Dover-Foxcroft, Maine

 

What is wrong with the Mayo Mill Dam and what needs to be done about it?

There are two separate issues with the dam, both of which must be fully addressed at the same time. The first issue is the dam has a number of safety violations that have been identified by FERC, the Federal agency that governs our dam. Failure to address the repairs opens the town to the potential of very large fines and/or financial liability in the event of a failure. The dam cannot be retained without the safety issues being resolved.

The second issue is the Town is legally required to “surrender” (this is an official term) the dam’s current license if there is no plan to have it generate electricity. The dam has not produced electricity for many years, and it has been determined that re-establishing power production is not financially viable. Therefore, the Town has no option but to start the very long, complicated, and expensive process of surrendering the license regardless of the dam being repaired or removed.

What is FERC and why do they have any control over what the Town does with the Mayo Mill Dam?

FERC is the Federal Energy Regulatory Commission. The Mayo Mill Dam currently holds a form of a license called an “Exemption” issued by FERC. The Exemption permits the Mayo Mill Dam to generate up to 3 MW of hydroelectric power. The Exemption also requires the dam meet the same safety and environmental regulations as a dam that does not produce hydroelectric power.

The dam used to produce power, so why is it not possible to restart power production and avoid having to Surrender the Exemption license?

This specific issue was examined in detail by both the prior and current dam review committees. It was also explored over many years by the owners of the Mayo Mill and at least one local hydropower company. The Town attempted to find other parties interested in producing power and found none interested in doing so. Several engineering studies, including one commissioned by the Town last year, showed the reason for the lack of interest; it is not economically viable. It was also determined to be the most expensive option for retaining the dam, therefore the current Dam Review Committee ruled out restoring hydropower.

Why can’t the town just address the safety violations and be done with this?

All dams are subject to various Federal and State regulations; however, the Mayo Mill Dam has the additional regulatory burden that comes from being licensed to produce hydropower by FERC. If the Town were to restart hydro power, it would have to address the FERC safety requirements as well as the expenses of restoring hydro power. Because restarting hydro power makes no financial sense, FERC requires the Town to Surrender its license. That changes everything.

Part of the Surrender process allows a dozen or more governmental and non-governmental “stakeholders” to proposal various improvements/changes to the Mayo Mill Dam beyond the existing FERC safety violations. It would be foolish to move ahead with repairs without knowing if they are the correct ones because if they aren’t then the Town would have to pay to redo work it already paid to do. Since making the repairs now doesn’t do anything to avoid the Surrender process, there’s absolutely no sensible reason to do the repairs until the Surrender process has run its course. 

The FERC safety report lists the overall “Hazard Potential” as rated “Low”. Does that mean the dam is not at significant risk of failure?

No, the rating in the FERC safety report has nothing to do with the risk of dam failure. Instead, the Hazard Potential, as defined by FEMA (publication FEMA P-333) and used by FERC, represents the potential risk of the loss of life and/or property if the dam should fail or be improperly operated. The classification is used to prioritize dams for attention by safety regulators. The LOW rating is perhaps one reason why FERC has not been more forceful in having the Town address the various safety issues.

The Town already voted to keep the dam. Why are we voting again, and why is removing the dam still an option?

The language on the ballot in 2024 stated that repairing and retaining the dam would cost taxpayers and estimated $7-8 million. However, it did not authorize the Town to raise and appropriate that money. Legally, the Town must give citizens the opportunity, through a vote, to give a YES or NO to all spending. The arrival of the deadline to satisfy FERC requirements leaves the Town with two options: a YES vote to borrow the money needed to repair and retain the dam or vote NO and remove it. Coming out of the June vote with any uncertainty about the next steps would not change the options other than to make them more expensive.

The Town’s website states the current Dam Review Committee’s purpose is "To present to the town a plan, including costs and funding sources, for keeping the dam and impoundment (with or without power generation)”. Why then is the Dam Review Committee talking about the option to remove the dam?  That seems to be a contradiction.

Over the many months of meetings and study the Dam Review Committee did not discuss or explore removing the Mayo Mill Dam in any meaningful way. Because all meetings and discussions were held in public this can be proven as fact. However, after presenting its final report to the Dover-Foxcroft Select Board there was a need to develop the logic and wording for a Warrant Article on this June’s ballot to secure funding for the repairs. The Select Board tasked the Dam Review Committee with this as they have the necessary experience. 

The founding principles of democracy and the State of Maine requires two clearly spelled out YES and NO responses, therefore the 2025 Article has two options with their associated costs just as the 2024 Article had. Since the Committee is charged with finding a way to repair of the dam, and that in turn requires taxpayer funds, helping develop the method to fund the necessary repairs is obviously consistent with its mission statement.

The Town is asking for the “authority to borrow” money to pay for dam related expenses.  Does that mean borrowing the whole amount at once?

No. The Town needs a line of credit which is large enough to pay for all expected dam expenses. Like a personal credit card, there’s no obligation to use it unless there is a bill to pay. In fact, because interest is paid on whatever is borrowed there’s every incentive to not use the line of credit until it is necessary.

Article 10 states that a NO vote means removing the dam and the estimated cost of that work is $0 to the taxpayers. How certain is this $0 figure?

The amounts for NO ($0) and YES ($14mllion) are the best possible estimates for keeping or removing the dam. However, until the work is contracted for there is a degree of uncertainty with the costs of either option. Any additional costs, should they become necessary, will require voter approval.

