution to extend Social Security coverage to Commissioner Thelen and all future Wright County Board members. Coverage will be effective January 1, 2009.
(End of Personnel Committee Of The Whole Minutes)
Russek moved to adopt Resolution #09-13, extended Social Security coverage to elected officials. The motion was seconded by Eichelberg and carried 5-0 on a roll call vote.
Mike Krause, Kandiyohi Development, requested approval of a resolution to support exemption of personal property tax for a proposed Biomass Energy Facility in Rockford Township. The project was described as a green energy project, representing a $75 million private capital investment in Wright County that will produce enough renewable energy for approximately 18,000 households. Kandiyohi Development has been working with Wright Hennepin Electric and Noel LaBine, Wright County Economic Development Partnership. Krause said 100 construction jobs will be involved as soon as the financial and permitting processes are in place. The Facility will create 20 permanent jobs. The average salary will be $63,000/year plus benefits. There will be an additional 20 jobs related to fuel handling. Some of the wood will come from Minneapolis but a significant portion will be from the local area to turn this into useable electricity. Krause said this is the beginning of the project. The County Board’s approval supporting the exemption of personal property tax does not predispose the permitting which will need to be obtained from the State or for the County’s land use application.
Gary Cerkveniek was introduced. He is a former St. Louis County Board Chair and represents Kandiyohi Development at the Legislature. Cerkveniek has personally worked on eight such personal property tax exemptions for electric utility facilities since 1994. He said this is standard operating procedure on how Minnesota has dealt with utility taxes. The only businesses in Minnesota that would pay personal property tax without this exemption is the utility industry. One required step in the personal property tax exemption is to obtain approval from the local governmental bodies (County, Township or City, and School District). Kandiyohi Development has introduced Legislation that would exempt the 20 Megawatt Biomass Facility in Rockford Township. The Legislation is requiring them to obtain resolutions of support. A listing was provided reflecting those projects which have been exempt since 1994. Cerkveniek personally worked with the Biomass Facilities in Virginia and Hibbing. Included in the information is a proposed bill which will be introduced by Senator Koch in the Senate and Representative Emmer in the House. The bill is being referred to tax and energy committees for action. Thelen asked how the Facility will affect other utilities in the County. Cerkveniek said this a small Facility (20 Megawatt) and will not affect the large facilities. It is an independent Facility. The product will be sold to the wholesale market. From there it will be sold to companies (i.e., Excel Energy, Great River Basin) which would in turn sell to distribution cooperatives or a municipal system. He said it will have no effect on any other utility or tax system in Minnesota.
Mattson said he has quite a bit of information as to why Kandiyohi Development should not be allowed into Wright County. If the County Board is forced into adopting the resolution exempting personal property tax, that forces the Planning Commission to approve their applications as well. Cerkveniek responded that is why it was explained that passing the resolution will not predispose the permit application process. The project will require a 12-18 month MPCA permitting process. Out of respect for the County, Kandiyohi Development came to inform the Board of the proposed legislation. The County Board does not have to pass the resolution at this time. This can be done after the statute is passed by the Legislature. The County has the veto power over this statute. The language reflects that a resolution is passed by this Board, the School District, and the Township. They have built adequate provisions for the local government and their processes, and the processes by the MPCA and the multitude of permits needed. Cerkveniek said there will be those who are opposed to any new development or electric facility, windmills, and biomass facilities. However, Congress just passed an $800 billion stimulus package that includes over $100 billion in incentives, including a 30% grant to any facility such as this. This type of facility is carbon neutral on the environment and it is the right thing to do relative to economic development. This is because 100% of the fuel use comes from waste wood within 75-100 miles of the Facility and the County would not have to pay to landfill the material. The amount of emissions will be similar to six automobiles that will travel by the Facility during the day. Cerkveniek said they will be happy to discuss emissions with anyone. They have to achieve the best available technology under Minnesota and Federal law in order to get permitted.
