June 5, 2006
Special Meeting
CITY OF MADISON
OFFICIAL PROCEEDINGS
MINUTES OF THE MADISON CITY COUNCIL
SPECIAL MEETING
JUNE 5, 2006
Pursuant to due call and notice thereof, a special meeting of the Madison City Council was called to order by Mayor Thole on Monday, June 5, 2006, at 5:33 p.m. in Council Chambers at City Hall. Councilmembers present were: Tim Volk, Maynard Meyer, Mayor Greg Thole, Rick Gail, and Cynthia Huse. Also present were: City Attorney Rick Stulz, Utilities Supt. Harold Hodge, and City Clerk Kathleen Weber.
AGENDA
Upon motion by Huse, seconded by Meyer and carried, the Agenda was approved as amended. Additions to the agenda include a contract with Upper MN Valley Regional Development Commission for professional services.
MINUTES
Upon motion by Volk, seconded by Gail and carried, the minutes of the May 31, 2006, Special Meeting of the Madison City Council were approved as presented.
LAC QUI PARLE COUNTY ETHANOL
At this time, Jeff Rheingans, on behalf of the Lac qui Parle County Ethanol Steering Committee, approached the Council to present their concerns regarding the City Council’s intentions to transfer a Land Option between the City of Madison and Sidney and Arlene Johnson over to Glacial Lakes Energy of Watertown, South Dakota.
Rheingans informed Council that approximately one month ago, a steering committee was formed from a local group of elevators and community members to work with the Lac qui Parle County EDA in researching the feasibility of constructing a locally owned and locally controlled ethanol plant in Lac qui Parle County, thereby ensuring that financial benefits of the project will remain in local communities. A corn study and site evaluation needs to be completed at an estimated cost of $37,000-$38,000; which neighboring elevators, except for Stateline Farmers Elevator in Madison, have committed funds for.
Mr. Rheingans listed several questions as to the validity of comments made by Glacial Lakes Energy representatives which raised a “red flag.” Some of these concerns include the start date given for dirt work and plant construction; the availability of a reputable construction company that will be able to build the plant on that timeline; the existence of “slots” reserved by a construction company for the ethanol plant project; if the land option is transferred to Glacial Lakes, what guarantee is there that a plant will be built; Glacial Lakes only owns 8% of the Redfield ethanol plant; Glacial Lakes indicated that local investors would have the first opportunity to buy shares in the new plant, but the LqP County Steering Committee felt that the profits from the Madison plant would be distributed to the South Dakota members since it would be a combined plant. This may be a hard sell for local investors. Mr. Rheingans voiced the Steering Committee’s feelings that the City Council has not given “due diligence” in consideration of this project and should not make a hasty decision.
Councilmember Meyer and Mayor Thole both commented on the fact that they had tried to find any negative information out there about Glacial Lakes Energy and were not able to find anything. Meyer noted his opinion that the only reason these concerns are being raised now is the fact that the county has been working on a similar project.
Council noted that the fact that a stand-alone project would require front-end costs that Glacial Lakes would take care of if they were to construct an ethanol plant. A new plant at the Madison location would generate increased utility sales and property taxes for the City. Glacial Lakes had indicated a willingness to help with water plant and wastewater plant improvements and/or expansions as needed.
Councilmember Volk asked Mr. Rheingans whether his definition of “community” meant looking out for the community or looking out for the plant investors. Rheingans noted that a community-based plant would mean local investors with local ownership.
Councilmember Gail noted the fact that Fagen is not the only company capable of constructing ethanol plants and Glacial Lakes had indicated that there other options.
Cheryl Knoll questioned what guarantees there are that a stand-alone, local ethanol plant would be successful after investing in a lot of upfront costs. Rheingans noted that a stand-alone plant would be a business venture with no guarantees. Knoll acknowledged the fact that there would be no guarantees with a Glacial Lakes project either, but the front end costs would be less.
City Attorney Rick Stulz explained to those present that the City of Madison has an Option Agreement with Sidney and Arlene Johnson for the possible purchase of property at $7,500 per acre. What the City Council is considering approval of is a Development Agreement which would assign the Option Agreement over to Glacial Lakes Energy of Watertown, South Dakota. Requirements included in the Development Agreement would be that Glacial Lakes Energy would have to exercise the Option Agreement on or before December 31, 2006; an ethanol plant would have to be constructed on this property; and the property would have to be annexed into the City of Madison. If the City of Madison has no assurance by December 31, 2006, that Glacial Lakes Energy is moving ahead to this end; then the Option Agreement with Sidney and Arlene Johnson would revert back to the City.
