Tomorrow’s sunrise could further illuminate the city’s progress on its sludge-to-diesel plan.
Terre Haute officials face a Monday deadline to reach agreement with Terre Haute Dewatering Co. for the drying of wastewater sludge.
The company has given $750,000 to Terre Haute as a prepayment for 33/4 years of lease payments. That money was made as a “good faith deposit” and must be returned if a business deal is not agreed upon, according to terms of an agreement signed by the Terre Haute Board of Public Works and Safety.
Beyond solidifying a business deal, the city is now working to assume ownership and relocate equipment used in the sludge-drying process.
Originally installed as part of its $115 million sewer plant upgrade, that equipment has become central in the city’s dealings with several companies, including Overseas Lease Group.
The dried sludge, itself, is key to the overall biomass diesel fuel project proposed by Powerdyne Renewable Fuels. Powerdyne wants to use it, along with other raw materials, to make diesel fuel.
Overseas Lease Group, which joined the project in November, was to have dried sludge at Terre Haute’s wastewater treatment plant, using equipment the city installed in a building to be leased by the company. As part of the project, Overseas bought property north of the sewer plant and indicated it would purchase the equipment, as well.
Several months later, Overseas Lease Group finds itself out of the mix. Company president George Badcock told the Tribune-Star last week that city officials — after entering into a contract with his company that was under re-negotiation to the financial benefit of the city — suddenly shifted direction and began negotiating with another firm, Terre Haute Dewatering Co. Overseas Lease Group believes it has been wronged and is seeking nearly $1 million in expenses and property.
While a fledgling company in its own right — Terre Haute Dewatering was formed in March — it has ties to longtime Jeffersonville company Sodrel Trucking, a partner in the Powerdyne sludge-to-diesel plan. M. Noah Sodrel is the chief executive officer of the trucking company and is the listed registered agent for the dewatering company. Original project contracts, also being renegotiated, included Indianapolis-based Sodrel Fuels, formed in spring 2014, which was to buy diesel from Terre Haute in a pass-through agreement after the city bought diesel from Powerdyne. Sodrel Trucking would then transport the fuel.
Mayor Duke Bennett told the Tribune-Star last week that “Sodrel contacted us and said they are interested” in contracting to do the dewatering. It is unclear at this point exactly when that initial contact occurred, but the mayor indicated Sodrel has been in touch with Overseas Lease Group, something Badcock confirmed.
The Overseas president said, however, that parties to the agreement back in Indiana had “gone silent,” sparking the company to seek direct contact conference calls with city officials. While Overseas is prepared to move beyond its role in the sludge-to-diesel project, it intends to recoup its investment, either through a settlement or litigation. Bennett said “Sodrel will have to settle with [Overseas Lease Group]” if they assume a lease for the equipment to dry wastewater sludge.
The newspaper has sought input from Sodrel many times over the past few months, by calls to Sodrel Trucking, where an employee said she has sent him emails with the Tribune-Star’s request and contact information. Calls were also made to an Indianapolis number for Sodrel Fuels, listed on original contracts between the company and the city. A call was also made to a telephone number corresponding to a Greenwood address listed on Terre Haute Dewatering Co. papers filed with the Indiana Secretary of State’s Office.
To bid or not to bid...
Of its negotiations with Sodrel, Bennett has said the city is reviewing options such as a service agreement, an operational lease agreement, or a lease for real and personal property.
Each of those options has different legal requirements, some of which do not require bidding, according to Todd Caldwell, who oversees cities and towns for the Indiana State Board of Accounts.
A service agreement would likely fall under state provision (IC 5-22-6-1), Caldwell said. It allows a purchasing agency of a governmental body to contract for services under any procedure that agency considers appropriate.
The purchasing agency for the City of Terre Haute is the Board of Works.
“We also are of the position payments made or received for contractual services should be supported by a written contract,” Caldwell said, “and that each governmental unit is responsible for complying with the provisions of its contract.”
Operational leases could be considered a public-private agreement, he said. Such a public-private agreement would require a request for proposals (IC 5-23-5-1). The city would then negotiate for the best offer.
The public, by law, is afforded access to such leases at a public hearing, where a description of the public-private agreement, along with a statement explaining the proposal, is available for inspection and copying. The basis for recommending the agreement is also set forth.
The other option available to the city, the disposing of or leasing of real and personal property, falls under another state requirement, Caldwell said.
Public bidding is required when it comes to the leasing of real or personal property, according to state statutes, IC 36-1-11-4(c) and IC 36-1-11-10(c). “There are exceptions, which would still require solicitations, but generally speaking, bidding is required and appraisal of the property is required,” Terre Haute attorney Noah Gambill told the Tribune-Star in a telephone interview.
Gambill is the attorney for former city engineer Pat Goodwin, who along with a group of concerned citizens has filed a tort claim, notifying the city of possible litigation over the sludge-to-diesel project. Goodwin also last year launched a Facebook page called “Terre Haute Inquiries - THinq,” which has provided a forum for discussion of the contracts and their implications.
Centrifuge ownership swirls
Ongoing discussions, be they online among Facebook friends or at the negotiating table, include the issue of ownership of the sludge-drying equipment installed at the wastewater treatment plant. The newspaper sought clarity from current city engineer Chuck Ennis. He said the equipment was purchased by Plocher Construction of Highland, Ill., as part of its $115 million contract to overhaul the city’s treatment plant. That sprawling sewer plant covers nearly 40 acres along Indiana 63, west of U.S. 41, on the city’s south side.
