City geothermal continues to radiate discussion

By Mike Van Sickle
Union editor

The West Union City Council continued to discuss its options with state and local officials, downtown business owners, and local residents in regard to leasing the community’s downtown geothermal system during a work session at City Hall on Wednesday, April 24. 

To open the meeting, Councilmember Cathy Bemiss asked City Attorney Jerem White if a 28E agreement is the type of contract the City would continue to pursue.

White responded that yes, a 28E agreement would be a benefit “to all citizens of West Union, as any 28E agreement is public record.”

Bemiss asked that if another company were to be interested in the geothermal, would it also be offered a 28E agreement, at which time White responded yes.

Councilmember Kennon Gumm asked why if the geothermal is truly like a utility, would the City not put a franchise tag on it.

White reminded the council that a franchise requires a voter-approved referendum (60 percent) of the citizens.

Gumm then asked if the City decided not to start up the geothermal system, what would be the liability of West Union.

City Administrator Bob Vagts said in discussions with state officials that the Department of Energy had never experienced such a matter before. He noted the organization’s local team members assumed most, if not all, funds requested would be required to be returned by the City. 

In addition, the position of Community Development Block Grant (CDBG) and other government entities would be that all funds would need to be returned by the City.

Jeff Geerts, special projects manager of Iowa Economic Development Authority (IEDA), reminded those in attendance that the CDBG and IEDA had invested approximately $1 million in the community’s geothermal system. He noted that language in the approved contract(s) stipulate that the project has to achieve satisfactory performance or the return of some or all funds could be sought.

“We (state) would not view a system in the ground without any users as being satisfactory performance,” he continued. “We have tried to provide that extra assistance to help you (City of West Union) get those users to the system.

“The more users you have, the better benefit to the community as a whole in the long term. We see this as a business retention, business recruitment tool,” he later added. “We see this as only the beginning for West Union. We’re here for the long haul. The simple answer for us is that we want to see the system turned on.”

Bemiss asked how soon officials would like to see the system operating.

Noting deadlines and issues with Housing and Urban Development (HUD), Geerts suggested an October 2013 startup date.

Gumm commented that if it was in everyone’s best interest to get the system running “the sooner the better,” and since the proposed LLC was formed in October 2012, why wasn’t the council notified of the LLC’s proposal before the council’s April 2013 meeting.

“We want the system running, we truly do,” said Mayor Kent Halverson. “Tell us about your plans. Show us your facts and figures. Persuade us that this local LLC should run the system.”

“We (City Council) want to get it up and running,” said Bemiss, “but we have a responsibility to the entire community, as well as the downtown. We can’t just focus on the users (of the geothermal) but also on the entire community, because the City owns the asset and it then has value.”

“It doesn’t have value if it’s not running,” replied downtown business owner Kara Wedemeier.

“Yes, we set up the LLC a while back, and we should have come forward,” admitted LLC spokesperson Jon Biederman. “If the City comes up with someone else to run the system, we will gladly step back. There is no money to make in the LLC.”

Gumm and Bemiss both requested a business and/or maintenance plan submitted by the LLC.  

“We’re not necessarily putting in a roadblock,” said Bemiss.

“This is such a huge project in West Union, and it’s a showcase project for the entire world,” Wedemeier interjected.

“The worst disservice we could do is have a (multi- million dollar) geothermal system buried under our streets that goes to nowhere,” added downtown business owner Steve Roach. 

In response to Bemiss acknowledging that she had contacted Black Hills Energy officials in regard to their interest in leasing the system, downtown business owner Joe Organist replied that many business owners want to hook up and begin operating the system as soon as possible.

“We have 11 business owners in place under the LLC, ready to hook up. What value do they (Black Hills) have if they have no customers established?” he asked.

“The reason for this discussion is the value of the lease,” answered Bemiss.

“Your lease has no value at this time,” Organist responded. 

New West Union resident Laurie Kreul suggested everyone “step aside from the line in the sand” and consider what’s best for the community.

“We (her family) came here because we believed that this was going to be a great place to live,” said Kreul, who serves as the Gundersen Lutheran-West Union Clinic manager. “You (Mayor Halverson, councilmembers Bemiss and Gumm) are saying that you’re concerned for the citizens.

“First of all you have business people who believe in West Union and are willing to invest their own money. So, while you are concerned about all of the citizens, that is wonderful, but we need to keep in mind to get new businesses into town. We need to be progressive, not regressive.

“Gundersen has been unable to recruit a physician to West Union for five years. We have to put our money into youth, and we have to have businesses who put money into our youth, and we have to support our businesses,” she closed, while praising the community’s recreational facilities. “If we don’t have businesses and our downtown is empty, no one is going to come, and what are our property taxes going to do then?”

“Are you excluding the retail?” asked Bemiss, noting the businesses on the fringes of the community. “They’re not included in this, so it sounds like they don’t count.”

“I’m not excluding anyone,” Kreul answered. “What did I say to make you think that they don’t count? To generate business into town, we need to commit to the downtown. The people downtown are willing to put up their funds to hook up to this system.”

Due to it being a work session, the council could not make a decision in regard to the proposed 28E lease agreement following the 2 ½-hour meeting. Deliberations are expected to continue in the near future.