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HomeMy WebLinkAbout13.F.2. Rahr Malting Proposal-Electrical Generating Facility /3.F.LI' CITY OF SHAKOPEE Memorandum TO: Mayor and City Council FROM: Mark McNeill, City Administrator SUBJECT: Rahr Malting Proposal- Electrical Generating Facility DATE: March 3,2006 INTRODUCTION: The Council is asked to give direction to staff regarding a resolution of support for a Bill to be introduced in this year's Legislature, concerning a property tax exemption for a Biomass Electric Generating Facility to be constructed at Rahr Malting. BACKGROUND: Attached is information from Rahr Malting, concerning a biomass to energy facility which Rahr Malting is planning to construct. The facility would be the result of a partnership between Rahr and the Shakopee Mdewakanton Sioux Community, in a joint venture known as Koda Energy. Rahr has indicated to City staff their desire to proceed with this, which would generate 11.5 megawatts of electrical generation annually, from the burning of by-products from their facility, and other biofuel sources. Rahr has indicated that this will be a major step towards keeping them competitive in the malting industry, as well as providing an environmentally friendly source of electricity. The excess energy generated from this would be purchased, as we understand it, by the SMSC. The benefit to Shakopee directly would be the preservation of the Rahr Malting Company and the more than 100 jobs that it has locally, as well as an increase by 7 the number of jobs that would support the facility. DISCUSSION: The issue being brought before the Council at this point is whether the City (and also Scott County) will support an extension of a law that was passed in 200 I, that would give Rahr a personal property tax exemption on the project. Senator Claire Robling is being asked to carry the bill, which would extend the time for the construction of the biomass facility. Origimllly, that was to be completed by January 1, 2006. Obviously, they did not make that deadline, and Rahr is asking that the deadline be extended until June 30, 2007. . Senator Robling has asked that the City and the County each submit resolutions of support. We will want to work with Scott County, and it is possible that a resolution would be available for the Council to consider at the March 6th meeting; if not, it would be available by March 21 st. However, at this time, I do not know if that will meet Senator Robling's timeframe. For this proposal to proceed, Rahr will need a Conditional Use Permit. Application for that has not been received by the City. It should be noted that any resolution of support given by the Council for the personal property tax exemption should not be interpreted to mean that the development review process should not run its full course. Rahr will still need to demonstrate their need for the CUP amendment. Bob Micheletti and other Rahr staffwill be at the City Council meeting on March 6th to make a presentation. RECOMMENDATION: If the Rahr proposal is to proceed, my recommendation would be to have Council direct staff to prepare a resolution of support for the State to consider an exemption for personal property taxes for the Koda Energy Biomass to Energy project. It is possible that a resolution will be available at the March 6th meeting, but it is unlikely. ACTION REQUIRED: If the Council concurs, it should, by motion, direct staff to prepare. a resolution for consideration on the consent agenda for the March 21 st meeting, to indicate Shakopee's support for a personal property tax exemption for the Koda Energy Biomass to Energy proj eet at Rahr Malting. LVLJL ~\c ~ Mark MeN eill City Administrator Koda Energy Biomass to Energy Project Summary The Shakopee Mdewakanton Sioux Community, a federally recognized Indian Tribe and Rahr Malting Company have joined together to form Koda Energy. The Koda Energy combined heat and power plant will generate 11.5 megawatts of baseload electricity and deliver 125 million over $750,000. Using accepted multiplier Btus per hour of process heat to the Rahr effects, these newjobs will increase the Malting Co. production facility. The total local employmentbyupt()20 jobs reliable, dispatchable electricity produced with an annual payrollof$1.5 million. by Koda Energy's biomass to energy The development of a biofuels facility will produce enough electricity to program will provide wildlife habitat, power 10,000 homes - from an environ- reduce soil erosion and reduce surface and mentally friendly, renewable resource. groundwater pollution. To fuel its boilers Koda Energy will produce enough heat Koda Energy will require up to170,000 from biomass to replace all ofthe natural tons ofbiofuels. This will annually pump gas needed for the malting processes. This $ 6.0 million into the local agricultural project will significantly reduce natural gas economy. demand, replacing enough natural gas to The project is located in the Minne- heat 11,000 homes. sotaRiver Basin - Minnesota's most By being able to supply both polluted river. Energy crops such as partner's energy needs, the Koda Energy switch grass can improve water quality by biomass to energy project will help insulate providing a continuous soil cover that the Rahr Malting Company and the stabilizes the soil, decreases nutrient Shakopee Mdewakanton Sioux Commu- transport and protects the soil from ero- nity from fluctuating energy prices and sion. The Union of Concerned Scientists uncertain supplies. Ensuring the long-term estimates that converting an average size viability ofRahr Malting will protect over farm (1,000 acres) from com to switch- 100 local jobs and a major market for grass could save over 66 truck loads of Midwest barley. In addition, the project soil per year from soil erosion. Koda will protect nearly 4,650 localjobs at the Energy's use of dedicated energy crops Shakopee Mdewakanton Sioux Commu- will help reduce top soil erosion inthis nity. enviromentaly sensitive area. This project will create skilled jobs The by-products from agricultural giving Koda Energy an annual payroll of processing industries that Koda Energy will . Friendly Energy Generated Through A Partnership Between tiHf the Shakopee Mdewakanton Sioux Community and the Rahr Malting Company use as fuel are over 180,000 tons currently low value per year. Reducing residues used to fuel combustion extend livestock from trucks trans- feed. Because the porting low value material has little agricultural by- nutritional value, products to Duluth using it as fuel for shipping could instead of mixing it reduce CO2 with feed will raise emissions from the quality of diesel fuel combus- livestock feed. tion by over 3,000 Initial con- tons per year. struction wilI pump Janet Cushman $40 million into the with the DOEbio- local economy. The energy feedstock long term effects of program identifies this project will switch grass as an annually cycle over $15 million through the excellent source for sequestering carbon Minnesota economy. because the plant's roots can reach depths By providing year-round, up to 20 feet. Planting 30,000 acres in dispatchable renewable power, Koda switch grass or other biofuels could Energy compliments other more intermit- annually sequester another 15,000 to tent renewable power sources such as 30,000 tons of carbon. wind and seasonally available sources such Koda Energy will be located next to as hydroelectric and natural gas. the Rahr Malting Co. Shakopee, Minne- Located near an electrical substation sota facility. Rahr is a family owned busi- and major power lines, this project can ness that has operated since 1847. The add 11.5 megawatts of renewable power Shakopee Rahr plant is currently the without requiring expensive transmission largest malting facility in the world. line construction and infrastructure up- The Shakopee Mdewakanton Sioux grades. Community is located 6 miles south of the The Minnesota Pollution Control Rahr Plant. Since 1969, SMSC has AgencJt has identified global warming as operated several successful businesses and the 21 t century's major energy and community organizations, including a environmental issue. Requirements to cut gaming commission employing 30 people, greenhouse gas emissions such as CO2 two casinos and entertainment complexes will drive up prices for energy producea by with over 4500 employees, and a Tribal traditional fossil fuels. By replacing coal- Government staffed by 125 people that fired base load, Koda Energy's biomass to includes a fire department and a public energy project will cut CO2 emissions by works department. Friendly Energy Generated Through A Partnership Between the Shakopee Mdewakanton Sioux Community and the Rahr Malting Company