Final
Presentations on Rural Economic Development
RURAL ISSUES
Votes:
Action Taken:
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10:37 AM -- Call To Order
Representative Hodge, Chair, called the meeting to order. The committee members introduced themselves and commented on concerns in their districts that fall under the committee's charge. Staff present from Legislative Council Staff included Natalie Mullis and Ron Kirk, and Tom Morris from the Office of Legislative Legal Services. Staff distributed a memorandum entitled "Enterprise Zone Benefits To Rural Economies" (Attachment A) .
10:45 AM -- Presentations by County Commissioners from Baca and Bent Counties
Prior to the presentation, staff distributed a packet of materials titled "Proposed Power Plant Generating Power For Coloradans" (Attachment B). Commissioners Bill Long, Frank Wallace, and Lynden Gill, from Bent County, discussed a number of issues pertaining to rural development in southeast Colorado.
Commissioner Long commented that energy production is one of the most important industries for economic development in Southeast Colorado. There is an estimated need for additional power (about 3,000 + megawatts) between now and 2013. Steady economic growth depends upon low-cost reliable energy production. On economic development, Commissioner Long commented that benefits from front range growth have been few. But one benefit has been the new prison. Other than that, rural economic development benefits have been limited and front range growth has in other ways been very detrimental. For example, the loss of water resulting from front range development has been hard on rural counties in Colorado. These trends are expected to continue but other opportunities in energy production may offset the loss of water to rural communities in Colorado.
Commissioner Long commented that as a group, the commissioners were going to discuss coal-fire facilities and the importance of rail transportation to the economy in southeast Colorado. In the past, at least two companies have considered building electrical transmission facilities in southwest Colorado or western Kansas. But the power from these facilities will go to the front range.
The committee briefly discussed the reasons Kansas was considered as a preferable alternative to southeast Colorado for locating a coal-fire facility. Commissioner Long responded saying some of the reasons energy companies are considering Kansas hinge on government regulations. Commissioner Long explained that one facility would amount to a $1.4 billion investment in the community. As the project grows, it adds to property tax revenues and the regional economy. In regard to government regulation, the guidelines and the time requirements for completing the permitting process is a concern. At the minimum, it takes two years to complete the permitting process.
10:55 AM -- (Presentation Continued)
Commissioner Long continued by briefly discussing competitive rail lines. The two companies that looked at rail lines in eastern Colorado have looked at sites in Kiowa and Byers Counties and a site in Kansas. The Kansas site has some of the permitting in place. Commissioner Long commented that for Colorado, we need fast-tracking or the ability to expedite the permitting process. As county commissioners, we would ask that regulations remain unchanged but be looked at and considered when these projects come forward. We need to make sure that rural Colorado has opportunities to share in Colorado's economic growth. Staff distributed another handout on the North-South rail line to committee members (Attachment C).
Commissioner Long commented that the Colorado Department of Transportation has been working on a project to move the rail traffic from the front range to rural Colorado. The main goal is to move rail traffic out of downtown Denver. The rail line would come from the Greeley, Fort Collins area out east about 30-40 miles east of Denver and utilize Union Pacific lines straight north of Las Animas. This new line would amount to about 95 miles of new rail and would be very beneficial to Las Animas. Commissioner Long closed by saying that it is very important for rural Colorado to receive economic benefits from these potential rail line projects.
11:00 AM -- Presentations by County Commissioners from Baca
Commissioner Wright began by saying that there have been several wind generation companies which considered projects in Baca County. Commissioner Wright commented that Baca county has the best wind in the area but does not have the transmission lines to deliver the power to areas that use it. The county has decided to put together a program using Private Activity Bonds to fund the construction of county transmission lines. Commissioner Wright commented that currently, the federal tax code does not allow private activity bonds to be used for this purpose. Commissioner Wallace asked if the legislature could pass a resolution to urge Congress to expand the federal law to allow Private Activity Bonds to include wind generational projects.
The committee briefly discussed federal funding for wind generational projects. Commissioner Wright emphasized that transmission line capabilities are the key to windpower generation projects in southeast Colorado.
The committee discussed the competitive markets in Colorado and other states for wind generation projects and the importance of an infrastructure at the site to transmit power from the site to users. Commissioner Wright mentioned that contractors that build wind generation facilities might be able to get a project up and running faster in Kansas than Colorado because the permitting process is more complicated in our state than many
neighboring states. The committee discussed ways to expedite the permitting process to gain the competitive edge from competitors in other states.
