By GEOFF FRANK, Bluffton News-Banner
The company behind the ethanol plant proposed for Wells County says it has met a county-issued deadline with two weeks to spare.
Indiana Bio-Energy LLC has identified the lender for its bond issue or secondary subordinated debt, according to David Dale, chairman of the IBE board.
Wells County Council had voted 7-0 on May 3 to give IBE until June 15 to resolve the key financing issue or prompt the county to reconsider its partial governmental guarantee of the project’s bonds in case of default.
County council members had expressed concern about perceived delays in the ethanol plant project, which has been proposed for a location at the southwest edge of Bluffton.
Since then, on May 30, three Bluffton City Council members backed the county council’s deadline, and council president Jim Phillabaum indicated a number of other questions about the project.
Several county and city officials have complained that IBE officials pushed hard for them to reach the tentative agreement on the partial guarantee of the bonds in case of default before the end of December, but now more than five months have passed without contact by IBE officials in public meetings.
Dale indicated Monday he is a little puzzled by the concerns. IBE has been extremely busy with other parts of the project and has not had a need yet to return to the governmental meetings, he noted.
Dale said he would have been very willing to attend meetings of any of the various governmental bodies to provide an update, but has not been invited.
In response to recent concerns raised at the county council and city council meetings, IBE board members are making contact with the local elected officials individually to provide updates and answer questions.
The ethanol topic also was raised at the Wells County Board of Commissioners meeting Monday morning.
Commissioner Kevin Woodward suggested reconvening the joint session of the commissioners, county council and city council for an update on the project.
While no action was taken by the board on Monday to schedule such a meeting, Woodward thought it was good to bring up the issue.
Several people have raised concerns to Woodward, who said he concurs with the county council’s June 15 deadline.
Woodward indicated he believes the governmental bodies need to get together to follow up on their Dec. 30 discussion.
Commissioner Paul Bonham offered no response to the Woodward suggestion.
Bonham said this morning that he did not believe he should respond since he is a member of the new Redevelopment Commission that has been established to be a part of the process on the bond financing.
Bonham also wanted to let current developments reach resolution with the county council and its June 15 deadline.
Commissioners president Randy Plummer mentioned to Woodward at the meeting that he knew Woodward would be contacted by an IBE board representative to update him on the project.
Plummer is one of the initial investors in the ethanol plant, and had previously filed conflict of interest papers to disclose his involvement in the economic development project.
County and city officials reached a tentative agreement Dec. 30 by which the local governments would provide up to $800,000 in an annual support guarantee in case of a default by IBE on the project’s bonds.
The guarantee would be financed mostly by County Economic Development Income Tax (CEDIT) funds and would only be paid in case of a default by IBE on the bond payments.
Responding to inquiries by The News-Banner, Dale said Monday afternoon that the IBE board made its decision May 31 on the lender for the bonds, two weeks before the June 15 deadline.
Dale said he has sent information about the lender — The Mercantile Companies Inc. of Northbrook, Ill. — to Pete Cole, president of the county council.
Contact has been made with the county’s bond counsel. Dale said he expects a schedule to be identified soon for the local governmental units to proceed on the partial bond guarantee financing steps.
The IBE chairman said the company’s first mortgage for the project previously was established to be with AgStar Financial Services of Rochester, Minn.
In response to questions from The News-Banner last week, Dale had noted that “because we remain in an SEC-mandated ‘quiet period,’ we are limited in what we can say publicly.”
In an e-mail response, Dale said that, “Notwithstanding the lack of word from us, I can assure you that the project is progressing nicely and that we remain on target for the start of ground work this fall and the start of concrete work in January.”
Dale’s response was an attempt to answer reported concerns by local elected officials, “whose continued collective support remains essential if the Wells community is to capture the enormous economic benefits that will flow into the community from this project,” Dale noted.
The IBE chairman had hoped to put together a more extensive news release, but has not yet had time.
