A LITTLE DAM KNOWLEDGE

The History of the Ada Dam:
Why You Own it, and What it Means to You

You may not be the first kid on your block to own a dam, but owning one makes you a member of a very select minority. Yes, the Ada Dam belongs to you and about 230 of your neighbors who own riverfront property between the Ada Dam and the Cascade Dam, which is owned by the township. This is a short history of your dam and of the association that made you an owner.

Chances are, especially if you're new to the area, you may not even know how we bought the dam for a dollar! You may not know that we lease it to professional operators; that it creates about $76,000 in association income annually; or that we have a treasury of some $772,000. It will answer questions about what uses are appropriate for these funds, the responsibilities and liabilities we face as owners, and why giving the money back to ourselves is not as easy at it sounds.

A River is Born!

Prior to the dam's construction in 1926, the Thornapple River, as we know it today, was little more than a creek flowing through a meadowland that was populated by many trees. At Oliver Woods (west of Island No. 1) it flowed along the extreme west edge of what is now the river and then turned eastward as it flowed north. Along the east shore here is what boaters and skiers know today as the deeper channel.

When the Power Company proposed damming the stream in the mid 1920's, they first had to purchase flood rights from the owners. Frank VanDeven owned one of the largest parcels, which included most of what is today Cascade Springs Drive, and this land stretched north almost to the present site of what is now the Camelback Bridge. The Power Company, in order to salvage the timber growing in the area, erected a sawmill, but found it easier to fell the trees at waist height rather than ground level. Dangerous stumps were left to plague us for years, and these were once marked with buoys. Most have since been removed by your Association during annual drawdowns.

VanDeven, however, secured enough fallen trees to erect a log cabin for his daughter, Frances, and her husband, Oliver Wallace--a home that still stands on a bluff overlooking the river to the West. It was later occupied by another daughter, Dorothy, and her husband, Les Craig, who died in '98; after which it was sold to Rob and Mary Buchanan. Its location is identified under that name on the map.

Buy the Dam ... or Else

The dam was built in 1926 by the Water Power Company and was owned by the Lower Peninsular Power Company. They sold it in 1934 to Consumers Power, who had been purchasing the dam's entire output since 1927. During the late 1950's, many of the generating facilities like ours were becoming less economical to operate. There were growing rumors that Consumers was considering disposing of several such dams, including our sister dam in Cascade.

Given this possibility, it was not difficult to imagine the impact on surrounding property values, threatened at best by an unmonitored and ever-changing water level, or worse yet, the dismantling of the entire dam. It was this threat that prompted founding of the Thornapple Association, Inc., chartered as a Non-Profit Corporation in September 1961.

Actually Consumers continued to operate the dam until December 30, 1968, after which the turbines and generators were removed. They offered to sell the dam to the association for one dollar, and the sale was closed on April 1, 1969. (Rumor has it that Dan Wallace, who was incidentally VanDeven's grandson, funded the purchase from his pocket change and has henceforth refused reimbursement so he can secretly tell his grandchildren: "It's really my dam.")

Is There A Dam Doctor in the House?

Having taken ownership of the dam, the board was now faced with the daunting challenge of running it, and the closest thing to an operating manual was a "Good luck!" from Consumers Power. (What do you expect for a buck?) Bud Somerville, who was president of the Association at the time, called a number of emergency board meetings. Story has it that he dangled the power house keys before the assembled board and said, "Someone please unlock the door and do something before that damn dam malfunctions."

Enter Ed Jackoboice, newly elected board member, whose family owned a prominent hydraulics firm. Admitting his knowledge of hydraulics, but professing not the slightest knowledge of dams, he accepted the challenge on three conditions: (1) that he is given the power of a dictator, (2) a blank check, and (3) no phone calls.

Without any automatic controls, the wicket gates that regulate the water level were literally controlled with a screwdriver, but during periods of heavy rain, it was necessary to open the floodgates by means of a hydraulic winch. Ed employed the part-time help of a County Drain Commission employee, named John DeBoer, who would visit the dam three times a day; and between the two of them they manually regulated the water level during the early 70's.

After a couple of malfunctions that caused flooding over several lawns and Thornapple River Drive, Ed Jackoboice purchased from Minneapolis Honeywell a $50,000 computerized controlling device that would electronically regulate our water level within plus or minus half an inch. Where did the money come from? He had the Drain Commission create a special tax assessment district that annually taxed all of the beneficial property owners. The amount of the county's assessment was determined annually, based on Ed's personal estimate of the funds he'd require for the coming year and periodic inspections by the drain commission.

New Life for an Old Dam?

As the cost of energy escalated in the 70's, the federal government began to encourage the refitting of many of the old dam sites that had been abandoned or sold in the 60's. In fact they invited owners of facilities like ours to apply for a feasibility study grant, which we did. We engaged the services of an Ann Arbor engineering firm, whose study confirmed the economic feasibility of re-electrifying the dam, even despite the projected equipment cost of well over a million dollars.