Krause spoke to the schedule moving ahead. He told Mattson that this will not affect the County’s authority over the land use application. The plan is to draft the air permit application which will be sent to the State. The process will involve public meetings, which he felt could be held at the Rockford Township Hall. They are also completing an EAW (Environmental Assessment Worksheet) which is not mandatory. They decided it would be better to complete the EAW on a voluntary basis so all issues can be discussed. The process will take place between now and May or early June. After that, the land use application will be presented back to the County. The Whispering Winds Industrial Park was approved previously and their proposed use is allowable. A CUP (Conditional Use Permit) is required. They are still determining whether a variance will be required as the structure around the turbine and boiler may be above the 45’ height limitation. The CUP will be handled through the Planning Commission. Krause said the personal property tax exemption does not mean this property will not be on the tax roles. He felt utilities in Minnesota pay more than their share (3.5% of all property taxes). They will still pay for the value of the land and any improvements, the buildings, and the electrical switch gear. This site is attractive as it is next to a transmission station allowing the ease of access to distribute energy. By statute, the pollution control equipment is automatically taken out of the property tax. The personal property tax exemption that they are asking for would relate to the very expensive capital items (boiler system, steam turbine that generates electricity, etc.). As mentioned, every other business in Minnesota does not pay property tax on its machinery, equipment, or inventories. State tax law has kept utility companies under the old rule that tax would apply to equipment. The smaller energy projects in Minnesota must seek an exemption from the local units of government. Krause said if the exemption is not obtained, they may not be able to get their financing to work. If they do, the increased operating costs will be passed through to the rate payers.
Sawatzke said the County is familiar with personal property tax. He referenced the Nuclear Power Plant located in Wright County. He has gone to St. Paul over the past 14-15 years to try to protect the personal property tax received from local utilities. For a number of years, reasons have been given as to why they should not have to pay it, with the first being deregulation. The County has spent a lot of time familiarizing themselves with that issue. He referred to those areas under the personal property tax categories (turbines, generators, etc.), things where tax is paid (land and buildings), and exempt items (pollution control devices). He asked for a breakdown of the personal property tax. He said the County does not have any idea as to what amount the exemption would be in dollars. Krause referenced those pieces which will still remain on the tax roles, such as the land, buildings, electrical switch gear, and site improvements. They are currently compiling those figures but estimate $5.5 to $6 million which will be added to the tax roles. The large items that would be part of the exemption would be the boiler system and turbine totaling about $26-$28 million. This has a huge impact on the operating budget. Krause said as developers, they would like an indication from the County whether they will support proceeding with the design and engineering for the project because of the significant investment.
Sawatzke referenced the $28 million which will be spent for the boiler system and turbine. He asked whether there are other things that will be added to this amount. Krause felt that figure should only fluctuate by $1 million either way. With the global recession, he said that there is a window of time where they will be able to construct the Facility for less. They are trying to fit into that window and move expeditiously. Sawatzke referenced the $28 million requested in personal property tax exemption and how much of that is already exempted as a result of pollution controls. Krause said the pollution controls amount is about $3.5-$4 million. They are actually including things they are not required to. They have done an analysis and determined this would be one of the cleanest biomass facilities in the country. He referenced the wood burning biomass facility in St. Paul on Kellogg Blvd. The facility provides electrical power into the system and uses hot water heat from cooling of the turbine to heat the downtown. There is not another business at the proposed site that could use this water. Sawatzke again referenced the $28 million for personal property, the $4 million for pollution control, and $5-$6 million for traditional buildings and property. He said that totals about $37-$38 million and asked how that relates to the $75 million figure referenced at the beginning of the meeting. Krause said about half of the costs will be in design, engineering, financing fees, and labor contracts. Their best estimate on what difference this would make in the tax bill is about $750,000-$800,000. The plant will produce about 183,000 megawatt hours of electricity. If 183,000 is divided into $800,000, he said it equates to about a $4.50 megawatt difference. This cost would have to get passed through and picked up in the rate schedule if the resolution is not passed. Krause said that no energy project has been built in Minnesota since 1994 without an exemption. The Legislature has discussed taking this out of tax law.
Thelen referenced the $5-$6 million that would be added to the tax roles and questioned whether this is what the County would take in through taxes or what would be taxed. Krause said that is what would be certified by the State for market value. Applying the tax rate, it would equate to about $200,000/year with about 50% going to the School District, 30-35% to the County, and the remainder to the Township. Krause said they met with the Township two weeks ago. Kandiyohi Development will meet again with the Township at their meeting tonight. The School District only meets in formal session one time per month. Kandiyohi Development will meet with them at their next meeting on 2-19-09.
