Small step forward for wood-burning plant

The developer has exercised its option to buy land for the power plant in the East Phillips neighborhood.

By STEVE BRANDT, Star Tribune

Last update: March 24, 2008 - 9:27 PM

Minneapolis officials are poring over a developer's claim that it has met conditions to exercise an option to buy a city site for a wood-burning power plant in the East Phillips neighborhood.

Kandiyohi Development Partners asserted to the city in a letter received Friday that it has the necessary commitment from Xcel Energy to buy the plant's power, one of the city's conditions for selling its land.

That's an abrupt change of stance in a week. Kandiyohi earlier asked the city to extend its March 30 deadline for exercising the option.

Kandiyohi's chances appear to hinge on whether it has "a commitment to enter into a power purchase agreement" subject to reasonable conditions, as required by the option agreement. "By no means is it an ironclad agreement," said burner opponent Jullonne Glad.

In a letter last week, Xcel acknowledged that it is negotiating with Kandiyohi. But the utility's commitment contains a big if -- if the developer and the utility reach an agreement. If so, Xcel said it will seek necessary management and regulatory approvals.

"We are negotiating with them," said Xcel spokeswoman Mary Sandok.

Greg Goeke, who is managing the land sale for the city, said city officials will decide "in a day or two" whether the developer has met option conditions. Kandiyohi tried last July to exercise the option, but the city said it hadn't made enough progress on the power sales agreement.

Kandiyohi said in the letter that it has exercised its option, sending the city a $50,000 check due. If the city agrees that Midtown has met all option conditions, it still must meet stiffer conditions to close on the land by the Oct. 2 deadline.

By then, the option agreement requires that Kandiyohi have all necessary government approvals, including a state emissions permit; demonstrate financing commitments, which it has obtained from Piper Jaffray; negotiate a neighborhood agreement, and have a signed power sales agreement.

Steve Brandt • 612-673-4438

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