County May Opt Out Of New Project

June 22, 2008
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GRAND RAPIDS — Kent County commissioners will decide this week whether to prevent the city of Walker from capturing a portion of county property-tax revenue for a remediation of the former Fenske Landfill site.

The Fenske Landfill, which was closed in 1985 and capped two years later, is slightly more than 56 acres and is part of 191 acres along Kenowa Avenue SW that New Era Land LLC bought from the Fenske family. The firm plans to invest $20 million into the property and develop an industrial park there. New Era told Walker officials the project would create 100 full-time jobs with an annual payroll of $25 million.

If county commissioners don’t take action regarding its involvement in the project, the county will lose revenue from the growth in the property’s property tax levy for up to 24, and possibly, 30 years.

“Kent County annually contributes over $7 million of its tax levy in the form of either tax exemption or tax capture by tax increment authority districts to support economic development initiatives,” said County Administrator and Controller Daryl Delabbio.

Delabbio added the $7.3 million represents more than 6 percent of the county’s total tax levy. A policy commissioners passed last year limits the county’s contribution to economic development projects, through exemptions and captures, to 7 percent of its total levy.

So if commissioners refuse on Thursday to participate in the project, also known as opting out, they will be following the policy they adopted in May 2007. The county Finance Committee recommended last week that commissioners do just that. In fact, the county has taken the opt-out route in the last five tax-increment financing requests it has received since the beginning of last year.

Another part of the county policy sets a total taxable-value limit of 10 percent that a local unit can exempt and capture, and Walker was at 11.4 percent last year.

“Every local unit has a copy of our economic development policy,” said Delabbio.

State law gives the county the right to opt out, but has to do so within 60 days after a public hearing closes. Walker closed the Fenske project April 28.

“County action, to exempt its tax levies from capture, will not serve to terminate the redevelopment project. The project may still proceed, but with a reduced cash flow,” said Delabbio.

Commissioners will also decide whether to lease the methane-gas rights at the county-owned South Kent Landfill to Granger Electric of Byron Center. Granger plans to convert the gas, which is generated from the landfill’s decaying solid waste, into electricity and then sell the power to Consumers Energy.

“Granger has a lot of expertise in doing this,” said Doug Wood, director of the county Department of Public Works.

Wood said Granger’s investment in the project is double that of the county’s, as the local company would design and construct the production and generation facilities on the landfill site to turn the methane gas into electricity.

Granger would also be responsible for maintaining everything and would have a back-up generator on the property. Wood said the county couldn’t afford to have a generator “sitting in a box” and wouldn’t be able to do the project on its own.

“Granger is providing the bulk of the insurance at their cost,” added Linda Howell, county assistant corporate counsel.

The proposed lease is for 20 years, with a five-year renewal option. The county would get 18 percent of the gross revenue from the sale of electricity, 3 percent of the gross revenue from the available tax credits, and would share in the revenue coming from the sale of renewable energy certificates. Wood said the county could receive from $380,000 to $400,000 in the first year of operation.

“If we get the facility up and running by the end of the year, we get 21 percent,” he said.

The lease lets the county keep the carbon, greenhouse gas and other non-emission reduction credits that could give the county a few hundred thousand more dollars in the future, as long as the landfill continues to produce the gas.

“We will maximize the production of methane as long as it’s there,” said Wood.

Wood told the county Legislative Committee last month that the amount of solid waste DPW is receiving was down, and less waste results in less methane. One way to maintain that production is to let landfills accept yard waste, something state law currently prohibits. A bill being considered in Lansing, though, would lift that restriction if a landfill commits the yard waste to energy production.

“If that law is passed,” said Wood, “then we will have a discussion with the board about that issue.”

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