Iron County board OKs changes to G-Tac lease option

HURLEY - After two failed motions to postpone action, the Iron County Board of Supervisors voted 8-7 to approve the proposed amendments to mining company Gogebic Taconite's lease option for its proposed mine site near Upson.

According to documents provided to the press, the approved amendment would change two sections of the company's option, which allows the company to maintain the lease of the property until the actual lease goes into effect, county Clerk Michael Saari explained after the meeting. The terms of the lease are unchanged by the amendments.

The amendment alters wording in the option so instead of G-Tac paying $20,000 to retain their option on the land for 2015 and 2016, G-Tac will avoid paying anything this year and pay the county $30,000 in 2016 to maintain the option for three years, in effect retroactively paying the county at the established rate of $10,000 per year.

The changes to the option became necessary after the company informed county chairman Joe Pinardi that they would not be able to make the $20,000 lease payment by the Jan. 26 deadline.

"They called me down to the office and said headquarters told them not spend any more money so 'what do we do now?' ... I went down there, with the proposal of $10,000 per year - $10,000 this year and $10,000 next year. There is your $20,000 right back at us. They emailed Florida through to headquarters and Florida rejected our offer. They came back with a counter offer of skipping one year, giving us $30,000 in 2016 covering '15, '16 and '17," Pinardi explained to the gathered press after Tuesday's vote. "We're not really out any amount, at that time. If they come up with the $30,000 next January, we'd be right back to square one where we should be."

The amendment states that all other terms and conditions specified in the option remain unchanged.

Pinardi explained his decision was based, in part, on the idea that developing a mine is a long term project and foregoing $10,000 in the short term was beneficial if it brought in significantly more in the future.

"If G-Tac stays on board and still proceeds with the mining like they say they are going to ... it's going to probably be six years from now before this option expires and when they actually have to engage in a lease option. At that time, if we denied (the amendments) right now, we'd be out the $60,000 that we would have collected (from) the $10,000 a year," Pinardi said.

One of the criticisms of the deal was the possibility that G-Tac could withdraw from the deal without penalty before the 2016 payment is due.

Pinardi added that the lack of other companies interested in the land limited his options, saying that G-Tac says they want to mine in the county so he has to act accordingly.

"They're the only people knocking on our door, I can't just argue with them and call them a liar," Pinardi said. "If I had other people knocking on the door ... maybe General Motors wants to come up and build Silverados, that'd be pretty good."

Supervisors Pinardi, Jack Prospero, William Thomas, Mitch Koski, George Nasi, Scott Erickson, Thomas Thompson and James Kichak voted in favor of approving the amendment. Supervisors Paul Mullard, Larry Youngs, John Smith, Karl Krall, Victor Ouimette, Opal Roberts and Brad Matson voted against the measure.

The board's vote ratified Pinardi's acceptance of the new terms, which he had initially agreed to prior to the Jan. 26 deadline.

Prior to the successful adoption, two motions by Ouimette to postpone action on the amendment failed. The first would have postponed acting indefinitely while the second would have postponed action for a maximum of six months. The first failed by a vote of 3-12 and the second was voted down 5-10. Roberts and Smith switched their votes after the first motion, joining Mullard, Ouimette and Mason in the failed second attempt to postpone action.

Ouimette, who made both motions to postpone action, expressed reservation that the original agreement had been entered into too quickly and the county had given too much to G-Tac, a problem he wanted to resolve once the decision was postponed.

"The original option to lease that came before the county board was done with very little notice and almost every supervisor on the county that I talked to at the time, when I was campaigning here a year ago, said they had not read it, didn't understand it and if they would have they probably would not have voted for it," Ouimette said.

Calling G-Tac's decision to not renew the lease a conscious and deliberate decision rather than an oversight or accident, Ouimette argued that it gave the county the time to deliberate and ensure the interests of residents are protected.

"I think we need a lease but it needs to be a lease that protects Iron County," he said.

Several supervisors expressed a willingness to delay action but were unwilling to agree to Ouimette's decision to postpone it indefinitely rather than a set timeframe. Ouimette explained that he included the language so that it could be brought up at anytime rather than force a timeline onto the county.

In light of the other supervisors' comments, Ouimette set a six-month limit on deliberations for his second motion.

During the debate prior to the vote on the second motion, several supervisors made clear that they wanted to give G-Tac enough time to find a way to profitably mine the site rather than drive the company away.

"I want to give (G-Tac) enough time to see if they can mine it or not, right now they can't mine it. The six months is not enough, they got to have at least a year because of the water thing, they have to do a water sample. I'm not sticking up for them but I just want them, at the end of the year ... to be able to say, yes or no," said Youngs. "You've got to give them a chance, at least a year."

One of the problems that G-Tac has encountered with the site that was referred to throughout the debate was more of the site was wetlands than originally expected, which legally the company must avoid impacting. To counter this development, G-Tac has changed the design of its mine from one with two large pits to four smaller pits, reducing the environmental footprint of the site.

Ouimette expressed regret at the vote after the meeting, although he also said he was pleased to see other supervisors joining him in expressing hesitancy toward the agreement with G-Tac.

"I was very pleased that at least a large number of supervisors felt that we should take a different look at this. Any time time you lose a vote, you're disappointed but actually I'm very pleased that at least other supervisors are starting to ask some questions and look at some other options," he said.

The county has already received $40,000 from G-Tac for the land since the original option agreement was signed in 2011.