Eyes can glaze over fast during a Legislative session, with dollars measured in millions — quantities most of us aren’t used to dealing with. Last year, 4.5 of those millions went to the St. Paul Port Authority to study power options for Rock-Tenn’s cardboard recycling operation in the Midway, which needs a new power source after Xcel Energy closed its steam generator.
To those of us who still count pennies, that seems like a lot of money — especially for a study, and especially given the quasi-governmental status of the recipient.
Questions arose as the study got under way, including suspicions — which Port staffers deny — that the Port has already decided to set up a district energy project in the Midway, modeled on downtown’s shared heating system. Rock-Tenn’s situation has been cited as either an excuse or an opportunity for such a system.
Don Jorovsky, legislative aide to state Sen. Ellen Anderson, said that when Rock-Tenn’s need for an energy alternative became apparent, the Port Authority seemed like the logical choice to deal with the problem because of its record of keeping jobs in town.
Established in 1932 to manage shipping in downtown St. Paul — which it still does, at a volume of 9 million tons of grain, steel and other materials in 2007 — the Port Authority was commissioned by the Legislature in 1955 to negotiate redevelop-ment of polluted sites, with the goal of retaining jobs and property tax revenue for the city.
It thus became one of the nation’s many redevelopment agencies, working outside the checks and balances of government and escaping the rules of competition that normally apply to corporations seeking government contracts.
As a redevelopment agency, the Port is a mechanism by which the public agrees to shoulder risk that the private sector refuses to touch. In exchange, the public gets better-paying jobs, environmental cleanup and other goods that might not pay dividends on the market.
The Port Authority’s 2007 annual report claims that since 2000 it has helped create or retain more than 12,450 jobs through-out the east metro and has returned nearly 155 acres to the tax rolls.
Jorovsky said that as state representatives discussed how to keep Rock-Tenn and its jobs in town, Sen. Anderson came up with the idea of a citizen panel to make sure neighborhood voices were heard. The Rock-Tenn Advisory Panel was convened last summer, just as the Xcel High Bridge plant went offline. It includes community council representatives, energy experts and labor representatives.
Jorovsky said he expects the Port Authority will have to come back to the Legislature for further funding in 2009, “and that’s when you get to revisit the conditions” of the funding, holding the Port accountable for work done so far.
“If the advisory panel decides one thing and the Port decides something else, I guess it’ll have to come back to the Legislature,” he added. “But we’re hoping this will be a cooperative process.”
The Port convened the panel but is not legally bound to take its advice. The panel’s work is expected to continue throughout the environmental review process, well into 2009, assuming a plant of some kind is built on Rock-Tenn’s site.
Currently Rock-Tenn is burning oil and natural gas in its backup burners. Any energy available to other users would come from recovery of thermal energy that escapes during the paper-drying process.
Anne Hunt, deputy policy director for St. Paul Mayor Chris Coleman, said District Energy’s downtown plant, which burns wood waste and heats government offices and businesses, “has eliminated 150 smokestacks,” and she’d be happy to see some kind of Midway energy-sharing plan.
In addition to cleaner air, Hunt sees economic advantages in exploring energy alternatives.
“How can you make St. Paul more energy independent?” she asked. She sees opportunities for colleges, multifamily dwellings and small businesses to escape rising fuel costs.
Hunt said a growing priority for environmentalists is to look for energy sources close to where they will be used. For example, South Dakota, which has looser air-quality regulations than Minnesota, wants to build a coal plant.
“They want to feed suburban customers in Minnesota,” Hunt said. But if companies closer to home can come up with cleaner power sources, she said, that would cut the demand for the South Dakota coal burner and thereby improve the region’s air quality.
But will Midway neighbors take the health risk, and St. Paul taxpayers the financial risk, to become a regional leader in energy independence?
Burning some kind of biomass — wood, grass, corn or “refuse-derived fuel” processed from garbage — still appears to be a leading option for the Rock-Tenn plant. Neighbors have expressed concerns about potential health threats associated with burning various fuels, many of them still in the early stages of research and testing.
