COB Energy Feb 1 Meeting...A Review

Feb 2, 2005.  A meeting held February 1, 2005 in the Klamath County Commissioners chambers to discuss the process of extending the enterprise zone lasted four hours.   Those attending learned that the enterprise zone designation for the COB Energy Facility will involve two separate processes.  One process involves extending the enterprise zone to Dairy and hopscotching on to Bonanza.  The other process involves the decision of whether or not to give Peoples Energy a tax break and how big of a tax savings that should involve. 

The first process involves amending the enterprise zone map to include the Bonanza location which is the proposed site for the COB Energy Facility.  During this process notice will have to be given to potentially affected taxing districts 21 days prior to a public hearing, that meeting notice to be published in the Herald & News.  After the required public hearings, both the City of Klamath Falls and the County will have to agree to amending the enterprise zone map.  Then they submit the boundary changes to the state's Director of Oregon Economic and Community Development.

Approximately twenty people spoke in support of extending the enterprise zone boundary to allow COB to receive huge tax breaks and/or to accept COB's proposal as written.  These folks, mostly from KCEDA, the unions, or local businesses expressed their feelings as to how they believed this project would be a great advantage to Klamath's depressed economy.  They gave no documentation to support their emotional appeal and, indeed, misstated many facts.  Commissioner Bill Brown asked some questions to clarify statistical data they presented such as the $35 million this project would gift to our county ... clarifying that this was the amount only if the whole project were built, not just the half facility that is proposed if demand doesn't warrant the full 1160 MW facility. 

The opponents of COB spoke next.  Several of the twenty-six known opponents had to leave the meeting because it had stretched into the afternoon.  The twelve speakers who did present their concerns about this project cited laws, spoke about the Contested Case phase of the project in which they have been parties, raised issues about ongoing water issues in our basin and that no more water rights should be issued until adjudication on prior issues is completed. 

All but two of the opponents were from the Langell Valley/ Bonanza area.  Only one of the proponents was from the locality where the proposed COB plant is to be sited.

One opponent stated that she had concerns as to how this facility's noise and emissions would affect her way of life.  Commissioner Elliott questioned whether or not she lived in the area.  She said she lived in the valley.  He stated again that she didn't live in the valley where the energy facility is to be sited.  She told him she lived only two miles from the site.  He argued that she didn't live in Langell Valley ... that the valley where COB is to be sited isn't two miles in size.  Hello?  Langell Valley is probably twenty miles long and, yes, she is one of the nearest residents to the site.  The COB official legal paperwork as recently as last week states that there are not residences within 1.7 miles (except the two houses currently on the property itself?) and, looking at their aerial map, we believe there to be at least twelve residences within 1.7 miles.

We are questioning whether their studies as to whether the emissions will be harmful are reliable given that they believe there are no live humans living within the stated distance.  Also, do the studies rely on population data to determine health and safety issues?  The COB data states that Klamath County is the least populated county in the state of Oregon and that Langell Valley is one of the least populated areas in Klamath County.  Out of 36 counties, I believe the statistics show that Klamath County is either the thirteenth from the smallest or the thirteenth from the largest depending on whether they are talking about population or population density.  Trey Senn ???

In response to someone's statement concerning "inappropriate water usage" (which may refer to the fact that COB will be using wonderful, well water for industrial purposes for which treated sewer water or some other surface water would suffice), Mr. Elliott questioned the basis for them labeling it "inappropriate."  I would like to explain to Mr. Elliott that 'inappropriate' water usage might be when this corporation came recently to our area and applied for water rights ... that many farmers in Bonanza have prior water rights, that we have been told that current data shows that due to stream flow and water levels, we will probably NOT be allowed to irrigate our crops from OUR wells after approximately July 4th of every year.  Does he realize that irrigation is probably MOST crucial in July and August????  Does he represent the residents, the constituents, of Klamath County or does he represent the interests of this huge for-profit corporation?

He spoke about how many, many acres of land are going to be put into land bank this year to make more water available.  Does he think this is a good thing?  Does he not realize that these farms will not be buying seed, buying new equipment, buying supplies such as hay twine, paying to have their farms fertilized or sprayed for insect damage control?  Does he realize how this will affect Floyd A. Boyd and Basin Fertilizer, Klamath Basin Equipment, Kerns Irrigation, Big R and Pelican Tractor...?  I guess these farm service businesses don't matter as much as his Main Street friends.

Paul Turner and John Elliott keep referring to the fact that COB will probably use 84 acre-feet of water a year.  I had a hard time verifying the math but finally figured out what Paul's numbers meant.  ... He stated that the permit would allow 200 gpm for the industrial part of their process.  Then, I had to read between the lines ... I guess he meant that they would probably only need about 72 gpm.  Now I'm confused why 210 gpm was rounded down to 200 gpm but his 72 gpm is precise ... not rounded to 70 gpm or 75 gpm.  Then he said they'd only run on the average of 72 % of the time.  Again, why 72 % and why 72 gpm and 72 % are both the same.  I was confused.  I thought he multiplied 200 gpm by 72 % and got (in error) 72 gpm instead of double that.  Then I did the math for converting gpm to acre feet.  Well, let's take a look at the real numbers of what amount of water they have applied and would be permitted to use ... not the much smaller amount that they estimate to minimize the impact on the basin.  They would be allowed 210 gpm for the industrial use, 365 days a year 24/7.    It would also allow COB to use up to 90 gpm of water for irrigation between March 1 and October 31. 

So let's do some water math.

