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Editorial: Selling dam is city’s best option

Published 1:21am Thursday, March 3, 2011

Thursday, March 3, 2011

There are plenty of options and just as many opinions on the issue of what should be done with the Pucker Street dam, which hasn’t generated power for about 20 years but has generated plenty of interest from companies wanting to restore it and use it for that purpose.

Advocates for removing the more than 80-year-old dam include the Michigan Department of Natural Resources, a group of local and regional environmentalists known as the Dowagiac River Keepers, and many of the Niles Township homeowners near the dam.

They argue that dam removal would improve water quality and the ecosystem, decrease the risk of flood, improve recreational opportunities on the river, increase property values of homes near the river bank and expose a natural waterfall.

That sounds good to us. But the main concern is money – something that is a major issue for all Michigan municipalities in wake of the governor’s proposed budget. If the governor’s proposal goes through, Niles could stand to lose at least $200,000 in revenue sharing.

Niles City Administrator Terry Eull said removal would cost around $1.5 million. While grants are available, even DNR representative Jay Wesley admitted to the council that less funding is available now given tightened budgets at the state and national levels.

While removal would be ideal, we believe that, given the financial struggle the city is currently facing, selling the dam is the best option.

Three companies have put offers on the table. Peterson Machinery out of Casa Grande, Ariz. and Hope Renewable Energy LLC out of Grand Rapids are interested in leasing or buying the facility, paying to restore it and splitting the revenues with the city.

But we are intrigued by the most recent proposal from Falling Waters LLC of South Bend, which wants to buy the dam outright for $100,000. It would then invest $7.9 million in upgrading the dam to the newest hydropower technology. The fact the company is willing to pay the city upfront and invest that kind of money is a good sign it is in this for the long haul.

Should there be problems, the company is offering the city first right of refusal to buy it back after 20 years.

Roland Klockow, a representative from the company, said upgrading the technology would triple the dam’s previous production to power about 650 homes. Klockow said the dam would be one of the first sites in the country to use their new technology to generate electricity. The new technology would be more “aquatic life friendly,” according to Klockow, as it would allow fish to pass through the turbines safely.

The fact the company is a startup and has no track record for such projects raises some red flags, but it is clear Klockow and his associates have done their homework and are willing to bank nearly $8 million on it. The city should go with Falling Waters LLC, which would give the city the funds to fill its shortfall for the upcoming budget and would allow the dam to lead the way in new renewable energy technology.

However, Falling Water’s proposal is not perfect. We worry about the structural integrity of an aging dam. Regardless of who buys or leases the dam, the city ought to stipulate that they also invest in structural renovation, not just in the dam’s generating capabilities.

This editorial reflects the views of the Niles Daily Star editorial board.

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