This raised the challenge of finding an appropriate firm, or firms, to finance, engineer, and finally to operate the newly refitted dam. Perhaps no one was more instrumental in meeting this challenge than former resident and long-time board member John Donnelly, whose financial savvy and tireless efforts were indispensable during this critical period.

After contacting no fewer than 20 candidates, we finally negotiated with STS Hydropower, a Northbrook, Illinois firm, whose primary activity is the development and operation of hydroelectric facilities such as ours. They would not only engineer and fund the refitting of the dam, but also would lease the facility from us and manage its entire operation over the 10-year span of the agreement. The initial lease agreement took effect on November 1, 1983, and, following amendments in 1988 and 1989, expired March 31, 1994. Your board has since renegotiated a new lease with STS for an additional term ending March 31, 2018. In their operation of our dam, it is their responsibility to maintain our correct water level. And thereon hangs another tale.

The River Level: Historic or Legal?

Our headwater elevation (as it's called) was mandated at 635.8 feet above sea level by a Circuit Court order dated November 7, 1968. But Ed Jackoboice had apparently been controlling it according to a marker that was only 635.5 feet, or nearly four inches lower--a difference critical to many boaters who would have difficulty clearing the Camelback Bridge at the higher level. (It is widely alleged that Ed knew it all along.) In 1990 correspondence with the Federal Energy Regulatory Commission, we confirmed our desire to continue operating at the historic, rather than the "legal" lake level, i.e. 635.5 feet.

Where Does the Money Come From?

Under the terms of our present agreement, STS leases our facility for an annual payment of $76,000 a year. This payment is subject to increase based on existing power rates, but it cannot be reduced below $76,000. The prior lease stipulated an annual payment of $15,000 to an escrow account to satisfy a possible DNR demand for a fish ladder, but the fund is now sufficient to obviate the need for further payments.

The dam is nominally projected to generate 5.5 million kilowatt hours per year, and Consumers Power has contracted to purchase its entire output from STS. Although our association's income is fixed by agreement, our operator's income and profits can vary substantially, based on such factors as weather and downtime for repairs and maintenance.

Where Does the Money Go?

Our funds are conservatively invested by the treasurer and a financial audit committee, and our Net Worth as of the end of our last fiscal year (9/30/98) showed a balance of approximately $772,000. Since our primary corporate mission is "to preserve the beauty of the Thornapple River and maintain it as a pleasant area for living and recreation", we have over the years spent money to remove hazardous tree stumps in the river, remove fallen or falling trees that might obstruct navigation, stock the river with fish periodically, conduct boating safety programs, and to subsidize social events aimed at promoting fellowship among the association. We encourage and are always alert to any suggestions from our members.

Why Not Free Power or Just Pay the Money to Ourselves?

This appealing idea has occurred to more than a few of us over the years, but there are various concerns to which we must be equally alert. In the first place paying the money to ourselves would require a change in our non-profit corporate status, which could probably be done by a vote of the members, with tax implications for all. But assuming we would distribute funds on a front-footage basis, how do we justly allocate them to a property that was owned by various families for different time spans during the years the revenues were earned? As for buying our own power at discounted rates, this may not one day be so farfetched, but our power purchase contract with Consumers won't expire until 2017. So don't hold your breath.

How About Charitable Trusts?

This idea has received more than casual attention from several boards. Given the philosophical differences among some 230 families, there is always the challenge of selecting a cause that will energize the same charitable passions among each of them: "Your charity or mine?" But apart from concerns of justice or philosophy, and realizing that neither course is impossible, there are perhaps some practical considerations that suggest we maintain a prudent level of reserves.

Although STS is responsible for the powerhouse and the generating equipment and (under the improved terms of our new lease) the structural components of the dam, the embankments, and the retainer gates, we are not totally without risk. We are liable for repairs of any prior, unknown defects plus "repairs of an extraordinary nature". Although these expenses have been modest to date, there is always a lurking potential of larger obligations in a structure that is already in its eighth decade of service.

But there is yet another liability that comes with the purchase agreement we have signed with Consumers Power. In essence it stipulates a "performance liability" in the highly unlikely event we ever cease to generate power during the 35-year term of the agreement. The liability rises steeply till the year 2000, when it begins to decline to zero in the year 2017. At the end of 1993, it had reached a staggering figure of more than a million dollars. Although our lease with STS indemnifies us against the liability, it would devolve upon our association in the event of a STS default.

Thanks for the Memories

We hope this brief story might answer whatever questions you may have had about the only dam you're likely to own in a lifetime. It was based on research of old records and on discussions with several former trustees, our legal counsel, Consumers Power, and the STS staff, whose help is gratefully acknowledged with our apologies for not recognizing them all by name, with one exception. That exception is Ed Jackoboice, who provided a wealth of information, and without whose operation of the dam from 1969 to 1984, we'd have all been in deep water. Or in dry dock?

Jim Alexander
Thornapple Association, Inc.
April, 1999