LUFKIN, TX (KTRE) - A bank representing a group of investors which financed a Lufkin biomass power plant is now looking to foreclose on it.
The U.S. Bank National Association, representing the Angelina Neches River Authority as a trustee, is seeking millions from Aspen. According to a document filed on May 9 in Judge Barry Bryan's 217th District Court, U.S. Bank notified Aspen Power of the $9.3 million owed in bonds.
In 2007, the Angelina and Neches River Authority Industrial Development Corp. issued $53.3 million worth of revenue bonds to the company for the purpose of building the biomass plant in Lufkin under a loan agreement. The U.S. Bank serves as the trustee for the holder of the bonds that Aspen Power is required to repay monthly payments of one-sixth of the interest due. According to the notice filed last week, Aspen Power had not made payments since February 2012.
Aspen Power is now in default on its obligations to the trustee under the agreement of paying back the loan for revenue bonds.
"They had several problems on start up and their hopes were that during the summer months when you have a peak demand that the electricity price would increase, and that they would be able to produce for a few months at a higher rate," Lufkin Deputy City Manager Keith Wright said.
According to the document filed, Aspen Power has not paid property taxes to Angelina County. Angelina County, the trustee, and 20 other defendants have lien rights to the Aspen Power Project. Due to Aspen's default on its obligations to the trustee, the defendant is entitled to foreclose proceedings against the company.
"We were aware that Aspen was financially having some problems; and no, we were not surprised that it is being foreclosed on," Wright said.
Company president Danny Vines worked six years to power up the first renewable biomass plant in the state. Aspen Power opened in August 2011 and closed in February 2012. During an interview with KTRE after the plant closed for the first time Vines said eight other plants nationwide were facing the same problems of low demand for electricity. During that time the city of Lufkin had invested $250,000 worth of improvements into the project.
"When it opened we were excited about it. We thought it would be a good opportunity for Lufkin and East Texas because we have a lot of biowaste, and that sounded like a win, win for the community to do something that was green," Wright said. "Unfortunately it did not work out. It's just economics and that's what caught up with them."
Documents show U.S. Bank requesting an order directing the sale of the power plant, with the proceeds going to the bank.
An attorney with U.S. Bank was not immediately available for comment. A call to Vines also was not returned.
City councilmen Robert Shankle and Victor Travis said they have not spoken with Vines in months.
"It depends on what happens during the foreclosure procedures if somebody takes over the plant. It would be a viable operation if someone had the funding to do that," Wright said. "I think that there's an opportunity there. I'd hate to see the plant scrapped. Our hopes would be that somebody with the financial ability would bring the plant back into production."