Blue Array looking to Vader for financing after alternatives fall through

After a series of unsuccessful attempts to acquire other local cities as clients, wastewater treatment company Blue Array is looking to Vader for financial stability in the order of $14,000 per month, including back payments for services rendered since July.

The startup company has been testing their portable wastewater treatment system in Vader for the last year, with Blue Array claiming their system would be a significantly cheaper alternative to replacing Vader’s aging lagoon plant with a more conventional multi-million dollar oxidation ditch.

City officials have been largely supportive of the company’s efforts, as other options could send sewer rates into triple digits. But they did not respond with great enthusiasm to Blue Array’s request for payment, as a current memorandum of understanding between Vader and Blue Array states the pilot program is not a paid endeavor, and because continued payments of $14,000 per month (which would cover the costs of maintaining the Blue Array system on top of Vader’s system) would require the city to raise sewer rates to around $124 per month, unless alternative funding sources became available.

Blue Array CEO and co-owner James Reilly has said a $14,000 per month charge is fair when considering the services Blue Array has provided Vader, as far as using their plant as a pre-treatment system to bring Vader’s lagoons into compliance with state standards. He also said it would signify in the eyes of investors that municipalities are willing to pay fairly for Blue Array’s technology, though the company has been unable to secure a financial backer since parting ways with Longview-based JH Kelley in July.

With the company’s funds dwindling, it was stated by Mayor Ken Smith Nov. 26 Blue Array was expected to be late on their electric bill by Dec. 1 and their plant would lose power at that time. But Reilly indicated this would not put an end to Blue Array’s pilot program, stating the water in Vader’s lagoons is so clean due to their technology it does not need to be treated regularly to conform with state standards.

Vader had previously proposed an offer of $8,000 per month in response to Blue Array’s initial request for payment Sept. 3, and it was reported Sept. 17 Blue Array had accepted these terms, with the caveat of Vader acquiring a $200,000 grant from the Lewis County .09 Funding Board. (Vader Mayor Ken Smith has since reported the funding was not approved as it did not meet board criteria.)

When asked in an email on Friday if Blue Array would consider the terms of their present invoice negotiable, Reilly did not respond directly, but said it was never agreed Blue Array would render services for free.

Reilly had also told this reporter during an Aug. 7 interview, if Vader declined to pay for services rendered, Blue Array would politely accept their terms and then likely move to California to seek investors in Silicon Valley. However, when asked if he recalled making such a statement, Reilly replied, "That was not what I ever said," and insisted only the sewer system itself is being offered for free, not the services.

No action has been taken by the council to approve or deny Blue Array’s request for funding, with Smith stating negotiations are currently taking place between Vader’s Attorney Joe Rehberger and Blue Array’s recently-acquired legal counsel Greg Lutje, out of Portland.

When asked if Vader would be required to seek a conventional sewer plant option if they could not come to terms with Blue Array, Smith confirmed the city would likely pursue an oxidation ditch upgrade as it originally had been doing until 2012 when Blue Array’s technology was introduced as an option. The last estimate for an oxidation ditch from engineering firm Gray & Osborne was around $6.6 million, submitted in 2012.