By GEOFF FRANK, Bluffton News-Banner
Work on the proposed ethanol plant is expected to begin this fall.
Indiana Bio-Energy LLC has obtained a signed letter of intent from Fagen Inc. to move forward with the project.
David Dale, chairman of the board of Indiana Bio-Energy (IBE) said Thursday afternoon that construction of the plant is to begin with dirt work after crops are harvested in the fall and “proceed to completion as rapidly thereafter as circumstances allow.”
Dale explained that a normal construction period for a 100 million-gallons-a-year plant is 18 months.
The IBE board members remain committed to building the plant in Wells County, said Dale.
The IBE board chairman indicated that formal implementation by the Wells County and Bluffton governments of their nonbinding Dec. 30 agreement still is needed to make that possible.
County and city officials had worked out a tentative agreement to provide partial financial backing of the company’s bonds in case of a default.
Dale also announced the selection of an experienced general manager for the project (see related story on this page) and indicated that the state of Indiana has agreed to provide some financial support for the project.
Dale provided the update at the request of The News-Banner.
His comments came in a prepared statement late Thursday afternoon. The company continues to be limited by SEC rules and regulations in what it can say, Dale explained.
Twelve of the 16 IBE directors were in Granite Falls, Minn., on March 9 to meet with Ron Fagen and other officials of Fagen Inc. to finalize terms of the agreement for construction of the plant.
“The meeting went very well,” said Dale. The board members returned with the letter of intent, signed by Fagen, that was needed to proceed with the $150 million project.
According to Dale, key components of the project have come together rapidly since the National Ethanol Conference in February at a Marriott complex near Las Vegas, at which six representatives of IBE were in attendance.
The board members are pleased with progress to date of “their collective efforts to provide the Wells community with an unparalleled project that will provide substantial economic benefits to the community for years to come,” said Dale.
“Although IBE has had many offers to move its project elsewhere, the IBE Directors have been and remain totally committed to build the project in Wells County for the benefit of the Directors’ home community,” said Dale.
However, said Dale, “the project still will not be possible in Wells County without formal implementation by the County and the City of their indicated support of the bonds portion of the project’s financing.”
Dale said the “legal and governmental actions needed to be taken by the County and the City are expected by IBE to take place over the course of the next three months.”
In the tentative arrangement on Dec. 30, county and city officials agreed to provide up to $800,000 in an annual support guarantee in case of a default by IBE on the project’s bonds.
Dale again expressed appreciation for the vote of support from the county and city officials at the joint meeting.
“IBE now looks forward to the commencement soon, by the County and the City, under the guidance of their bond counsel, of the legal procedures needed to formally implement” the Dec. 30 action, said Dale.
The bonds now are expected to be issued in an aggregate principal amount of $22 million, he said.
The local government backing would come mostly from County Economic Development Income Tax (CEDIT) funds, but would only be needed in case of a default.
“IBE fully expects to make all of the payments on the bonds and that the County and City are not expected to ever have to make any of the payments,” said Dale.
Additionally, Dale noted that the state, through its Indiana Economic Development Corp., “has agreed to provide some needed financial support for the project.”
Details are “expected by IBE to be finalized with the IEDC within the next week or so,” Dale said.
As reported earlier, if the $150 million project moves forward, it is expected to employ 50 or more people and create as many as 1,500 spin-off jobs.
The plant is targeted for a location at the southwest edge of Bluffton.
City officials have worked to annex remaining portions of the site into the Bluffton city limits.
County officials have had initial discussions about road and drainage improvements that would be needed in the plant area if the project moves forward. Heavy truck traffic is expected.
An outside county consultant, Jeff Kapell of SJH and Co. of Boston, recently delivered a report indicating the proposed ethanol plant is a viable project.
He had been commissioned to review the project as part of the due diligence efforts of local government officials.
The project is expected to result in an increase in the price local farmers receive for corn, a key component in the ethanol-making process.