Committee approves utilities plan
TRACTEBEL: Agreement clears way for power plant in south Chehalis
By Brian Mittge, The Chronicle, 3/3/2001
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A utilities agreement required for construction of a south Chehalis power plant was approved by the Chehalis City Council's Growth Management Act committee Wednesday morning.
The compromise takes Tractebel's position on compensation to the city in the event of sales tax rollbacks, but guarantees that in any event Tractebel will pay for more than a million dollars worth of improvements to water and sewer lines leading through the Chehalis Industrial Park to the plant's proposed Bishop Road location.
The Texas-based power company would also pay for a new water tower in the Yates Road area, in addition to laying large water and sewer pipes through an area that currently has a "bottleneck" of vital services.
The full city council will consider the resolution at its March 12 meeting.
Receiving an official guarantee of city utilities is vital to Tractebel as the international power company puts together financing to build its 520 megawatt natural gas-fired power plant.
After nearly seven years of trying, the company's amended site permit recently received a recommendation from the state's Energy Facility Site Evaluation Council, and awaits only Gov. Gary Locke's signature and federal Environmental Protection Agency air emissions limit approval before the company can begin breaking ground.
The company hopes this could mean construction could begin within two months, with a completion date of November 2003.
A meeting of the GMA group earlier this month could not reach a decision on the utilities agreements, specifically provisions to ensure that payment of sales tax revenues to the city or county would occur if the legislature passes tax relief for energy companies.
Senate Bill 573 1, co-sponsored by Sen. Joe Zarelli, R-Vancouver, would exempt construction of new power plants from sales and use tax, to encourage their development. The bill is currently in the Environment, Energy and Water Committee.
For a time, the Chehalis council considered requiring Tractebel to give the city a full Repayment in lieu of taxes," which would could mean $2 to $3 million in Chehalis city coffers, earmarked for improvements to the port area.
Tractebel offered to pay the entire local share, minus the amount it pays the city for utility line improvements.
This plan could save the company up to $1.8 million, the estimated cost of paying for Chehalis' utility work.
In Wednesday's meeting, GMA committee members seemed comfortable with Tractebel's proposal.
Mayor Bob Spahr was most worried about a repeat of a recent retroactive tax break given to logging equipment companies. This unexpected rebate was a major stress to the city's budget, and Spahr scrutinized the legal language to ensure that Tractebel wouldn't take such a retroactive break even if it is granted by the Legislature.
After city and Tractebel attorneys suggested a slight revision to the agreement's language, Spahr was satisfied.
Councilor Bud Hatfield, who has strongly questioned Tractebel's proposal, softened his stance Wednesday and supported the new legal language.
With such a budget crunch in the capital, including a potential shortfall of hundreds of millions of dollars, "I doubt very strongly there's going to be any tax relief for anybody," he told The Chronicle after the meeting. "I think it's all going to be a moot point."
The enhanced water and sewer service to the industrial park will be a big benefit to businesses and homes in that area, he added, and the tens of millions of dollars in additional property taxes brought into the city far outweigh a one-time loss of a million or two.
"When this is all built and the city of Chehalis annexes that property, we're talking big, big money," he predicted. "The benefit for the entire community is certainly worth more than $1.8 million."
Tractebel has said it would agreed to authorize annexation at Chehalis' request.
According to the approved documents, the plant will be authorized to use an average of 162,000 gallons of city water a day, or 850,000 gallons during peak needs. This is specified as 540 equivalent residential units.
The sewer service is set for 80,000 gallons a day, which equals 320 ERU'S.
The GMA Committee's approval is unlikely to be overturned by the entire 7-person city council, since Hatfield had been the most vocal critic of the agreement.
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