11:08 AM -- Continued Committee Discussion
The committee briefly discussed economic development projects in southeast Colorado and the permitting process that is associated with such projects. Also discussed were the difficulties associated with a transmission line project that would deliver power from wind generation facilities in southeast Colorado to the Front Range. The committee also discussed the electrical grid system in Kansas and how it compared to Colorado.
The discussion shifted to rural health care. Commissioner Wright commented that health care is accessible but very costly and at the county level it is getting expensive to fund employee insurance. The cost of health care varies from county to county and in Baca County, there are only three health care providers. Commissioner Wright also commented that rural clinics have a challenge hiring doctors. The work schedule for rural doctors is often split between other professionals. For example, at a Las Animas clinic, one doctor works two half days and a nurse practitioner works five days.
The committee briefly discussed the number of pharmacies in the surrounding counties and discussed the challenge related to hiring health care professionals in rural parts of Colorado.
11:27 AM -- Discussion on Funding Transmission Lines
Commissioner Frank Wallace, Bent County, discussed the Highway 50 transportation project and its impact on communities in Southeast Colorado. The committee discussed the matching federal funds that would be spent on the transportation project.
Commissioner Wallace reiterated the importance of transmission lines to local energy projects and urged the committee to look at changes that would allow private activity bonds to be used as a funding mechanism for such a project. Representative Gardner asked staff to research the changes in the Internal Revenue Code that would allow these bonds to be used for funding the construction of transmission lines.
The committee briefly discussed sales tax revenue sharing as a way to provide sales tax revenues to cash-strapped local governments. Commissioner Wallace commented that some local governments have had the fortune of having big-box stores relocate in their rural areas. As an example, Commission Wallace commented that La Junta depends upon Walmart sales tax revenue but said it is difficult when big outlet stores go in because they drive out business in neighboring cities. Thus, it would be very helpful if there were a mechanism that would allow local governments to share sales tax revenue.
The committee closed the discussion by commenting on the need to look at the benefits of sharing sales tax revenues between regions and the possibility of sharing revenues paid in by power plants when they are first constructed (impact fees).
12:00 PM -- Lunch
12:20 AM -- (working lunch and continued discussion)
Mr. Milbrand, Prowers County, commented on the importance of job creation in Southeast Colorado counties. He said that legislative decisions affect the types of industries that locate in rural parts of Colorado. Mr. Milbrand commented on a milk processing center that considered relocating to southeast Colorado but did not because of Colorado's regulatory policies. This company would have been a $50 million facility that would have created 50 jobs. The company built its facility in Kansas because they viewed Kansas as a more "dairy friendly" state.
Mr. Milbrand closed by discussing the wind energy industry and the personal property taxes that are paid by the industry. If the state abolished the personal property tax, local governments would lose $800,000 of revenue and not have enough money to provide services to its citizens. Mr. Milbrand closed by commenting on the incentives that the state could provide to bring more businesses to rural parts of Colorado.
12:27 PM -- Discussion on Wind Energy Development
Mr. Leroy Mauch, Chairman, Prowers County Board of Commissioners, distributed a powerpoint presentation handout (Attachment D) to committee members and commented on the impact of the windfarm industry to Southeast Colorado. Mr. Mauch commented on the leased land in Prowers County that is used for transmission lines at wind energy development sites. Mr. Mauch mentioned that there are over 11,000 acres of leased ranch land in Southwestern Prowers County used for wind generation.
Mr. Mauch commented on the economic benefits of wind energy plants to rural economies in Colorado and commented on the tax benefits to local governments. Mr. Mauch closed by discussing the economic benefits the community receives from the Lamar Wind Farm.
The committee commented on the royalties farmers receive from wind farm operations and the secondary and indirect impacts to the economy. Mr. Mauch commented that an average lease yields farmers about $2,000 each year plus a percentage of the profits derived from electric generation by wind generation facilities. Mr. Mauch continued by saying most of these facilities are on open-sloped areas where it is not uncommon to see high winds.
The committee continued to discuss the economics of wind generation facilities and the benefit of these facilities to rural communities in Colorado.
