Half of incentives went to Iowa biofuel firms
Source: Lee Rood • Des Moines Register • Posted: Tuesday, January 17, 2012
Biofuels companies made up more than half of the top 50 recipients awarded state aid since the state began tallying all public assistance doled out in 2003, according to information provided to The Des Moines Register under Iowa’s open records law.
Biofuels plants now owned by Texas oil giant Valero Energy topped the list of 50 companies awarded the most in tax breaks and other assistance — some $59 million since 2003.
Valero owns four plants it bought out of bankruptcy from VeraSun Energy in 2009. The plants are in Albert City, Charles City, Fort Dodge and Hartley. The company took over VeraSun’s public-assistance contracts with the state when it assumed ownership.
Valero, the nation’s largest oil refiner with $324 million in profits last year, is No. 24 on the top Fortune 500 companies in America. It operates more than 1,000 retail gas stations, mostly in the southeastern United States.
Valero’s Fort Dodge and Charles City plants fell into default with the state in 2011 after prior owner VeraSun went bankrupt in 2008 and failed to created 83 promised jobs. The Charles City site received $4.89 million in credits; Fort Dodge received $9.4 million.
Plants in Menlo, Shell Rock, Fairbank and Iowa Falls owned by Flint Hills Resources were awarded $40.8 million in subsidies.
Flint Hills is a subsidiary of Wichita, Kan.-based Koch Industries run by two of America’s richest men, brothers Charles and David Koch, whose combined wealth is exceeded only by Warren Buffett and Bill Gates.
Flint Hills bought the Iowa plants from Hawkeye Renewables, which emerged from Chapter 11 bankruptcy last year.
Flint Hills was awarded $5.6 million in credits and loans; the rest of its incentives were awarded under state contracts with Hawkeye Renewables and transferred.
Harvest Biofuels, a subsidiary of Kensington Industries and Investments of Dallas, is the third-largest award winner at $36.1 million. The oil refinery operator has three plants in Galbraith, Gilmore City and Garner.
Economists have questioned the level of public money that has been pumped into the industry, especially since it likely would have existed here anyway because of the state’s corn supply.
Debi Durham, who heads the Iowa Economic Development Authority, said state leaders last year capped several tax credits administered by her agency, “which I think was a wise thing to do. There should be a cap.”
A lot of the assistance companies receive now, she said, is “second generation” or for new technologies tied to the byproducts of biofuels production.
The bulk of public aid for other industries now is in financial services, advanced manufacturing and bioscience, Durham said.