Councilmember Meyer pointed out the fact that the development of the Lac qui Parle County EDA does not preclude local EDA’s to pursue business development projects.
Darrel Ellefson, Lac qui Parle County Environmental Office, noted that he felt it was premature for the City of Madison to be signing any type of agreement until a drainage study is performed. Councilmember Volk noted that Glacial Lakes Energy will be able to utilize water discharged from the city sewer plant in their cooling processes. Supt. Hodge noted that MPCA has restrictions on recycling water, and that this matter would need to be discussed with them to verify compliance. Council noted that this would be an issue that would need to be worked out no matter if the county were to construct a stand-alone ethanol plant or if Glacial Lakes were to build an ethanol plant.
City Attorney Stulz noted that issues such as this are the reason that Glacial Lakes Energy will not exercise the Option Agreement right away. Further analysis needs to be completed on a variety of issues.
Ron Sigdahl stated the fact that the City of Madison can work with Glacial Lakes Energy anytime. The City should afford the County more time to do further research on the feasibility of a stand-alone ethanol project. Councilmember Meyer noted that if the City doesn’t act now, there is no guarantee that Glacial Lakes Energy would come back; maybe an alternative would be presented to them they would be interested in.
Roger Longhenry of the Lac qui Parle County Steering Committee noted the fact that there are very knowledgeable people on the committee and that it will take some time to complete a corn study and site analysis.
Council thanked the group for attending the meeting and expressing their concerns.
City Attorney Stulz informed Council that due to the fact that the Council is discussing the purchase or sale of property, the meeting could be closed.
Councilmember Huse questioned why the City has to move so quickly on transferring the Option Agreement to Glacial Lakes Energy before their feasibility study is completed. City Attorney Stulz indicated that Glacial Lakes Energy would not want to go through all the work in determining site feasibility if the land would not be available to them.
Councilmember Meyer questioned whether representatives of the Lac qui Parle County Steering Committee will be attending the public meeting being held at Lac qui Parle Valley High School on Friday, June 9th, in order that their questions can be addressed by Glacial Lakes Energy. Meyer noted that maybe the Council could act on transferring the Option Agreement at its next meeting scheduled for June 12, 2006.
County Commissioner Todd Patzer noted that this has been a highly educational project for him and expressed his opinion that the “due diligence” comments are very important. Also, he was glad to see that the City did have some stipulations in the Development Agreement that would protect the City in the event Glacial Lakes Energy does not follow through with their promises.
Councilmember Meyer moved that the City execute the Development Agreement with Glacial Lakes Energy for the transfer of the Option Agreement with Sidney and Arlene Johnson. Mayor Thole seconded the motion. After further discussion on the matter (pros and cons) including the fact that a public meeting is being held on Friday, June 9th; out of respect for the Lac qui Parle County Steering Committee; the Council may be putting the City at risk of losing the deal with Glacial Lakes Energy.
Upon motion by Meyer, seconded by Huse and carried, Council delayed vote on Meyer’s original motion to Monday, June 12th, 2006.
CITY HALL ELEVATOR PROJECT
Upon motion by Volk, seconded by Meyer and carried, Council ratified execution of a proposal from Peters Construction for the installation of a mahogany underlayment in the City Hall main hallway to accommodate the installation of new carpeting at a cost of $2,325.00.
RDC PROFESSIONAL SERVICES AGREEMENT
Given the fact that the Council did not yet transfer the Option Agreement to Glacial Lakes Energy, it was noted that approval of this agreement should be moved to Monday, June 12th, 2006.
CITY MANAGER POSITION
The Mayor, City Council, and City Attorney were presented with copies of resumes received for the City Manager position. The resumes will be reviewed and discussed at a later date.
There being no further business, upon motion by Meyer, seconded by Huse and carried, meeting adjourned at 7:15 p.m.
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Greg Thole – Mayor
ATTEST:
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Kathleen Weber – City Clerk
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