12:50 PM -- Discussion on Biofuels
The discussion shifted to renewable fuels and ethanol mandates in Colorado. Mr. Mauch commented that Colorado does not provide ethanol producers tax incentives similar to other Midwestern states. Mr. Mauch commented that renewable energy is becoming more important as gasoline becomes more expensive.
12:54 PM -- Discussion on Wind Energy Development
Mr. Price Hatcher, Xcel Energy, distributed a handout (Attachment E) on renewable energy resources and discussed energy use in Colorado. Over the last decade, electric use in Colorado was up 13 percent, Xcel's customers grew by 20 percent and peak-period demand was up 50 percent. Air conditioning use was one of the major reasons for this.
Mr. Hatcher commented on the role of renewable energy and reiterated that Colorado's energy needs are growing. Mr. Hatcher discussed the PSCo 2004 Resource Plan Filing. This plan describes the resource needs through 2013 and proposes a plan for meeting these needs. Mr. Hatcher continued by discussing the objectives of renewable energy. Renewable energy use will lower customer rates by hedging against fuel price volatility. Mr. Hatch commented on the economic principles that govern the use of renewable energy. When renewable energy prices are less than the marginal cost, it means savings for customers. Currently, wind farms are cheaper to operate than natural gas plants.
Mr. Hatcher commented on the use of production tax credits for renewable fuels in other states. Smaller business development often needs additional economic assistance. For some of these businesses, economies of scale are at work but the infrastructure is not always there to make a business viable.
Mr. Hatcher closed by commenting on Xcel's Energy Wind Portfolio.
The committee closed the discussion with comments on the economic feasibility of biomass and wind energy alternatives to conventional energy uses. The committee questioned whether the use of production tax credits could be used as economic incentives for renewable fuels in Colorado.
01:29 PM -- Discussion on Ports-to-Plains Coalitions
Mr. Joe Kiely, Lamar Town Administrator, and Ports-to-Plains Trade Corridor, distributed a handout (Attachment F) on the economic impact of freight corridors in the eastern plains and discussed the handout. Mr. Kiely said that in November 2004, the Ports-to-Plains Corridor Development and Management Plan provided an in-depth look at the economic potential of the developed corridor in the next 20 years as a four lane, divided highway. It is important to note that these economic impacts are only valid if Colorado moves forward on the schedule approved in the plan. Total project costs in 2004 dollars are $610 million or $2.9 billion for the entire transportation corridor.
Mr. Kiely commented on the jobs that would be created by the corridor project and said that nearly $2.4 billion would be realized through direct and indirect benefits. In manufacturing, 1,700 direct jobs would be created in the Ports-to-Plains counties. When indirect job creation is included, 3,600 new jobs would be created. Mr. Kiely continued to discuss the economic impact from the corridor project and the tax revenues generated from the project.
Mr. Kiely commented on legislation during the 2005 session. In the last legislative session a bill dealing with the enterprise zone tax credits was introduced that provided an incentive for rolling stock. Mr. Kiely commented on the legislation and asked that it be revisited during the next legislative session.
The committee closed the discussion by talking about the products that are shipped along the corridor route and the importance and safety issues that are tied to the corridor project.
02:01 PM -- Discussion on the
Pierre Auger Project
Dr. John Harton; Department of Physics, CSU, introduced himself and gave a slide presentation on the Pierre Auger Project (a Cosmic Ray Observatory, measuring ultra-high energy cosmic rays with the Pierre Auger Detector).
Dr. Harton explained that cosmic rays are a part of nature and likely to be sub-atomic particles. We are working to obtain some robust detectors for use in Southeast Colorado schools. He mentioned that the project has recently received money from the state's economic development office.
Dr. Harton discussed the Pierre Auger Project and commented that the primary cosmic ray initiates a shower. There are two basic detection techniques. When the shower hits the ground, it is many miles across. The central core (where that particles would have gone if it didn’t knock into the air) makes a glowing core of nitrogen florescent air that can be seen with a telescope on a dark night.
Dr. Harton commented on the project's use of the surface detector. The Auger surface detector unit is a large tank of water, 12 feet across, 4 feet high, made up of a battery box, solar panel, and electronic box. A computer on board radios back the information to the central campus where the data is analyzed. One unit is being built in Argentina and we are building one in southeast Colorado. A unit in northeastern Colorado will still need to be built. The site in Argentina is about 35 miles across with water tanks spaced about a mile apart. About 1,600 water tanks are planned for the project in Argentina and presently there are more than 800 tanks on the project. The detector should be completed by the end of 2006. The buildings that surround the tanks have large telescopes with giant digital cameras that take pictures of the fluoresceins in the air. The buildings are called “fluorescence buildings.” There are four of these buildings in Argentina that surround the site.
