A federal loan to restore four dams in Midland and Gladwin counties has been denied. The Four Lakes Task Force applied for a loan from the U.S. Army Corps of Engineers to rebuild the dams that failed during a devastating flood in 2020.
WCMU's Teresa Homsi spoke with Dave Kepler, the task force president, about how the denial will affect the project's funding.
This transcript has been lightly edited for clarity and length. Listen to the interview above.
Teresa Homsi: I was wondering if you could maybe step back and describe what the loan application looked like. How much was the request for and what part of the project would it have covered?
Dave Kepler: Yeah. So the initial loan, the restoration project is what it would be funding as part of the financing of the Four Lakes dam and lake restoration.
The project cost $400 million. We had approximately $180 million of state money and then we had a few million dollars of federal grants. And so that left $270 million to finance all four dams.
When we went to the counties in February, the first $80 million we were going to do through municipal financing once we got the special assessment completed. Then we would use the Army Corps loan, which would have been about $130 million or so to work on.
The Army Corps loan provided two things for us: it had a lower interest rate, and also provided that we didn't have to draw all the money down at once, so we could pay as we go.
There was a scenario where we knew we weren't going to get this loan. So the the approach now is probably going to do it all with municipal financing.
TH: In one of the posts from Four Lakes, it said there the Army Corps was confident that the project would qualify. And I'm just curious, what changed? Why do you think the loan was denied?
DK: Well, the loan specifically was denied because it was only going for dam repair and it didn't — our category was going to match was environmental restoration. We weren't bringing hydropower back on.
And specifically the only funding that they would finance for environmental restoration in that category would be for removal of the dam, not for building the dam.
TH: The Army Corps recently invited to Consumers' Energy to apply for funding to fix up some of their dams. Do you feel a little sleighted by that?
DK: Well, it doesn't make sense that in the same week, they turn us down, and you're (invititng) them. And yes, it's a different program and they can explain why.
But on the surface, it's not logical. So even Consumers' power is having challenges with the transition from these hydro dams to something that's sustainable, so the fact that those dams qualify and ours don't, there's a whole bureaucratic explanation for.
But it doesn't make sense. If we're trying to improve the safety of dams, feel like our system ought to be addressed because it was a regulated environment by a private owner, and there is no system in the federal government really to to deal with (this transition).
It's just an indication there's something wrong in the system that you're trying to lower the risk with dam repairs, that you don't have criteria that puts this at the higher level of the choices.
TH: The argument in favor of funding Consumers' is that they have existing dams that need repairs, whereas, your effort is more focused on rebuilding dams.
DK: Well, that's not true. If you look at Secord and Smallwood, they were ordered down by the federal government for inspection and repair, so they're lowered, but they still impound water. These other two dams are still declared as high-hazard dams.
In fact, the dam doesn't disappear when they fails, it still has embankments. And if you look at the work we're doing, the state of Michigan had to take emergency control to get it stabilized, and we assume the responsibility to do the work.
But as long as the infrastructure is in there, when you get to like a 100 year flood or something, these dams will again fill up and have water in them. So you have to either fix them or take them out.
TH: Is there anything else that you'd like to add or you think is worth noting around the Army Corps financing?
DV: We thought we had a pretty good opportunity to get that. We didn't get it. This doesn't change the current estimate of the project.
We were trying to get these kind of things to lower the cost. It was disappointing because it's one more opportunity not to lower the cost.
And if you look at the op ed, we're not arguing consumers shouldn't get theirs, or we shouldn't get ours. We're arguing at least we should be able to be considered in these projects and shouldn't be turned down simply from the categorization of the dam.
So if you have a dam and you're dealing with dam safety, we just want to be able to compete for the financing.
Editor's note: The U.S. Army Corps did not respond in time to WCMU's request for comment.
Restoration of the Edenville, Sanford, Secord and Smallwood dams has been suspended this year due to ongoing legal challenges over the tax assessments on property owners. Residents have previously told WCMU that people will lose their homes once the taxes take effect.