Sawatzke referenced Mattson’s concern on whether a County Board vote in support of the resolution may taint the Planning Commission’s decision on the CUP. He felt that could, in theory, put pressure on them to act in one way or another. The same could happen with the Board of Adjustment’s decision on any variance request. Thelen said language included in the resolution indicates that adoption in no way predisposes what the County may do through the zoning processes. A lot of work will be put into the permit applications making sure they include enough detailed information for the Planning Commission to make a decision. The resolution indicates the County is interested in seeing Kandiyohi Development proceed and get to that point, which will come later this year. Sawatzke asked whether it would be problematic to allow the Board of Adjustment to take action first. Cerkveniek responded that those who are investing in the project are not Wall Street Bankers, they are residents of Minnesota. He said that in no way would passing the resolution have any affect on the Nuclear Plant. Things have been done to protect the tax base in counties like Wright. The counties and school districts have grown dependent upon that tax base. He said that this would not influence that at the Legislature. If the County decides to say no to the project, the developers should know this prior to proceeding with applications. They can decide at that time whether to proceed to another county or another site. Cerkveniek said if the answer is maybe, the developers would like an opportunity to meet with the County Board again in the near future to answer any questions. If the Board decides that adopting the resolution would be routine, which he said has been the case in most all instances since 1994, the appropriate signal needs to be sent to the Board of Adjustment, Planning Commission, or any other regulatory bodies that they need to make an independent decision based upon what is presented to them. By the County Board passing the resolution, the Board does not want to influence the decision of these groups. Kandiyohi Development needs to hear from the County on how they will proceed. Krause said the dilemma for them is that they do not control the schedule of the Legislature. Their goal is to get the bill passed this session. Otherwise, it can pose an element of risk when they attempt to obtain financing. There is then the question of whether the Legislature and local units of government will approve the project. They would like the local government input while the Legislature is addressing this bill. That is what is driving their timeline.
Thelen supported the last option that this does not obligate anyone to proceed and approve the plan. She said the decision is just about the tax roles. She has questions about the Facility itself and assumed these would be answered through the process. It appears the County would lose about $840,000 of taxes per year. Cerkveniek said the County will gain about $200,000 on the table and walk away from about $800,000-$850,000. That is the way it has been since 1994 in Minnesota for every one of these similar facilities. They are not built unless this property tax exemption gets passed. What happens at the Legislature is that this bill will be part of the tax bill and will not be passed until the last week of the session. Cerkveniek said a hearing will be scheduled in the next few weeks in the Senate and the House. The County is encouraged to testify and listen to their testimony. As part of the process, the Tax Committee Chair will ask whether the local government units have given approval. He said they generally pass the bill contingent upon receiving local government approvals.
Eichelberg supported having more time to make a decision. Although he has learned about the project today, he favored more time to receive additional information. He felt it would be good to have Kandiyohi Development come back to answer questions at a future Board meeting. He was not comfortable with passing a resolution of support today. Russek informed Kandiyohi Development that he serves on the Planning Commission. If the County chooses to approve this resolution, he was concerned with the precedence that may be set. He referenced the problems over the years with tax rights relating to Excel Energy. He thought if the Facility is approved, there will be others that will come forth. Russek is not ready to vote in favor of this. He said he has not seen the plan for the plant yet.
Cerkveniek said all pieces of legislation since 1994 have been written very specifically. In Minnesota law, a tax break cannot be specific to one company. This is a way to narrow it down to one site. He said every one has been passed since 1994 and they all apply only to new facilities. The only group that pays personal property tax in Minnesota is the large utilities on their existing pre-1994 plants. No one else pays personal property taxes on any business in Minnesota. He said Wright County will never have another type of factory come in for a personal property tax exemption. Only utilities pay the tax. Cerkveniek said he goes before the Legislature each year with this type of exemption. They are standard 3-4 minute hearings. They get passed as it is standard operating procedure. Wright County hasn’t been a part of this as there hasn’t been a facility built here. Cerkveniek felt it was reasonable for Wright County to wait and allow the opportunity for them to come back and answer questions. They would also be available to meet individually as well.
