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Dakota County buys out Goodhue's stake in Byllesby Dam for $1

The Goodhue County Board moved Thursday to sell its 40 percent stake in the Byllesby Dam to Dakota County. Their asking price: one dollar.

The county is virtually giving its share away to avoid paying for substantial safety upgrades ordered by federal officials. Those could have cost the county millions of dollars over the next few years.

"I think we're dodging a real bullet here," Commissioner Ron Allen said during the board's meeting at the county fairgrounds.

The Dakota County Board voted in favor of the purchase agreement on Tuesday. Under the agreement, Dakota County would take full ownership of the dam.

The agreement should be finalized in two weeks, according to Goodhue County officials.

Under the terms of the sale, Goodhue County will transfer all rights to the dam to Dakota County, including any revenues and costs of operations. Goodhue County will continue to maintain emergency sirens downstream on the Cannon River.

The sale comes amid pending litigation with the dam's previous tenant and operator, North American Hydro Holdings Inc.

Both counties have charged that the company owes up to $400,000 in unpaid rent, penalties and interest accrued since 2001.

Goodhue County will no longer be directly involved in that litigation under the agreement. Any settlement awarded would go to Dakota County. Should the settlement go the other way, Goodhue County would still be liable for 40 percent of any cost in excess of the escrow fund created for that purpose, though County Attorney Stephen Betcher doesn't anticipate that the county will have to dole out any additional funds.

Officials have lauded the sale as a win-win for both counties, with Goodhue County officials eager to rid themselves of the liability associated with the dam, and Dakota County officials looking to it as a long-term investment.

Dakota County Administrator Brandt Richardson said the county's size -- it's the third most heavily populated county in the state -- gives it the financial ability to take a "longer view" of the costs and potential revenues of the upgrades ordered by federal regulators.

"We are in a better position to finance those upgrades," he said.

Substantial upgrades also would enhance the dam's value should the county ever choose to sell it to a private party, he said.

"I don't believe that the dam could be sold before it is improved," he said.

Goodhue County Commissioner Ted Seifert said Thursday that his vote to sell the dam came out of an eagerness to rid the county of what he sees as an unnecessary financial burden.

"I'm glad to be out of the electricity business," he said.

Betcher said that he doesn't doubt that the dam could generate revenues for the county in the future, but that the investment required for upgrades would be too much for the county to bear in its current financial situation.

"It's a short-term expense with a very long-term return and that's a hard thing to cash flow in Goodhue County right now," he said.