Processing potatoes to make hash browns and other products consumes about a half-million gallons of water a day at Michael Foods in Chaska. And the starchy leftover liquid all ends up at a water treatment plant in Shakopee.

Water from industrial businesses like Michael Foods is more costly to clean than what flows down a household drain. So the Metropolitan Council, which purifies the region's wastewater, is helping businesses install machinery to clean it at the source instead.

"It's a win for the environment. It's a win for the taxpayer, because the public benefit is tremendous," said Shane Menefee, director of environmental affairs for Michael Foods.

The new program appears to be the first of its kind in the nation, tackling a problem common among wastewater agencies. Depending on how many businesses finalize agreements with the Met Council, the first round of contracts could exceed $20 million in value.

Under the agreements, the council will finance the installation of water purification equipment at industrial plants, with most of the debt repaid by the business over time. Council staff said that, as a result, treatment plants can reduce operating costs and delay costly expansions. Other people in the water treatment industry will be watching to see how it goes.

"I think it's brilliant," said Al Parella, operations and maintenance manager for the Western Lake Superior Sanitary District, which oversees wastewater in the Duluth area. "It is akin to what the electric utilities do — how they subsidize low-wattage light bulbs, for example, so they don't have to build a new power plant."

Water flows into the Minnesota River from a pipe connected to the Blue Lake treatment plant in Shakopee.

Twin City Tanning in South St. Paul, which processes cow hides so they can be made into leather products like Red Wing Shoes and car upholstery, has also applied for the program. It hasn't made a final decision on whether to proceed.

Bob Hawley, director of tanning operations at S.B. Foot, a parent company of Twin City Tanning, called it a "forward-thinking program."

"We were interested in helping if we could," Hawley said. "And being a good community member by trying to do what we can to treat our own waste."

Extra treatment needed

The $11.3 million deal with Michael Foods, authorized last week, will help the company build a water filtration and reuse system at the potato processing plant in Chaska where they churn out Simply Potatoes brand products.

The wastewater from the facility travels to the council's treatment plant in Shakopee — carrying 12 times more solid material than household water. Cleaning that water requires more bacteria and more oxygen.

Michael Foods pays the Met Council about $1.5 million a year in "strength charges" for the treatment, which consumes extra resources. About 7 percent of the water at the Shakopee treatment plant comes from industrial sources, but that water accounts for about one-third of the oxygen demand at the facility.

Under the new program, the council will finance construction of a treatment and reuse system at Michael Foods. Michael Foods will pay off the debt over 10 years. In addition to nixing the extra treatment charge, the business benefits from low interest rates and up to a 30 percent discount on the repayment if they meet certain treatment goals.

"Without this Met Council program, this is not a viable project for Michael Foods," Menefee said. The reuse system will also allow the company to expand operations, he said, since they have been unable to tap additional groundwater.

Ned Smith, of the Met Council's environmental service department, said it will reduce energy needs at the Shakopee treatment plant and delay the need for expansion. The company is liable for the debt if they stop the treatment.

"In the contract, we have a clause that says if you shut this thing down you need to still pay us," Smith said.

Added Menefee: "We would have to go bankrupt in order for this debt to be laid onto the taxpayer."

Other applicants

Cynthia Finley, director of regulatory affairs at the National Association of Clean Water Agencies, which includes the Met Council, said she did not know of a similar treatment-incentive program elsewhere, although many utilities have special arrangements with industrial customers.

The Met Council approved the program in 2015, capping it at $50 million in financing for business improvements. So far, it has received five applications from businesses interested in the program and willing to pay $5,000 to submit their proposals.

Smith said the other applicants were Kemps, Old Dutch Foods, Twin City Tanning and Twin City Hide, a parent of Twin City Tanning. The council approved a $700,000 deal with Kemps last week for a water purification system at a facility in Farmington that makes cultured dairy products, like sour cream. The remainder are pending.

"We will only do these agreements if the Met Council and the [public] ratepayer is better off than the [industrial] customer," Smith said.

Eric Roper • 612-673-1732

Twitter: @StribRoper