Mattson referenced the plants in Virginia and Hibbing. He has information reflecting that the permits were violated. The MPCA issued fines and revoked the permits. Cerkveniek said the permit has never been revoked. The facility is in its third year of operation. It has met all permit and MPCA obligations. There was one discharge violation when the facility first started up, but most facilities run into problems at first. Mattson clarified that the information states “reworked” not “revoked”. Cerkveniek said this happens in many industrial applications. Kramer said they would like to proceed with the project. They are using new techniques from other earlier facilities. They are using a modified gasification system which burns at 900 degrees Fahrenheit. The emissions are extremely low. Since they get such thorough combustion, they are able to capture 99.5% of all fine particulates. As stated before, the volume of emissions from this plant in one year is equivalent to the emissions of 60-70 cars. Krause said he understands that they will need to convince the County of this and also that a quality facility will be built.
Sawatzke asked whether the EAW process has begun. Krause said they have hired Wenck Engineering from Maple Plain to work on the air permit and the EAW process. The process will not be completed until mid to late May, at which time it is submitted to the MPCA. This will trigger a series of reviews by the MPCA and they will hold hearings. He estimated this would occur during the summer months. When this is complete, Kandiyohi Development will start putting the land use applications together. Environmental conditions could be included in the CUP. Sawatzke asked whether this Facility will be located on the Crow River. Krause responded that it will not be. They will have cooling towers and their own well system. Kandiyohi Development did look at locating the Facility in the City of Rockford. It was attractive as it has municipal services so they could buy the water and have it discharged back into the system. The current site does not have municipal services. Sawatzke asked how much water will be pumped from the ground and where the water will be discharged. Krause explained that it is a fairly significant amount. Worse case scenario is 500 gals./minute or 770,000 gals./day. There is a DNR permit that applies. The amount is roughly equivalent to the Dickinson Springs Well System. Sawatzke said that System is typically not run. Krause said it would be ideal if another business could use the thermal energy. The quality of the water is the same from out of the ground to discharge. It can be shipped to another business to extract the thermal energy. The drawback to the site is that there is not another business currently that could do this. He said there are a thousand different industrial applications for what is called industrial processed steam. In the meantime, they will need a discharge permit for the excess water or a cooling pond. That is regulated by the DNR. Krause said they can direct the water to the Crow River. Sawatzke asked how this would happen as they are not located on the River. Krause was unsure but felt a pipe would be involved. In the past, their company has worked with municipal systems. This site will require all new engineering. An engineer has analyzed this and the options are known. Sawatzke voiced concern on whether wells in the area could go dry with this much water being used. Krause said they would be required to obtain a DNR permit and run a 30-day well test. Their engineer has indicated there is more than enough water in the area to handle this Facility. Sawatzke said it appears the Biomass Facility will emit very little pollution and will utilize a renewable resource not well utilized now. He just wants to make sure that there are no surprises later on. Krause said their company will need to make a decision how far they will proceed with this particular site. That is where the tax exemption piece becomes critical. They are working with Tree Top in Delano to operate a wood yard to feed into the Facility and also a group of farmers in Howard Lake that have a proposal to put 6000 acres under conservation easements for fast growing poplar trees.
Krause said Kandiyohi Development will have to decide how far they want to go with expenditures related to testing and engineering without some indication from the County that they support the project. He did not feel this was a question in the short term. They would be willing to come back in a couple of weeks to address more specific questions. Cerkveniek said they will bring their environmental engineer to the meeting to answer questions related to the DNR permit. It would be helpful if they had specific questions ahead of time. He invited Commissioners to forward those questions through the County Coordinator or by email. If the County is going to decline the request, they would rather know up front. Mattson asked to receive minutes of the township and school board meetings that Kandiyohi Development will attend. Mattson moved to lay the issue over for two weeks, seconded by Thelen.
Jackie Poole lives in Rockford. She said it doesn’t appear that anyone has heard about the project. She learned about it when the Rockford Newsletter came out. She said citizen concerns were voiced but that their questions were not welcomed or answered. No one heard anything for about one month and then they learned the project had moved. Poole talked with Rockford Township and Delano area business owners and the Delano Chamber of Commerce, and no one had heard about it. She felt it was prudent for the County Board to hear information from outside experts that do not represent this project and to also hear from the people. She referenced children, organic crops, and livestock in the area. The allowable levels by the MPCA are up to 1 million per year of pollutants. She felt it would be hard to find anyone who doesn’t want to see alternative energy levels developed. She had concern with depletion of water levels and water being discharged into the Crow. She said the water temperature is 105 degrees when it is discharged. She asked that the County invite outside experts to the public meeting to address the facts.