210 gpm x 60 min per hour x 24 hrs per day x 365 days per year = 110,376,000 gallons per year divided by 325,848 gallons per acre-foot = 338.7 acre-feet per year

31+30+31+30+31+31+30+31 =  245 days from March 1 thru October 31

90 gpm x 60 min per hour x 24 hrs per day x 245 days from March 1 thru October 31 =  31,752,000 gallons per year div by 325,848 =  97.4 acre-feet per year for a total of 436.1 acre-feet per year

So Paul Turner tries to encourage us to accept their amount of water usage by saying it will probably only be 84 acre-feet per year but their permit would allow them to use 436 acre feet per year ... over four times as much as he suggests.

Feel free to check my math and let me know if I made any mistakes.  I try to always be accurate and honest.

So now you know the real numbers, if indeed I am correct, how do you feel about their water usage?  Oh, you say, that might only water 140 to 180 acres a year of alfalfa.  But have you been listening?  Doug Whitsett, our new and highly respected senator, respected for his knowledge and integrity, AND Water for Life's attorney have said that if COB is given their  permit for water from the Babson well and new wells they plan to drill, it will set a precedent that could change water law in Oregon.  Nowhere in Oregon law does it allow a permit to be granted under the circumstances and conditioning it the way that is being done by the Energy Facility Siting Council for this siting!

Stephanie Bailey from the Chamber of Commerce (Main Street) stated that they surveyed businesses and that they are in favor of extending the enterprise zone and/or siting the COB in Langell Valley.  Farms are businesses, too.  How many farmers did you survey, Stephanie?  There are many farms in Langell Valley.  How do the farmers feel about the COB?  There are very few businesses in Langell Valley except for the ones in the small town of Bonanza.

Below are the statements I made to the County Commissioners:

First I want to say that it is not appropriate to extend an Enterprise Zone to an agricultural area.  Second of all,
it isn't right for a for-profit corporation coming to our area that will provide only about 25 to 30 permanent jobs
to receive a tax break.  No amount of money should buy this power plant's right to be sited in and area designated
for Exclusive Farm Use.  If our Commissioner Switzer and Commissioner Elliott don't understand this, though, they
should at least be negotiating for the needs of the agricultural community and all the residents of Klamath County.

Our County Commissioners could negotiate a better deal for the county.  They should ask for COB to give us a
percentage of the power this Energy Facility can generate.  This is done by one of the power plants near Hermiston. 

Trey Senn keeps telling us that this project will help our area financially.  I don't believe it will help the agricultural
community.  The farmers, many of them  devastated by the cutoff of water in 2001 and most of them who will be
impacted by higher power rates for irrigation after 2006, will not reap an economic advantage.  But the County
Commissioners could make this part of the agreement before offering any kind of tax break for this project. 
They could require COB to give the local area say TEN percent of the power that the facility can generate.  That
could provide free or inexpensive power for irrigation and could lower other residents' power costs or could be
sold to pay for other programs within the county.

A young lady who has excellent credentials for land use planning and public administration and is new to our county will be the facilitator for the process of expanding the enterprise zone.  She made an excellent suggestion ... that the county not start the process of expanding the enterprise zone until the siting is completed after the appeal process which may take six months to a year.  It will be a time consuming process and therefore cost our county a substantial amount.   I believe it was this same young lady who stated that we could bill COB for the costs involved in our county doing the work to expand the enterprise zone. 

The commissioners seemed to think this would be an unfair imposition on Peoples Energy.

COB's proposal for the possible tax break is that they pay half of their assessed amount of property tax but it would be a payment in lieu of taxes or a contribution or gift.  They would save approximately 35 million dollars over the fifteen year period.  One clause in their proposal that I think we need to look at carefully states,
"COB agrees that, if the Facility is certified for property tax exemption for not less
than 15 years plus the construction period, then COB will make Basic and
Supplemental Contributions as described below:    For each year in which the 
Facility is exempt from property tax pursuant to this 
agreement, an amount equal to 50 percent of the total property tax amount (after
application of the three-percent discount for payment in a single installment) that
would be due and payable for the property tax year with respect to the Facility if
the Facility were not exempt and the assessed value were properly and accurately
determined (the Basic Contribution).  COB reserves all right to contest the real
 market value or assessed value shown on the assessment and tax roll, including
the right to appeal to the Department of Revenue or in the Oregon Tax Court, as well
as the right to contest the assessed value in direct proceedings against the County."

The commissioners did vote to start the process for expanding the enterprise zone.
They went into a session where they were discussing the proposals and we could listen but not comment.  Commissioner Brown stated that one concern he has had is that COB will be required to pay 13 or 26 million dollars (depending on whether they build half the plant or the whole facility) to the Climate Trust to mitigate for the huge amount of carbon dioxide they will produce over allowable limits.  They will pay this money up front.  So Commissioner Brown proposes that if they can pay this money up front, they should pay the $35 million in taxes for the next 15 years up front for the county to invest and then draw the interest to fund budget items.

Commissioner Elliott presented a slide show with financial information about how the tax contribution would decrease over the years with appropriate graphs.  Unfortunately his slides would not focus so he talked us through his presentation while we watched blurry visuals.

Commissioner Switzer said we could receive 3.5 million dollars the first year decreasing over fifteen years to 2.4 million dollars OR we could elect to have it averaged on a straight-line basis and only collect about $2.8 million a year for the fifteen years.  Now why would anyone propose we receive less in the beginning when we could receive more?  If he can handle the county's money effectively, and if, indeed, the commissioners have the discretion as to how the money is used, the extra amount (the difference between 3.5 million and 2.8 million) would be received and could be invested to use in later years and could earn our county some extra funds from interest in the meantime. 

All in all, it was a very frustrating meeting.  Many good ideas were presented but apparently some poor decisions were made.