One thing to keep in mind is that the partnership proposing a $0 cost removal has a track record of delivering on their promises. On the other hand, the best-case costs for repairing, operating, and maintaining the dam are certain to be higher than even a worst-case scenario for dam removal. Therefore, it is fair to expect a NO vote will have a $0 impact on local property taxes and a YES vote a $14 million impact.

Is it true that a local contractor submitted a firm fixed price proposal to repair the dam at a cost less than the $9 Million being asked for on the ballot in June?

Yes and no. It is true that an excellent, well qualified local contractor has voluntarily stepped forward to offer the Town a firm fixed priced estimate of $8 million ($7 million for their work, $1 million for possible related work). However, this price presumes only minimal repairs to the current fish ladder. If that turns out not to be the case, many millions could be added to the project’s total cost.

Another factor is the quote has an expiration date that is likely to arrive prior to the project being completed, perhaps even started. Therefore, some amount of inflation adjustment needs to be budgeted for.

In the end the Dam Review Committee recognized there are serious complications that come from asking the Town for less borrowing authority than is needed, therefore it went ahead with the $9 million recommendation (plus financing) instead of the contractor’s suggested $8 million.

Why is the Town asking to borrow all the money at once if it’s going to take many years to complete the work?  Why not ask to borrow money when it is known to be needed?

There are three reasons why the Town is asking for the authority to borrow the full anticipated amount in one vote. The first is transparency with the citizens of Dover-Foxcroft as to what they are committing themselves to by voting YES. Second, the Town cannot sign legally binding contracts for repair work unless it knows it can pay for it. Third, it is probable that FERC will not approve the surrender plan if it does not contain any assurances that the Town can execute it.

If Article 10 (funding the dam) passes and the repairs come in under budget, what happens to the extra money?

There will never be any extra money. The Article being voted on authorizes the Town to borrow money to pay the bills associated with dam repairs. If the bills add up to less than the expected $9 million, then the remaining portion of the line of credit won’t be used because the Town is not allowed to use it for any other purpose.

I heard there is no actual cost to surrender the FERC license, so why is the Town asking for between $250,000 and $500,000 for doing that?

The cost of surrendering a FREC license comes from the work necessary to gain approval, not from the application itself. This is like securing a license to practice law in Maine. The bar exam is only $600, but the cost of the law degree needed to pass the exam averages about $200,000. Therefore, if you want to know how much it costs to become a lawyer there’s more to look at than just the cost of the bar exam. The same is true for surrendering the FERC license for our dam.

For FERC to accept our application we must submit a “surrender plan” that meets with the approval of a variety of government agencies (state and federal) and other “stakeholders”. We have been advised by people familiar with the process that we can expect to spend at least $500,000 and 1-2 years on the process. By way of comparison, a local hydroelectric dam operator recently informed us they spent $1.2 million and nearly 3 years to complete a FERC relicense of one dam. The surrender process is likely less intensive than a relicense, which is why we’re only budgeting $500,000.

Who will receive the money that is in Article 9?

The money will go to outside project management experts with direct experience with the FERC Surrender process. Fortunately, since FERC is a Federal agency, we are not limited to selecting a project management consultant within Maine or even New England. This should provide the Town with a healthy competitive bidding process and the best fit for our needs.

A smaller portion of the funding may be used to cover directly related expenses to the Town for such things as legal expenses, public hearings, special town meetings, etc. These are expenses that are not otherwise budgeted for in the 2025/2026 municipal budget.

It sounds like the Dam Review Committee has gone with a “worst case scenario” for the YES vote on Article 10 and a “best case scenario” for a NO vote. That seems to be misleading.

This is not the case.  People should be presented with an apples-to-apples choice, not apples-to-oranges. While there is an unavoidable degree of uncertainty about the costs, the financial estimates for both of Article 10’s options are fair representations of the “most likely case” for each. In fact, there is more room to argue that the figure in the YES vote is more optimistic than the figure in the NO vote.

Does a YES vote cover the full costs of the dam going forward?

No. The Article is purely for the repairs of the dam as required by FERC in the approved Surrender Plan. It does not include ongoing maintenance, short term contingency repair funds, or eventual major repairs like the ones required today.

The Mayo Mill building has benefited from a TIF (Tax Increment Financing). Why don’t they help pay for the dam repairs?

A TIF (Tax Increment Financing) is a tool that towns use to incentivize a private enterprise to undertake capital-intensive improvements by phasing in over time the taxes on those improvements. The owners of the Mayo Mill used this incentive to help it finance the transformation of the building complex from a town liability into a town asset. The dam was not a part of the arrangement because it has always been owned by the Town.

What may confuse people is the owners of Mayo Mill voluntarily pursued restoring power to the dam, which would have included the repairs. They were under no obligation to do this. After spending a considerable amount of their own money, they came to the reasonable conclusion that it was not economically feasible. That set in motion the events that have lead us to the vote in June.

What is the timeline for repairing the dam?

The exact time cannot be determined at this point; however, some estimates are possible by looking at similar projects. It is expected to take 1-2 years to complete the FERC surrender process and at least 1-2 years before significant work can be started. The length of time to complete the project once started is probably not less than 2 years, possibly more if unanticipated complications are encountered. All told, it is reasonable to assume that repairs may take at least 5 years to complete once the funding authorization is approved by voters.

What deadline is the Town facing regarding repairs on the Mayo Mill Dam?

FERC had given the Town until June 30, 2025 to submit a plan on the Town will respond to outstanding safety issues with the Mayo Mill Dam. The Town has requested an extension and is awaiting a response.