Sawatzke said this raises the issue of what comes first, the land use process or this process. In the land use process, there are public meetings where residents may get their questions answered. In this process, the County Board is being asked to make a decision without that public process occurring. That is something the County will have to determine, whether they can take action prior to the public process. Cerkveniek said they are not trying to avoid the public process. He said this is a public process and so are meetings at the township, school district, and Legislature. As developers of the project, they do not go door to door with their proposal. They bring their project forward at meetings which include the press. Cerkveniek said they are available to discuss this with anyone who has questions. Their website is www.kandiyo.com. Questions can be directed to 612-455-2177 or firstname.lastname@example.org. Krause said as more information is developed, it will be added to their website. They are just starting with the air permit and EAW process. The motion carried 5-0.
On a motion by Eichelberg, second by Russek, all voted to authorize the AMC Delegates to attend the AMC Legislative Conference, April 29-30 in St. Paul.
Eichelberg moved to authorize attendance at the AMC Training, “Building Foundations: Making Solid Land Use Decisions.” Trainings are held as follows: 2-19-09 (Rochester); 2-20-09 (Brainerd); 3-19-09 (Mankato); and 3-20-09 (Duluth). The motion was seconded by Thelen and carried 5-0.
A & B Security Storage. $195.60
Allina Hospitals & Clinics 231.01
Allina Hospitals & Clincs Sp 1,038.78
American Institutional Supply 366.50
Ameripride Linen and Apparel 420.90
APEC Industrial Sales & Service 341.10
Bob Barker Co. 1,455.32
Batteries Plus 122.41
BDS Laundry 1,099.90
Buffalo Floral & Landscaping 160.00
Center Point Energy 20,095.47
Central McGowan Inc. 143.86
Chamberlain Oil Co. 2,392.86
Climate Air 10,082.82
Crow River Tools 330.65
Design Electrical Contractors 2,995.94
Display Sales Company 279.69
Dale Engel 350.00
Tom Feddema 129.80
Forestry Suppliers Inc. 424.00
Gard Specialists Co. Inc. 429.22
General Office Products Co. 635.73
Gopher State One Call 127.55
Granite Electronics 694.81
Hickmans Service Inc. 162.41
Hillyard Floor Care Supply 2,539.53
Neal Huemoeller 505.12
Chris Jahnke 206.47
L-3 Communications Mobile Vi 3,313.88
LaPlant Demo Inc. 556.31
Larson Allen LLP 9,800.00
Loberg Electric 282.41
Carol Lostetter 300.00
Martin-McAllisters Cons. 2,000.00
Richard Mattson 151.25
Menards - Buffalo 580.62
Midwest Machinery Co. 23,190.38
MN Dept. of Public Safety 225.00
Monticello-Big Lake Hospital 3,496.25
Brian Munsterteiger 177.72
National Business Sys. Inc. 16,900.00
North American Salt Co. 44,309.07
O’Reilly Auto Parts 126.34
Office Depot 3,537.35
Photo 1 246.08
Frank Ramacciotti 600.00
Redneck Trailer Supplies 160.57
Royal Tire Inc. 6,383.78
Pat Sawatzke 619.47
Robert Shadduck 12,000.00
Software House International 233.24
Source One Supply Inc. 266.22
Spectrum Solutions 13,921.00
State of MN-Office Enterprise 1,335.00
Stratus Technologies Ireland 3,061.73
Super Express 178.92
Nancy Tallman 146.85
Tech Depot 875.17
Waste Management-TC West 1,101.97
City Waverly 130.69
Conrad Webb 125.00
West Central Industries 2,425.32
Arlene Wirth 1,389.76
Wright Co. Highway Dept. 62,172.00
Wright Co. Human Services 285.00
Wright Hennepin Co-op Elect. 4,049.66
Wright Hennepin Electric 235.47
36 Payments less than $100 1,585.58
Final total $285,861.51
The meeting adjourned at 10:15 A.M
Published in the Herald Journal March 16, 2009.