BY CHRISTINA M. SEILER, Rochester Sentinel News Editor
Fulton County officials Thursday decided to hire Umbaugh Associates to do preliminary work on a $10 million government-backed bond issue to help finance an ethanol plant.
Indiana Renewable Fuels plans to build a 100-million-gallon capacity ethanol plant in or near Fulton County.
The company, a limited liability corporation, also asked for a 20-year tax abatement for its proposed $135 million plant.
Consultants and company officials addressed the Fulton County Council and Commissioners in a special joint session.
The council voted to ask Umbaugh to find out its bonding abilities and rates before it makes any binding decisions.
The county can make the bond issue – because it would be loaned money – outside its statutory debt limits, said Fulton Economic Development Corp. Director Mike Busch.
Those were the only financing details discussed during the meeting.
The company’s total investment is estimated at $135 million. It has to raise $67 million in equity and the other half will be financed.
An investment that large, said Busch, is a rare opportunity for a place like Fulton County, and for Indiana. He estimated there are maybe a dozen such opportunities in Indiana and 50 to 100 across the U.S. every two or three years.
But other counties, and at least one other state, would like to have the plant as well, he said. Approval from county officials is vital to making sure Fulton County is an option for the investors, he said.
“Are you willing to take the county into debt to have a $100 million investment in your community?” Busch asked the county officials.
So far, I haven’t heard any of you say no.” Busch began discussing details with them four months ago.
The proposed plant, he said, is “as close as you can get to an economic development home run.”
The company also asked for the county’s support as it seeks state aid.
Councilman Gary Sriver said he didn’t think the state could afford to help the company because it’s already telling counties to tighten their belts and find new revenue sources. He said he’s even not sure of the county’s financial situation.
Busch said the state’s economic development budget is separate from its operating budget and he has no doubts there will be help from higher levels of government.
Indiana Renewable Fuels already received a $100,000 planning grant from the U.S. Department of Agriculture’s value added grant program. It was secured by Kathy Showalter, of PlanScapes consulting firm. She attended Thursday’s meeting.
Busch also outlined the negatives of the company’s financing request: default and delayed tax impact.
First, there’s the possibility the company could default on its loan. If it does, the county would have to make the bond payments. Busch said he doesn’t expect that to happen, especially since the company has a letter of intent from Fagan Inc., a Minnesota firm specializing in renewable energy development.
Fagan, he said, has never failed to bring an ethanol plant into profitable production.
Granting 20-year tax relief would delay the tax impact of the new assessed valuation, Busch said. A modern ethanol plant’s life expectancy is at least 75 years, said Matt Sederstrom, a Fagan chemist.
Showalter said a representative assessed valuation would be $37 million of real property and $85 million of personal property but each plant is different.
The advantages to having such a plant exceed the initial investment, she said. Such a large enterprise creates spin-off jobs and investment for the local economy.
To produce 100 million gallons of ethanol per year will require 100 semi-trailer loads of grain per day, Sederstrom said.
It would provide the market for corn and create 40 to 45 jobs with an annual payroll exceeding $2 million. Almost all of them could go to local people and every employee will be trained at another ethanol plant.
Mark Bateman, overseeing site selection, said the site the group has optioned would require about one mile of county road upgrade for heavier truck traffic.
Officials did not reveal their chosen Fulton County site. Sederstrom however, said the ability to use landfill methane gas to fuel the thermal oxidizer – which reduces gas emissions from the plant – makes the proposal more feasible.
The only working landfill in Fulton County is County Line Landfill, which also is close to needed rail lines and U.S. 31.
Sederstrom also presented a quick outline of the dry-mill ethanol-making process.
The corn is ground and then turned into a slurry and fermented. After that, the ethanol liquid is taken from the top of a distillation system, at a strength of 130-proof, and sent through molecular sleeves to remove water. The final product is 200 proof alchohol. Federal regulations require gasoline be added to the tank every 24 hours so it’s never considered food grade.
The solids in the distillation system, called whole stillage, are removed and processed into distiller’s grains, which are fed to livestock.
Sederstrom said he has no doubt demand for ethanol will only raise because of government mandates for ethanol usage and because the country is currently producing less than it’s using and has tapped into reserves.