Will taxpayers ultimately foot the bill for failed Lowell biodigester?

Will taxpayers have to pay for the biodigestor?

LOWELL, MICH. - A contract obtained by the 13 Watchdog team seems to show taxpayers in Lowell could be on the hook to pay more money for the city's closed biodigester.

On Thursday, we reported Lowell's city manager cut off negotiations with the new company attempting to operate the biodigester in Lowell. The biodigester was built to turn waste into energy but produced a terrible smell in the city for months. City leaders withdrew a permit for Lowell Energy AD to operate it and the facility shut down in December of last year. 

Fast forward to today, there are hopes the facility can be brought back online but it appears Lowell's city leaders aren't interesting in talking about it.

Lowell City Manager Michael Burns wrote an e-mail to Ross Pope, President of Advanced Water & Energy Solutions (AWES), that "the City of Lowell has no intention to meet with you at anytime in the future".

AWES has taken over operations at the facility after Lowell Energy AD was fired by the anonymous investors funding the original project started in 2013. AWES's President, Ross Pope told us Thursday he will request a permit to begin operating a portion of the biodigester again.  Pope says it will cost them approximately $1 million to reconstruct the facility because the original biodigester was built with design flaws and inefficiencies.

"We need to get past the fear and politics and deal with the facts and evidence of what we have," Pope said.

Wednesday, Burns released a statement indicating the new operators weren't part of the discussion to try to alleviate wastewater issues at nearby manufacturer, Litehouse. It was expected that Litehouse would use the biodigester facility to treat its wastewater.

"The biodigester is not operational and the City is not considering issuing a permit at this point," Lowell City Manager Michael Burns said. "The City and Lowell Light and Power are working with Litehouse to explore a variety of options for wastewater treatment. We look forward to sharing potential solutions at an upcoming public meeting."

After learning the city cut off talks with the company, Pope said AWES will enforce provisions in the contract related to Lowell Light and Power paying for energy. Energy that's not being produced because the biodigester is shut down. Pope says the amount would be $55,000 a month adding up to as much as $7 million over time to pay for the failed plant.

The contract does have a provision for a resolution of disagreements:

"Failure to reach resolution within (60) days of the initial written notice shall entitle the parties to seek agreement pursuant to mediation, or voluntary arbitration if consented to by both parties, or by court resolution of the issues".

As for a default by one side or the other, there is a cause for potential remedies:

"In the event the default is not cured, or a plan for curing the default has not been agreed to, then the non-defaulting party may pursue all its remedies at law or in equity, including specific performance."

Finally, there is an early termination clause as well which could kick in during negotiations:

"If at any time during the term of the Agreement Purchaser desires to terminate the agreement for any reason it may do so only through negotiation of a buyout price acceptable to both parties". 

That early termination clause seems to suggest taxpayers may have to pay to get out of the deal if the city of Lowell and Lowell Light and Power do not want the biodigester to operate again. 

Pope's public relations colleague, Matt Gryczan, wrote in an e-mail to us Friday indicating the city needs to negotiate.

"The people of Lowell have a right to know what is going on at the 625 Chatham Street plant because the city may end up paying for the $7 million facility," Gryczan wrote. "They have a right to know who is doing the work at the plant and their credentials, why the plant failed last year, if the plant can be salvaged and the cost to them if the plant doesn't resume operation."

"AWES has been strenuously trying to keep this out of court since everyone will lose," Gryczan wrote.

The 13 Watchdog team contacted Burns and the city's public relations representative Mary Ann Sabo to find out whether the city's taxpayers were in jeopardy of paying more money to get out of the deal but did not get comment before our deadline. 

In November, our investigative team asked Burns how much money taxpayers have on the line here. He told us he would look into it at that point. There are indications in e-mails taxpayers could have made as much as a $500,000 investment when the facility was being planned.

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