Biomass critics also point out that the fuel has to get to the area somehow, quite possibly hauled by noisy, polluting vehicles.
For citizens following the Rock-Tenn debate by attending meetings and reading updates, a dizzying network of organizations makes it hard to assess whose interests are served by a given proposal.
It’s also hard to determine whether the public gets its money’s worth. An organization called Good Jobs First tracks publicly financed developments around the country and finds that too often, industry profits from tax advantages and then leaves. Cities can be left paying off bonds and starting all over again in the search for jobs, having collected little or no tax revenue from large plots of inner-city property.
Reports on the group’s Web site, along with activist Greg LeRoy’s book “The Great American JobsScam,” credit Minnesota for exercising skepticism over the years and holding companies accountable — partly because of some lessons learned the hard way in the early years of using public money to take on private debt.
Minnesota has a “clawback” provision that requires companies to pay back taxes if they haven’t met job-provision goals within two years. But it’s still hard to say, given the decades-long timelines of public financing, whether communities win in the long run.
The St. Paul Port Authority cites two redevelopment projects that will leave their tax-increment financing (TIF) status behind this year and join the rest of us in contributing to schools, roads and other public goods.
“Taxes paid by companies in two Port Authority business centers — Energy Park and Empire Builder — will be returned to the rolls beginning next year,” Port Authority Director of Marketing and Communications Tom Collins wrote in an e-mail.
Added to the tax rolls will be Energy Park (218 acres along Energy Park Drive, established in 1980), for about $2.8 million in annual property tax revenue, and Empire Builder (32 acres north of Pennsylvania Avenue between Rice and Jackson streets, established in 1985), for about $169,000.
Collins noted in an interview that the Energy Park project was built on the Koppers Coke site, which was so polluted that it qualified as a federal Superfund project. He also conceded that no workforce agreement was in place on that project; the goal was simply to do something with the land.
“It was incredible pollution there,” he said.
Collins said that companies getting TIF or other financing through the Port Authority generally enter into a 10-year workforce agreement requiring them to hire city residents, meet a living-wage standard (currently $11 an hour as set by the Port Authority’s board) and provide benefits.
Although environmental questions dominate the Rock-Tenn debate now, money will surely follow. What debt will
St. Paul taxpayers be willing to take on in exchange for 500 jobs and a possibly visionary project? What guarantee is there that the company will stick around, and if they do, will there be a workforce agreement?
It is not clear that the study process is subject to Minnesota data practices — the “sunshine” rules governing public access to information — although the Rock-Tenn Advisory Panel convened by the Port includes neighborhood representatives and has also chosen to publicize its process by making all its meetings open, posting extensive information online, allowing public participation in an e-mail listserv and depositing files at neighborhood libraries.
The Port itself operates as a private corporation, but two St. Paul City Council members serve on its board of directors, and like any other entity, the Port must have council cooperation in order to use government financial tools such as bonds or TIF.
The state auditor does not audit the Port Authority, but a recent request for an audit to the Port’s financial office immediately produced a copy of a 2006 independent financial report. A more recent report will be available in spring.
District Energy St. Paul, the nonprofit that manages downtown St. Paul’s biomass burner and shared heating system, has no direct relationship with the Port Authority but has come under suspicion because one of its for-profit spin-offs, recently renamed Ever-Green Energy (formerly Market Street Energy), is involved in the Rock-Tenn study, and District Energy is an obvious model or even potential manager for a Midway energy project. Some see a conflict of interest, and it’s difficult to sort out whose interest lies where.
District Energy’s federal Form 990, the annual report that all nonprofits must file with the Internal Revenue Service, is posted at www.guidestar.org. Its franchise agreement with St. Paul constitutes Appendix K of the St. Paul City Code and can be viewed at www.stpaul.gov/code/appk.html.