Against recommendation, state awards $4M to ethanol plant

Source: By Kevin Hardy,, Des Moines Register • Posted: Monday, February 1, 2016

The Iowa Economic Development Authority board awarded more than $4 million  to fund a long-stalled ethanol plant in Cass County, despite recommendations from agency staff not to provide incentives for the $190 million project.

IEDA has made a priority of funding next-generation ethanol plants like cellulosic facilities that use crop residue — stalks, cobs and leaves — as opposed to first-generation projects like the corn ethanol plant proposed near Atlantic.

Once completed, the plant is expected to pump out 150 million gallons of ethanol per year.

The project has been in the works since 2006, when a group of farmer investors formed Amazing Energy Atlantic, LLC. The group sunk millions into site work, concrete piers and construction of an administration building, but ultimately wasn’t able to acquire the investments needed to complete the project, IEDA reported.

In 2012, the site was purchased by Ron Fagen, founder of Fagen Inc., which has built facilities that produce 60 percent of the ethanol capacity in the United States, as well as ethanol facilities around the world.

Fagen Inc. will build out the plant for Farmers Energy Cardinal. The company requested $17.25 million in state incentives, including $13 million in investment tax credits and a $4.25 million refund of sales tax. But agency staff recommended its board not approve the request, said IEDA spokeswoman Tina Hoffman, because of its preference to fund next-generation energy projects.

“Making a staff recommendation to not provide incentives was in no way saying we don’t support ethanol or we don’t support this project,” Hoffman said. “It’s a great project.”

And after many backers of the project addressed the board Friday morning, including local officials and nearby landowners, it  struck a compromise of sorts, Hoffman said. It unanimously agreed to award the $4.25 million in sales tax refunds, but not the $13 million in investment tax credits.

“After all that discussion the board felt like moving forward with the modest sales tax refund — the $4.25 million on the $189 million project was a good compromise to move that project forward, particularly in a part of the state where economic development projects aren’t happening every day,” Hoffman said.

For its part, the plant has pledged to create 49 jobs, 45 of which must meet a qualifying wage of at least $18.67 per hour. The company must receive financing and begin construction within a year in order to receive the incentives, officials said.

The new plant’s capacity will rank it among the largest of Iowa’s 44 corn ethanol facilities, the Associated Press reported.

Iowa produces nearly 4 billion gallons of ethanol annually, more than any other state.

“Even though we have the largest amount of ethanol production, we still have excess corn,” Monte Shaw, executive director of the Iowa Renewable Fuels Association, told the AP. “Iowa should still be one of the most attractive places to expand ethanol production whether it’s with a greenfield plant like this proposal or through expansion to existing plants.”