ARPA and City of Lamar Perspectives on Required Demolition Permit

ARPA GM, Rick Rigel

The City of Lamar and ARPA, Arkansas River Power Authority, have been at legal loggerheads for the past year over the failed Lamar Repowering Project, its ultimate disposition and the ability to default on the construction bonds used to build the coal fired plant.

The plant has been offline since late 2011.  In September 2014, the ARPA board decided it would be to their interests to decommission or dispose of the project’s assets and hired a company, International Process Plants, to help market and sell the facility.  ARPA also hired an engineering firm, HDR Engineering to research options for selling the plant’s assets.  IPP was looking at selling the project as one complete unit.  The City of Lamar is opposed to these options at this time, believing any sale, whole or in part, is premature.

ARPA has voiced plans to disconnect some of the electrical and mechanical systems linking the Lamar Repowering Project to LUB, Lamar Light and Power.  The City of Lamar has stated, through several letters between them that it believes ARPA requires a demolition permit for such actions and City Administrator, John Sutherland, brought that to the city council’s attention during their June 22 meeting.  ARPA General Manager, Rick Rigel, has stated that’s not their intention.  Rigel said, “We recognize that this is not a house down on a corner and there will be a totally different process for a demolition project.”  He explained, “What we question here is do we need a demo permit just to disconnect those two systems?  If that’s what the process requires, then that’s what we’ll have to do.”  Right now, Rigel said, all ARPA wants to do is a disconnect for some electrical connections at some substations and some mechanical piping and relays.  He added, “If something happened to fail in the LRP, it could get back to the distribution operations and ARPA doesn’t want that.”  Rigel explained that if it comes to a demolition project, the contractor would have to pull the permit from the city and there isn’t any contractor hired by ARPA at this point.  He said some parts of the Plant could still be powered for maintenance needs such as air cooled condensers.  Rigel said he’s not trying to circumvent any of the city’s building permit rules.

The general manager explained a portion of a separate letter regarding ownership of rail spurs and easements that was mentioned in the city council meeting.  “We are looking to sell the spur and there have been some interests in that.  We own the sidings and the easement and the two sidings that parallel the BNSF main track.  We paid for the construction and we have the lease with BNSF for that property.  The spurs run off the sidings and are used to deliver the rail cars to the plant site.”  Rigel added, “This could be an independent sale, not tied to the Repowering Project.  We’ve had some local interest that could be used for industrial purposes.”  Rigel added that the coal domes and the rail unloading system are not part of the sale of the Repowering Project.  The land they sit on is owned by the city, but the hardware is not on the market.

When asked about the current lawsuit, Rigel said there is still a legal process to go through, explaining, “We have responded to the ruling with claims and counter claims that we made on June 12 and typically, a judge will order mediation between both sides.  The two elements of the suit, #31 and #45 have been consolidated at this point,” he added.  Rigel also said he’d like to see some talks with the city outside the courtroom.  “I think there’s more common ground here than we’ve giving credit to and I think we should be sitting down and visiting.  It may not end in any settlement, but I don’t see any downside.  We might be able to find some elements of agreement on some points, some middle ground of agreement and perhaps settle the rest in court. If nothing else, both sides can get a better understanding face to face.”

Although ARPA doesn’t schedule regular board meetings in June or December, he said one was called for June 18 by conference call to review three issues that developed.  One, regarding language changes by ARPA board policy review, was mentioned by City Administrator Sutherland at the council meeting as attempting to initiate some policy changes.  “The intent of that meeting was to change their rules and do whatever they wanted in terms of disposal of the plant and their other assets,” Sutherland said. He told the council that he, and Lamar’s other ARPA representative, Light Plant Superintendent, Houssin Hourieh, objected and the changes were tabled with backing from the Trinidad board members.  The second issue was discussion of the costs for  HDR Engineering which was hired for the potential sale of the plant, providing board members with the scope of services for dismantling the plant.  Rigel said that would be a part of acquiring the demolition permit at some future time.  The third part of the meeting was to look into engaging public finance managers.  “They would help us with our debt service portfolio with a chance to reduce some costs through a refinancing of the construction bonds, assessing market conditions and act as a municipal advisor to the ARPA board,” he explained.  Rigel said the next scheduled board meeting is set for July 30 at the museum in Las Animas on the east side of Main Street.

By Russ Baldwin