While Overseas Lease Group has been billed for the drying equipment, company president Badcock said it no longer needs the equipment or the land it bought since the city is seeking to enter into an agreement with Sodrel.
City engineer Ennis said the construction company, Plocher, owns the equipment until the bill is paid.
“If it was not paid; the contractor still owns it,” he said. “They are looking for someone to pay for this equipment.”
A change order to reinstate the $2.88 million cost of the machinery as part of the city’s sewer plant construction project could go before the Board of Sanitary Commissioners as soon as Wednesday, Ennis said. He explained that the project has been below budget since the cost of the equipment was taken out last year. The move to restore that cost would return the construction project cost closer to its original bid award, which includes more than $30 million in new equipment.
The city also will incur a cost of about $300,000 to return the hefty equipment — it is about 10 feet tall and 15 to 20 feet long — to its original design location at the sewer plant. It was installed in a building to be leased by Overseas, per the original project agreements.
“The dewatering equipment is there, but it is in the wrong place,” Ennis said. “Because of one of the side agreements, it was put into Building 18 on a temporary basis. Now that the sanitary district is working on a change order, that equipment will be brought back to Building 13, where it was originally designed and intended.
“This treatment plant was designed five years ago, well before Powerdyne was conceived of,” he said. “The city’s sanitary district will now own the dewatering equipment, and it will be where it was designed when this [construction] started three years ago.”
The upgrade of the wastewater treatment plant, which can treat a maximum of 48 million gallons of wastewater per day, is to be completed by January 2016, per the contract with Plocher.
“It will be done well before that,” Ennis said. “We have a substantial completion time, which is when everything is installed and working as intended, for the end of June. The final completion time, which is when every light switch plate is installed, the grass seed is planted and everything is all painted and cleaned and the contractor is ready to leave the site, is this fall.”
Different cities ... different methods
While treatment of wastewater is fairly standard, the methods used to dry the sludge and what’s done with the end product vary.
The ash-like substance created by the drying process can be put into a landfill or sold for alternative uses, Ennis said. The city can also land-apply the liquid wastewater onto farm fields.
“We are moving away from that,” he said, “because you have to find eligible land and often that is close to homes and it does produce a smell, whereas the dry material has no smell.”
Applying wastewater sludge to farm land is something that has been done for decades by the City of West Lafayette, said David Henderson, director of the West Lafayette Wastewater Treatment Utility. That facility serves Purdue University as well as the city.
Workers there transfer wastewater sludge into tanker trucks, which haul it to permitted farm ground for land application.
“We have been land-applying for a long time,” Henderson said. “There are federal and state guidelines for loading rates for nutrients and metals. The majority of wastewater is just water, with 3 to 4 percent waste sludge.”
West Lafayette’s sewer plant has the capability of daily treating 10.5 million gallons of wastewater per day, Henderson said.
The City of Bloomington has two treatment plants: the Dillman Road Wastewater Treatment Plant, which treats wastewater from Indiana University and part of Bloomington, and the Blucher Poole Wastewater Treatment Plant.
Garrett Towel, plant superintendent for Bloomington’s utilities department, said the Dillman facility has a daily capacity of treating 15 million gallons of wastewater per day, with a maximum of 30 million gallons, while the Blucher facility has a daily capacity of treating 3 million gallons of wastewater per day.
Bloomington utilizes two methods in drying its sludge, Towel explained. “One is a belt filter press, which is similar to a centrifuge. The second is a drying bed, which is an old-fashioned, low-tech method,” he said.
Each system produces a dry material, which is then hauled to the Medora Sanitary Landfill operated by Rumpke Waste and Recycling. The Dillman Road plant, Towel said, has an on-site landfill for disposal; however, the majority of dried sludge is taken to Medora.
Dewatering Co. deal deadline
Back in Terre Haute, officials hope to meet Monday’s deadline to reach agreement with Terre Haute Dewatering Co. An earlier deadline last month was extended, following the resignation of the city attorney. An Indianapolis-based attorney is now involved in the negotiations.
Should the city and the company be like-minded on the details, the agreement is to reach the Board of Works in a stipulated 10-day time frame. Once received, board members will have another 30 days to vet the proposed agreement.
Still under renegotiation is the city’s contract with Powerdyne to make biodiesel fuel. Powerdyne president Geoff Hirson told the Tribune-Star recently that he plans a return visit to Terre Haute in a few weeks.
As he had done in an appearance before the City Council in February, Hirson expressed concern over the controversies that have arisen regarding his business proposal. He emphasized that his company is “the major player in this deal,” and he encouraged people to work with the city if they want the project to move forward.
Mayor Bennett told Rotarians in April that progress is being made.
“We are working on updating the contracts,” he said at the time. “We need to make sure we get them right. We are almost done with the dewatering agreement. Then we’ll have some updates on the other contracts in the coming months.
“So, it’s still moving ahead, things are moving forward, we’ve just got to get some language fixes in there. ... We’ve got to make things a little bit clearer from a public perspective,” Bennett said.
Howard Greninger can be reached at 812-231-4204 or firstname.lastname@example.org.