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Archive for Monday, February 28, 2011

Sale of bonds for Bowersock’s hydroelectric plant on north bank of Kansas River to close next week

February 28, 2011

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A project to build a $25 million hydroelectric power plant on the north bank of the Kansas River is on the verge of becoming a reality.

Sarah Hill-Nelson, an owner of the Lawrence-based Bowersock Mills & Power Co., confirmed Monday that the company has found buyers for all the necessary bonds it needs to build a new plant near the northern end of the downtown Kansas River bridges.

“It is not over till it is over, but we’re now anticipating to begin construction very shortly,” Hill-Nelson said.

Financing has been the largest hurdle for the project, which was announced in 2009. The company has received the necessary federal permits to build the plant, which will operate in tandem with Bowersock’s existing plant on the south bank of the river. In November the company reached a long-term deal for the Kansas City, Kan., Board of Public Utilities to buy all the power from the plants.

But finding buyers for the nearly $25 million in bonds had been problematic as large institutional investors hadn’t taken the time to research the project. But Hill-Nelson said the project received a boost when the Securities and Exchange Commission ruled that qualified individual investors would be allowed to directly purchase the bonds. That allowed the project to court more regional investors.

City leaders on Monday were pleased to learn of the bond deal, which is scheduled to close March 11. They said the new “landmark” power plant building will help market Lawrence as a community that wants to be a player in the green energy market.

“In terms of a per capita basis, we’re going to be producing as much renewable energy as any community in California,” said City Commissioner Aron Cromwell.

The plant will produce enough electricity to power about 5,400 homes. The city of Lawrence will act as an issuer for the bonds, but won’t have any financial responsibility to repay the bonds. Private bond buyers are financing the project, but buyers will receive tax breaks that were part of the federal stimulus program, Hill-Nelson said.

Comments

Steve Jacob 3 years, 9 months ago

I wonder what interest rate they had to pay to finally get the bonds sold?

Sigmund 3 years, 9 months ago

srj (anonymous) says… "I wonder what interest rate they had to pay to finally get the bonds sold?"

Don't know and don't care, There is a rule when it comes to new offerings of stocks or bonds, "if you can get in on the IPO you don't want them." Why? If a new issue is available to you, especially a small offering like $25 million or so, it means lots of institutional and very large investors passed before they got around to offering them to you. The whole, "But finding buyers for the nearly $25 million in bonds had been problematic as large institutional investors hadn’t taken the time to research the project," is bullcarp, they looked and said "thanks, but no thanks."

My guess is they were all bought up by the "partner" Kansas City, Kan., Board of Public Utilities, who not only is going to buy all the power but also bought all the bonds. This is money available through Qualified Energy Conservation Bonds, or QECBs, and Recovery Zone Facility Bonds, and the project has a lot of different forms of risk and lack any guarantee. By buying them themselves they can turn a portion of their cash flow tax free.

The other clue, "But Hill-Nelson said the project received a boost when the Securities and Exchange Commission ruled that qualified individual investors would be allowed to directly purchase the bonds. That allowed the project to court more regional investors."

Translation, "no respectable underwriter could be found who could move these, so the SEC waived a lot of rules that they ordinarily claim are necessary to protect the investing public, and allowed us to sell them directly to the suckers!"

Seriously, a micro hydroelectric plant on the Kaw? If it were economically sound project it would have been done long ago. Anyway I hope some environmental group, KHDE, EPA, Bozo, Sven, or Merrill doesn't file a bunch of lawsuits demanding construction stop until impact statements can be done on the native two-headed catfish population.

just_another_bozo_on_this_bus 3 years, 9 months ago

""But finding buyers for the nearly $25 million in bonds had been problematic as large institutional investors hadn’t taken the time to research the project," is bullcarp, they looked and said "thanks, but no thanks.""

The whole liar-loan/derivatives debacle that brought the world economy to its knees is ample evidence that institutional investors often don't investigate their investments particularly well.

gl0ck0wn3r 3 years, 9 months ago

How many did you buy? Do you put your money where your cut-and-paste mouth is? I doubt it.

KS 3 years, 9 months ago

That is without a doubt a very ugly building. Looks like something that might fit out on the farm. Why not give it some character. Give it some very long lasting stone; something! This is going to be an embarassment to dowtown Lawrence. BTW, I am in favor of the plant, just don't like the looks of it.

50YearResident 3 years, 9 months ago

Is the picture dawn to scale? It doesn't look like much of a building to generate $25 million worth of electricity any time soon.

Bladerunner 3 years, 9 months ago

Perhaps they could sell snow cones out of it to recoup some of the costs.

matahari 3 years, 9 months ago

“In terms of a per capita basis, we’re going to be producing as much renewable energy as any community in California,” said City Commissioner Aron Cromwell"

My, that's a sweeping statement, and what exactly does it mean?

BigPrune 3 years, 9 months ago

Having this ugly monstrosity.....Does this mean Corliss will be leaving soon? What a wonderful sight when coming into Lawrence, and to stay at the Marriott and open the curtains to see that over the Kaw should help repeat business. How do these things get a pass so easily, because the Earth Nazis aren't screaming? At least the City bought Farmland Coop to beautify our city. The City fathers will have to look at this "thing" everyday they're at work.

Crazy_Larry 3 years, 9 months ago

It's a little off topic, but hey! I'm wondering if you ever have anything positive to add to a discussion. Jesus Christ on a popcicle stick, man! I thought I was a negative nelly. You win the prize! You take the cake! I guess that your name fits perfectly...you eat big prunes and spew crap all day!

BigPrune 3 years, 9 months ago

Will they be using union workers to build that ugly thing? You might have to get out your placards to protest if they do not....that will be interesting if they don't, won't it?

It's still ugly, and it will always be ugly, no matter what you think - obviously you have poor taste.

Crazy_Larry 3 years, 9 months ago

Note: My comment contained no opinion concerning the hydro-plant, yet you still find something negative to shoot back. Perhaps you should seek help from a head-doctor; a head shrink. That much negativity in NOT normal...Rush Limbowel is that yoU?

BigPrune 3 years, 9 months ago

I wonder if union thugs will be muscling their way in for the build job? A mob tactic.

The hydro-plant IS ugly. Everything in this town that is new is faced by resistance from the freeze dried hippies (a minority) that inhabits our city, except the ugliest thing to ever be constructed. Hmmm. Just stating the facts.

Crazy_Larry 3 years, 9 months ago

Yeah, well, you know, that's just, like, your opinion, man.

And opinions are like elbows.

nekansan 3 years, 9 months ago

I think the trains rolling through at 2AM blasting their horns pretty much take care of any repeat business the Marriott hopes to maintain.

Matthew Fowler 3 years, 9 months ago

It's going to destroy the view from the levee, and no more jogs up there

Clark Coan 3 years, 9 months ago

I think it's pretty cool that 5,400 homes can be powered by the two plants. It is my understanding that the hydroelectric plant on the south bank will continue to operate.

Now, KU needs to put small wind turbines on top of Fraser Hall and a large one on West Campus. Plus, a company needs to put a hydroelectric plant below Clinton dam. The Lake of the Ozarks produces lots of electricity..

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