State mining board issues reimbursements

HURLEY — Members of the Wisconsin Investment and Local Impact Fund Board met Friday to discuss four applications for reimbursement of costs incurred by communities related to Gogebic Taconite’s failed development of a mine site near Upson, awarding $203,611 in funds.

The towns of Anderson and Morse, as well as Iron and Ashland counties, applied for funds from the board for a number of costs relating to everything from legal fees and developing ordinances to environmental consulting and water testing.

To ensure some money would remain for future grants, the board agreed to not reimburse per diem costs for any applicants.

Board members also agreed to reduce the amount Iron County receives by $50,000 because of the fact the county received $50,000 from G-Tac prior to the project’s halt for two lease option payments and a bulk sampling fee.

The board, meeting at the Iron County Courthouse, also rejected the town of Morse’s (in Ashland County) request for $8,000 in discretionary grant funding to continue ongoing water monitoring project for another two years.

Jeff Ehrhardt, who chaired Morse’s mining impact and joint impact committees, explained that five years of data was needed for the results to be accepted as valid and the town had only been performing the tests for three years.

Board members were sympathetic to Ehrhardt’s argument, but asked him to explore alternative funding options and clarify how long the results would be treated as viable if the full five years of study was completed.

The town of Anderson (Upson) asked for $55,475 and received it in the form of $38,834 in “notice of intent” funds and $16,641 in discretionary grants.

The town of Morse received the requested $15,275 in “notice of intent” funds and no discretionary grant funding — as the only request for grant funding was the rejected $8,000.

Ashland County asked for $19,435 and received $12,690 in “notice of intent” funding and $3,295 in discretionary grants — everything the county asked for except $3,450 in per diem costs.

Iron County requested $172,891 and received $8,201 in “notice of intent” funding and $108,675 in discretionary grant funding — the requested amount minus the $50,000 already received from G-Tac and $14,216 in per diem costs.

Prior to a discussion on requests for reimbursement, the board declined a written request by G-Tac for reimbursement of the $75,000 “notice of intent” payment the company made.

“They said they had not entered into negotiations with the local units of government yet,” said Wisconsin Department of Revenue Chief Legal Counsel Dana Erlandsen, who was one of several people attending the meeting via teleconference. “And since they had not started, they should be refunded the money.”

Erlandsen told the board state law gave no express authority for the board to authorize the reimbursement to G-Tac.

On top of the lack of clear authority to act, several board members also argued there had been negotiations and attempts had been made to involve G-Tac in the discussions.

“I guess I would argue that I believe the towns and counties that are asking for reimbursement have, in fact, spent monies to ready themselves to negotiate. And although we did not sit down at the table with a formal ‘we are now hammering out a local agreement,’ I believe that monies have been spent and I believe ... in final analysis — as we go through these applications — we’re going to see monies were spent to ready ourselves to enter a good-faith negotiation, so I don’t believe we should return the money,” said Robert Walesewicz.

Vice-chair Leslie Kolesar seconded Walesewicz’s point, saying that Iron County, if not the other communities, had documentation it tried to include G-Tac in the preliminary efforts.

G-Tac announced it was closing its Hurley office on Feb. 27, bringing a halt to the development of the Upson mine site.

Given the board’s decision to reject G-Tac’s request, the board had two avenues to reimburse the communities — the $75,000 in “notice of intent” funds and the $205,000 in discretionary grants available to the board.

Representatives from each of the four municipalities requesting funds gave a brief summation of their requests and detailed what the costs included and why they should receive reimbursement.

Katie Posewitz, an attorney with Fauerbach, Martell and Posewitz, representing the town of Anderson, argued the town of 60 adult residents simply did not have the tax base to handle the legal fees incurred between Nov. 15, 2011, and June 9, 2015.

“The entire annual budget for the town is $176,000, so these attorney fees were a substantial cost to the town and a cost they would not have incurred if it was not for the proposed mine,” Posewitz said.

Once the board heard from all the members, it set about discussing the best way to distribute the available funds.

The board agreed to try and keep about $80,000 in discretionary grant funding available for future projects.

The discretionary funding is generated through the state’s net proceeds tax, Kolesar told the Daily Globe, and is left over from past mining projects in the state.

Morse can — and based on the discussion surrounding the decision, likely will — appeal the board’s rejection. If the additional information the board requested is presented at the appeal, the consensus seemed to be the decision to reject the additional $8,000 expenditure would likely be reversed.

With the decision to reject these portions of the reimbursement applications, the board approved the remaining requests.

The municipalities should receive the reimbursement payments in the next month or so, according to information at the meeting.

Kolesar and David Pajula abstained from the votes dealing with Iron County’s reimbursements.