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Questions Remain As Terre Haute Mayor Renegotiates Contract

Terre Haut

Terre Haute's mayor has been working on a business deal that could bring in revenue to the struggling city.

But, with an expected $3 million still missing and contract wording being renegotiated, the future of this business agreement remains uncertain.

Terre Haute's financial woes have become a story reflective of many mid-size cities in Indiana struggling to find revenue after being hit by the recession, followed by the state legislature implementing property tax caps.

Terre Haute Mayor Duke Bennett hopes a deal with California-based company Powerdyne will bring in new technology - and new money - to the city.

What's In The Contract With Powerdyne?

Powerdyne initially reached out to Terre Haute and proposed a partnership to bring a facility that could turn the city’s wastewater sludge and wood waste into diesel fuel. Right now, the city pays another company to haul the sludge to Kokomo.

The contract stipulated the city would get $3 million last year and another $3 million this year as a goodwill gesture. Then, the city is supposed to pay Powerdyne over $700,000 per month for 20 years. City officials say the city hasn’t paid Powerdyne any money yet.

Powerdyne said, in a press release, the facility would be up and running in 24 months.

The California-based company also promised it could generate a million gallons of fuel from the waste each month and sell it to Terre Haute at a fixed $2.50 a gallon. The city would buy that fuel and sell it at market price to a third party.

The contract was approved by the Board of Public Works last year but never went before the Terre Haute City Council.

Reactions To The Contract

Since the contract never came in front of the council, some council members have been skeptical whether the contract is even legal. Thursday, the  city attorney said that after reading the contract, some wording was illegal, specifically the part that  states Terre Haute can't cancel or not pay the contract "due to non-appropriation of funds."

At the city council meeting on Thursday, an engineer, after looking at the contract, determined that the city wouldn't be able to provide enough sludge to meet the requirements of the contract and turn over the amount of diesel fuel Powerdyne said it would turn out.

Craig Shumaker, a retired engineer with a Ph.D in materials engineering from Purdue University, says he thinks this deal would end up losing the city money.

"The Terre Haute system is mostly a wood-fuels operation, so the sludge-to-fuels is kind of a Trojan Horse, in a way," Shumaker says. "The sludge carbon is only about a tenth of a percent of what they really need, so the whole process is dead-on-arrival as far as I'm concerned."

Shumaker also said that after looking at the technology patents Powerdyne has applied for, the city would have to bring sludge in from other places, which would end up costing the city more.

What's Next For Terre Haute In Sludge-To-Diesel Deal

The president of Powerdyne, when contacted last week, said the contract was still being worked out but wouldn't explain what parts were being changed.

Bennett remains hopeful that this deal will go through and thinks this contract could bring Terre Haute progressive technology.

"Why not Terre Haute? To me it's a perfect fit," Bennett says. "If for some reason they fail, contracts go away, we'll go back and hire the other company and pay them to take our sludge away."

The process proposed to generate diesel fuel from wastewater sludge and tree waste hasn't been done in any other cities, but is possible in theory.

Here's a link to the contract as written at the time of publish.

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