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Counties discuss future of Perham garbage burner

By Rin Porter

Special Correspondent

A group of officials who are stakeholders in the Perham Resource Recovery Facility (PRRF), known as "the incinerator" or "the garbage burner", got together on January 28 to discuss its future.

The PRRF is located in Perham and owned by the city of Perham. It burns 35,000 tons of garbage collected annually from residences and businesses in Otter Tail, Todd, Stearns, and Wadena counties, after recyclable materials are removed. The burning process makes steam that is sold to two Perham industries that use it to run their production facilities. The facility is also capable of producing electricity from the steam, but is not currently doing so.

The PRRF plant employs 13 people. It is supervised by a county coordinating committee made up of representatives from each county and the city who meet monthly, but daily decisions are made by an on-site plant manager and the city manager of Perham.

The three counties and Perham are part of a joint funding and contracting agreement to share costs and decision making for the garbage burner. Stearns County was part of the agreement from 1986 to 1998, and when the PRRF facility reopened in 2002, but several Stearns County Commissioners have made recent public statements indicating that Stearns County will not remain a part of the agreement when Stearns County's part of the contract expires in February 2009.

The county boards and solid waste directors of Wadena, Todd, and Otter Tail counties; the Otter Tail County Attorney; the City Manager, Finance Officer, and City Attorney of the City of Perham; two officials from the Minnesota Pollution Control Agency (MPCA); a representative of Ehlers & Associates financial consulting firm; and the operations manager of the Perham Resource Recovery Facility met in a joint session at the Events Center in Parkers Prairie on January 28 for nearly two and one-half hours.

No one from Stearns County was present at the January 28 meeting. The joint meeting was hosted by the Otter Tail County Board and chaired by Commissioner Syd Nelson. The purpose of the meeting was to consider making two decisions: (1) whether to change the existing method of governing the incinerator through a coordinating board, and if so, to determine what the new form of governance should be, and (2) whether to expand the capacity of the incinerator, and if so, how to pay for the expansion.

Current status of major issues

During the last few months, the county boards of all three counties passed resolutions supporting the idea of forming a three-county Joint Powers Agreement to govern the incinerator after Stearns County leaves in 2009. So in theory, there should have been no problem for the officials to agree at the joint meeting that a three-county Joint Powers Agreement should be drafted. The three-county agreement would include the City of Perham as a nonvoting member.

But last October, the City of Perham indicated in a letter to the counties its desire to sell the facility to the counties for $1.00, end its management of the facility, and sell its portion of the debt.

Quite a bit of time at the meeting was taken up with questions put to the Perham officials in an effort to determine whether there was any room to negotiate their continued participation in the management of the incinerator.

Another issue that attendees focused on was the pending application for grant money from the MPCA. Two years ago the City of Perham submitted a preliminary grant application to the MPCA for money to help pay for an expansion of the incinerator so that it could accept more garbage per day and generate more steam through burning the garbage - a project estimated to cost $9 million. A $3 million grant was approved in 2006 by the state pending a final application process that was supposed to be completed by June 30, 2007. The process has not been completed. The City of Perham has received extensions of the deadline several times, and it is currently set for March 30, 2008. If the final application process has not been completed by then, the state may take back its offer of $3 million.

The county coordinating board of the PRRF has put off completing the final application to MPCA because of Stearns County's announcement that it was leaving the agreement and taking its 6,500 tons of garbage elsewhere, and Otter Tail County's refusal to commit only 12,500 to 20,000 of its 27,000 tons of its garbage to the PRRF. Without Stearns' garbage and more of Otter Tail's garbage, the PRRF would not need to expand, and could not provide enough tonnage for the expansion if it occurred.

But if additional counties, like Becker or Cass, would agree to bring some of their garbage to Perham, the expansion could go forward.

Then there is the issue of money to pay for the bulk of the expansion - the other $6 million. Financial adviser Mark Ruff of Ehlers & Associates, and Perham City Attorney Dennis Happel made two important points at the meeting. If the Joint Powers Agreement (JPA) could be drafted and put in place quickly, then the financial advisers could sell bonds to refinance the PRRF and to pay for the expansion at the current low interest rate of 2.8%. This would be a financial advantage to the counties, who are now paying over 6% interest on their current bonds, and free up more capital. But if the counties drag their feet on putting the JPA in place, they will lose the advantage of low interest rates and lose the $3 million from the state grant.

Discussion goes in circles

At the January 28 meeting, the discussion went in circles. Otter Tail County Commissioner Syd Nelson said, "Let's draft the governance agreement and then consider the expansion." Todd County Board Chair Randy Neumann agreed. The MPCA representatives agreed.

Then another commissioner said, we can't agree to the structure of governance until we know whether we'll have to take on more debt because of an expansion, so let's decide first about the expansion.

Then someone else said, no, let's do both at the same time, work on them together.

Several commissioners suggested that a person be hired to be an administrator of the facility and get all the preliminary work done for both governance and the expansion.

Wadena County Commissioner Bill Stearns disagreed, saying it would take too long to educate a new person about all the history. He suggested that one of the county attorneys or the Perham city attorney could draft the joint powers agreement.

Otter Tail Solid Waste Director Mike Hanan said, "First you have to know who's going to be a party to the agreement. We believe Stearns doesn't want it, but we don't have their final word. We need to clarify it with them, and also with Perham. Are they in or out?"

Wadena County Commissioner Lane Waldahl said, "What I'm hearing is that the three counties are in favor of a Joint Powers Agreement."

Otter Tail County Attorney David Hauser said, "You need to proceed down both tracks at once."

Wadena County Commissioner Bill Stearns asked, "Will Otter Tail bring in their other 15,000 tons to this facility or not? Their commissioners have to decide this or we don't need an expansion. What is your answer? Is your county committed to doing the green thing by bringing their garbage to this facility?"

Otter Tail County Coordinator Larry Krohn said, "We were looking at costs for Otter Tail taxpayers and that's why we diverted our other garbage to North Dakota."

Perham Finance Officer Karla McCall said, "The state is encouraging a waste-to-energy solution to solid waste like we're doing at PRRF. You've got to think of everyone, not just Otter Tail County taxpayers. It's best for all citizens, it's not necessarily the cheapest way, but it's the best way to handle solid waste."

Todd County Solid Waste Director Tim Cadwallader said, "To buy ourselves more time, we've got to get that MPCA application done. Our existing capacity includes 6,500 tons from Wadena County, and 20,000 tons from Otter Tail County, and 7,000 tons from Todd County. That's 35,500 tons. Can we get 20,000 additional tons from Becker and Cass? If so, then we need to do the expansion."

Finally, after more than two hours of discussion, Wadena County Commissioner Bill Stearns said, "This is not going to happen unless Otter Tail County is willing to be the lead investor of time and effort. Are you willing to do this?"

Otter Tail County Commissioner Syd Nelson said that the county was willing.

At this point, decisions were made quickly and the meeting adjourned.

Here is what was agreed: The City of Perham will contact its engineering firm of HDR that worked on the PRRF most recently. HDR will provide engineering updates for the MPCA application. The three county solid waste directors will draft the Joint Powers Agreement. Otter Tail County Solid Waste Director Mike Hanan will work with the City of Perham to find other counties to contribute solid waste to the facility. And Karla McCall will complete the final application paperwork. All this will be done in about 35 days, in time for the next coordinating committee meeting on March 5.