Regents say steam plant can’t be moved

Lynne Kozarek

Joel Sawyer

DULUTH — University officials gave Gov. Arne Carlson the cold shoulder Friday when they rebuffed his offer to negotiate moving the University’s southeast steam plant off the Mississippi River.
In a Friday morning letter to Board of Regents Chairman Tom Reagan, Carlson said he was “stunned,” and considered the University’s unwillingness to negotiate “a very serious” breach of an agreement he said had been reached in a Wednesday meeting.
But Reagan, in Duluth for meetings of the University’s Board of Regents, denied any such agreement existed. “We’ve never had negotiations as part of our deliberations,” he said.
Carlson and University officials, including University President Nils Hasselmo, General Counsel Mark Rotenberg and Reagan, met Wednesday to discuss obstacles that would prevent the University from moving the steam plant off the river.
Despite last Wednesday’s offer of $15 million from the state and an additional $2 million from the city of Minneapolis, University officials concluded they were unable to negotiate the plant’s move from the river.
“We couldn’t negotiate if we wanted to,” Reagan said. “We’re under contract.”
The University has a 25-year, $109 million contract with the construction firm Foster Wheeler Twin Cities Inc. to renovate and maintain the plant. The contract, which began Jan. 1, would have to be voided if the plant was moved.
“Legally, our neck is sticking way out there if we mess with that,” Reagan said. “You’re talking possible litigation if we try to get out (of the contract). I don’t know the figure, but the costs could be astronomical.”
Reagan said he appreciated Carlson’s financial offer but said the sum wasn’t enough to cover the cost of moving the steam plant or possible litigation.
School officials say building an off-river plant would cost $45 million to $55 million. In addition, the city, which had pledged to help find an acceptable off-river site and issue the appropriate permits, has failed to do so.
Brian Dietz, Carlson’s press secretary, said the governor felt “extreme disappointment” with the University’s position.
“We’re fairly confident that the governor’s $15 million bonding proposal was more than adequate to move the steam plant off the river,” Dietz said. “The governor still has hopes that the University will alter its thinking.”
But Reagan said there is no chance that will happen.
The governor has no authority over the University’s steam plant decisions and, despite his strong stance, can only push for legislation to move the plant off-river.
The only way the plant could be moved is if legislators pass an environment and agriculture budget bill currently in the Senate. If passed, it would prohibit the University from continuing construction on the current site. Sen. Steve Morse, DFL-Dakota, said the bill’s passage is up in the air.
Sen. Larry Pogemiller, DFL-Minneapolis, and Rep. Phyllis Kahn, DFL-Minneapolis, have each sponsored bills that would grant $6 million to the University to move the plant. The house version of the bill was recently stripped from the Government Operations Finance Bill.
Kahn said the last chance for passage of the bill is in the Environmental Finance Conference Committee, which will meet later this month. If the money is not attached to a finance bill, the state won’t be able to appropriate it.
Reagan said he was also concerned the potential costs of litigation or the additional costs of moving the plant could adversely impact tuition rates, faculty salaries and other University projects.
“We have a fiduciary responsibility to the University,” Reagan said. “If we get ourselves engaged in something that’s going to cost us much more to build our new steam plant than what we initially voted on, those projects all suffer.”