Clinton City Council authorizes SRF planning and HDR design work for RWRF biogas project

At its Feb. 25, 2025 meeting the Clinton City Council rescinded a prior authorization and approved a resolution to submit a State Revolving Fund (SRF) planning and design loan application and to authorize HDR Engineering Inc. to begin planning and design work for a proposed biogas (renewable natural gas) facility at the city’s Regional Water Reclamation Facility (RWRF).

Council members also directed staff to bring detailed cost estimates and rate scenarios to the finance committee before the council moves forward with construction financing decisions.

The action rescinded Resolution No. 2025-086, then adopted a new resolution authorizing commencement of planning and design work by HDR and authorizing submission of an SRF planning and design loan application. The council approved a planning-design budget of $1,884,000 for HDR’s work; council members discussed that planning work would feed into a later SRF construction loan the city anticipates could be up to $25,000,000, depending on the final design and grant/tax-credit availability.

City staff described the project as a step to capture methane now being flared at the RWRF and to produce renewable natural gas that could be injected into a nearby pipeline. Staff said the project would focus initially on material delivered by ADM, which is expected to send about 8,100,000 gallons of industrial wastewater to the plant; the design will also examine whether other industrial flows from the rail park could be incorporated.

The council’s discussion focused on three practical concerns: the scope and cost of the planning/design contract; who would market and manage the renewable natural gas and federal renewable identification numbers (RINs) revenue; and whether federal tax credits that significantly affect project economics will be available when the project is complete. Staff said the SRF planning/design phase is zero-percent interest during design and would establish costs and a construction estimate. If the city later elects not to build the biogas facility, staff said the planning-design cost would be rolled into industrial rates rather than residential rates.

Council members and staff reviewed tentative timelines and rate impacts presented during the meeting. Staff said ADM’s flow would begin arriving this summer and would be ramped up; an on-site methane flare could be active this fall, and the earliest optimistic date for the project to be producing steady biogas was described as around October–November, subject to commissioning and “bugs” (biological process) performance. Staff said HDR’s planning/design work was expected to advance to roughly 30–60% and possibly toward 90% design under the planning budget.

On cost and rate scenarios, staff presented two illustrative examples discussed in the meeting: a planning/design cost of $1,884,000 would increase the industrial rate by roughly four cents per unit, changing an example industrial rate cited in the discussion from about $3.45 to $3.49 per unit. A larger construction borrowing scenario (using $25,000,000 as a planning ceiling) produced a much larger per-unit impact in the staff model — on the order of about $0.81 per unit in the city’s scenario — underscoring that the financial feasibility depends on construction cost, available federal tax credits, and contractual arrangements for revenue from RINs and gas sales.

Several council members voiced caution about committing to construction before plant flows and ADM’s operational profile were fully verified. One member said they were “a little leery” of moving forward before more certainty on ADM’s flow and federal tax-credit availability; others urged proceeding with planning to avoid continued methane flaring. Staff said they and outside counsel would investigate qualification for federal tax credits and that securing any available credits would materially affect the project’s return on investment and the city’s ability to lower the SRF borrowing burden.

Staff described next steps: HDR will begin the planning and design work; staff will bring detailed numbers, an itemized budget, and rate scenarios to the finance committee for review; the council will consider a future SRF construction loan ordinance or resolution once design and revenue assumptions are better defined; and staff will seek clarification from federal and legal advisors about the availability and timing of tax credits and how they could be applied to SRF financing.

Votes at the meeting showed council approval of the planning/design SRF resolution after rescinding the earlier authorization. The council also approved a separate motion appointing Taylor Kleppe as RWRF director earlier in the meeting; Kleppe was described during discussion as already working at the plant while the city completes hiring paperwork.