WATERLOO -- The city of Waterloo is looking at de-annexing the proposed site of the LS Power plant in northeast Waterloo now that the company has dropped the project, Mayor Tim Hurley said Tuesday.
Hurley said the city staff is already discussing the de-annexation of the land brought into the city for the project and putting it back in unincorporated Black Hawk County.
"We said in the beginning, if this project does not go we had no interest in hanging onto that land," he added.
Elk Run Energy Associates, an affiliate of LS Power Inc., announced Tuesday the company will halt further development of the proposed $1.3 billion, 750-megawatt coal-fired power plant on Waterloo's northeast side.
"We're not pursuing the site for development anymore," said Mark Milburn, assistant vice president of LS Power. "The decision was based on our view of the projected energy market; the load growth is slowing in the region due to the downturn in the economy."
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Hurley, who has steadfastly supported the project, expressed disappointment.
"Some are going to claim the decision to pull out was a victory of sorts," Hurley said. "But it's a loss to the city, the region and the state."
One neighbor who opposed the project for years felt otherwise.
Phyllis Morgan, who lives adjacent to the proposed plant site, said, "The New Year will look better than it has for years for us in the neighborhood," she said.
She and others opposed the plant for environmental reasons, citing concerns about water and air pollution and long coal trains tying up traffic through the city. Supporters said the plant would have to meet stringent state and federal environmental standards, and that trains would be brought in during periods of low traffic, and not as frequently as opponents suggested.
"I believed in this project," Hurley said. "I'm just not one who believed in all of the evil things that would happen if the coal plant located here."
The plant would have been the largest economic development project in the city's history.
"I think it was a needed project and would have been very beneficial," he added. "I'm sorry to see that project go, but I respect LS Power's business decision."
Milburn said the company will instead focus its development efforts on more advanced projects in Arkansas, Arizona, Georgia, Michigan, Nevada, New Jersey, Texas, Virginia and other locations.
The announcement follows another one Friday that Texas-based Dynegy Inc. and LS Power had dissolved their joint venture to develop the Waterloo plant and five others across the U.S.
Milburn said it was the slowing economy and falling demand, which lead to the decision.
"The dissolving of the joint venture with Dynegy Inc. was an independent issue," he said. "With that joint venture not in place we have 100 percent control over all of our projects."
Asked if the company may consider the Cedar Valley for future development, perhaps with "clean coal" technology, Milburn replied: "I can't speculate on what we might do in the future."
"Certainly this site has a lot of great features that attracted us, and we'll certainly keep it on our radar screen," he said. "Elk Run Energy has been a proud member of the Greater Cedar Valley community, and appreciates the unwavering support of so many individuals and organizations throughout the development process."
Don Shatzer, a member of Community Energy Solutions, which opposed the Elk Run Energy project, was pleased with the announcement.
"This think has been a three-year roller-coaster ride for everybody involved," Shatzer said. "There were a large number of people involved fighting this coal plant.
"We didn't stop the coal plant; all we did was prolong the construction," he added. "What finally ended this whole think was the financial crisis.
"I think Waterloo and Black Hawk County can be very thankful this project didn't get started nine months or a year ago," he said, noting it could have left a partially developed plant without necessary financing.
The project, which would have brought 1,000 construction jobs and 100 permanent jobs to the area, had been supported by a number of business organizations.
"I'm extremely disappointed, for the community, especially," said Mike Mallaro, of Progress Cedar Valley, an organization formed to support the Elk Run Energy Station. "This was a big opportunity missed, and those kinds of opportunities don't come along all that often."
While the Waterloo project ran into a political landscape shifting against coal-burning plants, Mallaro believes more plants will be built in Iowa in the future to meet demand. But he thinks those will be constructed along with existing facilities, making the prospect of a power plant in Waterloo unlikely.
"We're missing out on thousands of jobs we could have had, and a whole new direction we could have had in this community," Mallaro said. "But we'll go on. We're blessed with a great economic development team and the community's going to be fine."
Steve Dust, chief executive officer of the Greater Cedar Valley Alliance economic development group, said, "It is a very major disappointment for us that we won't benefit from the investment or the temporary or permanent jobs. We documented very well what the benefits were going to be."
While the area still has sufficient electric generating capacity to sustain future development, Dust said, "Any time you have a huge facility, or a developer deciding not to move forward with a project of this size, it brings some attention to you that you don't want.
"And I think Iowa needs to be cognizant of this as a state," Dust said. "It's also disappointing it's the Iowa project that got pulled," while LS Power project in other states are going forward, including another upper Midwestern facility proposed in Michigan.
He suggested a protracted regulatory process here may have slowed the project to a point where it became vulnerable when market demand eased.
With this development coming on the heels of opposition which swayed Monsanto to locate a large corn seed production plant in Buchanan County instead of Black Hawk County, and the resistance PFGBest Inc. encountered in its ultimately successful struggle to locate a facility north of Cedar Falls, Dust suggested Black Hawk County officials also need to take stock of what role they want to play in economic development.
The county Board of Supervisors officially took no position on the plant while the county Board of Health called for a statewide moratorium on coal-fired power plants, based on board-commissioned study by a University of Northern Iowa professor on the LS Power proposal's possible environmental impacts.
The four-year construction of the plant, which had been scheduled for a 2013 opening, would have brought in up to 1,200 workers at the peak of construction, with an estimated payroll of more than $200 million.
The company has been awaiting regulatory approval before construction could begin on property that the city has annexed and zoned for the project along Newell Road east of North Elk Run Road. The plant would have been east of Eagle Ottawa tannery and John Deere's East Donald Street Tractor Works.
Carrie La Seur, president of Plains Justice, a public-interest law center based in Cedar Rapids, hailed the decision. Plains Justice had assisted the opposition to the Elk Run Energy project.
"We congratulate LS Power and Dynegy for recognizing that developing new coal power is just too financially risky for their stockholders, but Iowa ratepayers should know that Alliant Energy's proposed new Marshalltown coal plant saddles them with the same imprudent financial risks," La Seur said in a news release.
Courier News Editor Pat Kinney contributed to this story.
Contact Tim Jamison at (319) 291-1577 or tim.jamison@wcfcourier.com.