In discussion Monday afternoon, Dale touched on the points raised by Bluffton City Council President Jim Phillabaum last week.
Phillabaum reportedly had expressed concerns regarding a lack of information on infrastructure needs, including road access, a source of fresh water, and plans for wastewater disposal.
Dale noted there has been heavy truck traffic in the southwest Bluffton area for a long time with vehicles to and from the Peyton’s Northern Distribution Center.
The IBE board has been trying to improve the situation, he said, having made contact with Indiana Department of Transportation officials toward possible state assistance with road improvements in the area.
IBE has made arrangements with a company with experience at other locations to drill two wells at the planned site for the ethanol plant.
Dale indicated the company has planned for its wastewater disposal. Rest rooms would be tied into the City of Bluffton’s sewage system.
Most other water is reused in the ethanol-making process, Dale noted.
After treatment, the remaining water is expected to go into the Addington Tile, a county-regulated drain, according to Dale.
There are not expected to be any contaminants that would harm fish or other aquatic life, Dale explained.
The proposed ethanol plant has not been in front of the Wells County Drainage Board yet.
Responding to a question, County Surveyor Jarrod Hahn said late Monday that the Addington Tile flows into the Schwartz Open Ditch and then into Bills Creek before entering the Wabash River.
Dale indicated a number of permit-type efforts will move ahead after IBE receives its go-ahead from Norfolk Southern Railroad officials on the location for two rail switches on the main line that will serve the project.
Once the switches are located, the exact location for the plant can be determined, he noted.
The plant will have a rail oval that will allow it to accommodate up to 300 rail cars so loading and unloading can be accomplished without delaying other train traffic.
Dale reiterated past comments that IBE has no concerns whether there is enough corn to go around.
The rail access will allow the company to bring in corn from other locations if needed.
Dale had initially made the comment May 4 following concerns expressed a day earlier by county council following the announcement by Central States regarding its plans to build an ethanol plant at nearby Montpelier.
IBE officials have a lengthy “To Do” list that they have been working on regarding all the facets of the projects.
Dale estimates that IBE board members collectively have put more than 3,000 hours of effort into the project.
Dale noted the continued support of local officials is vital to the project, not only for the message it sends, but also for the comfort level of the bond buyer.
He indicated that no one is going to lend money for a project like this if the community doesn’t want it.
In other news regarding the plant:
— The overall ethanol project now is estimated as a $163.5 million project, with costs of $115 million for the plant itself, Dale indicated.
— Edgar Seward, the general manager for the project, has completed his move here with his family from his former residence in West Burlington, Iowa.
— Dale provided The News-Banner with a copy of the letter from Indiana Economic Development Corporation regarding the state’s award of up to $1.6 million in cash grants and training grants for the project.
The state letter indicated that IBE has confirmed that it is willing to forgo traditional incentives offered by the state agency with respect to the project as well as existing (but not future) ethanol production credits that may be available to the company if the IEDC would provide the training assistance and $1.5 million cash grant detailed in the state’s letter.
The IEDC cash grant will be provided as a dollar for dollar match for equity raised by IBE in excess of $34 million to a maximum of a $1.5 million grant.
The funds would be paid to IBE in three installments:
— $500,000 at the time of financial closing on the project and the start of construction (planned for October of this year).
— $500,000 on the first anniversary of the plant becoming operational.
— $500,000 on the second anniversary of the plant becoming operational.
The final two payments would be contingent on IBE “reaching certain mutually agreed upon performance milestones, including without limitation, thresholds relating to ethanol production, employment and wage levels,” according to the state letter.
Up to $48,500 of the employee training grants are expected to come from the state’s Skills Enhancement Fund.
Up to another $50,000 of employee training grants are to come from the state’s Technology Enhancement Certifications for Hoosiers Fund.
Dale had noted earlier that IBE will remain eligible for ethanol production credits that may be made available by the state in the future.