Dr. Harton said that the community support in Southeastern Colorado has been significant and commented on site selection. Prior to approving a site, the atmosphere must be studied to ensure that there is as little dust as possible. Less dust allows the fluorescent light to appear through the atmosphere. In Southeast Colorado, dust levels are low enough year round for their purposes. Dr. Harton mentioned that the air was significantly clearer at night rather than during the day.
Dr. Harton mentioned that the Lamar Community College has offered a five-acre site for the visitor’s center, computer center, and assembly building. The next step is to finalize the contract and look into tax credits that are offered by the federal government.
Dr. Harton said that the Pierre Auger Project is a pure science effort – not for profit. It’s goals are to understand a true mystery of nature. The National Academes of the Sciences came up with the 11 most important questions a few years ago in astronomy and natural sciences. The three main questions answered by the project are: what are these extremely energetic particles; how do they get their energy; and how do they travel to earth? Dr. Harton said that they are either being produced by some close energy source, or they’re evading energy loss as they enter the atmosphere.
Dr. Harton concluded by talking about the reasons for site selection in Southeastern Colorado and funding for the project. Some of the considerations included unwavering community support and a good county road network that allows us to deploy project tanks easily.
The committee closed the discussion by commenting on project funding.
02:38 PM -- Discussion on Rural Economic Development Issues and a Revolving Loan Program
Ms. Jan Anderson, Southeast Colorado Economic Development, Inc., commented on a number of rural economic development issues and discussed a revolving loan program available to businesses in Southeastern Colorado. Ms. Anderson said that investment in Southeastern Colorado is important to the economic vitality of the area.
Ms Anderson commented on some of the benefits businesses receive from the state enterprise zone program and said that $15 million in tax credits were recently certified. Ms. Anderson also commented on the state's revolving loan program which provides start-up capital to small businesses in the region. The loan program started with $80,000 and today the loan portfolio is at $9 million for housing and economic development. Both programs are exceptional programs and should be maintained. Ms. Anderson mentioned that one economic development concern is that air service is not available in the region and is a barrier to economic development. Ms. Anderson closed by commenting on the importance of the state's college system to employers because it provides vital training for the state's rural workforce.
02:45 PM -- Discussion on Rural Community Colleges
Mr. Dave Smith, Lamar Community College, began by discussing the challenges that rural community colleges face in Colorado given the recent budgetary reductions. Rural colleges, particularly Lamar Community College, face financial challenges that result from location, reductions in state funding levels, and the population base in Southeastern Colorado. Mr. Smith commented that the college is the smallest in the state and located in one of the poorest areas of the state. The college also has one of the smallest budgets in the state for community colleges.
Mr. Smith continued by mentioning the economic benefits that community colleges bring to rural areas in Colorado. As one example, about 65 percent of the nurses in the area are trained at Lamar Community College. There is no equivalent among metro colleges in the importance of the college to the area in which it serves. In the rural areas, the most affluent and mobile students will leave and attend a metro-area college such as Colorado State University. In contrast, for those students who are not mobile or do not have the resources, Lamar Community College is the only place they can get an education. Mr. Smith continued by discussing the effect of state budget reductions for community colleges. These budgetary reductions have resulted in four years of budget reductions for Lamar Community College. If the budgetary reductions continue, the mission of the Lamar Community College will have to change. Mr. Smith concluded by saying that the state needs to frame the question in terms of benefits to the area rather than the cost per student or the largest school.
The committee concluded the discussion by talking about the population base that attends community colleges in rural regions of Colorado.
03:24 PM -- Public Testimony
Mr. Frank Wallace, Bent County Commissioner, briefly commented on the difficulties that school boards have when hiring qualified teachers. Mr. Wallace said that only 21 percent of graduating seniors in Colorado are able to become employed in a job or higher education without additional remedial education. Mr. Wallace closed his presentation by mentioning that the education system needs to pay its teachers more money.
The committee did not make any bill requests.
03:33 PM
Adjourn.