County OKs smaller tax break for ethanol plant

Talk about it

The Stutsman County Commission approved a reduced property tax exemption Tuesday for the Dakota Spirit AgEnergy ethanol plant planned for the Spiritwood, N.D., area.

The corn-based ethanol plant would use waste steam from the coal-fired generating plant at Spiritwood. Great River Energy had asked for a six-year 100 percent exemption with the exemption reduced by 20 percentage points per year for four years after.

“We need to do everything we can to make this business viable,” said Al Christianson, GRE’s manager for business development and government affairs for North Dakota, at the commission’s meeting Tuesday. “The county has looked favorably on value-added agriculture and we hope you will look favorably on this.”

However, county commissioners saw breaks as excessive given the county’s current financial condition.

“Things have changed so much over the last years in the cost of road repairs and this is a lot of money,” said Dale Marks, county commissioner. “I wonder if it’s come to a point we need to pare back because of the financial situation of the county.”

Estimates from the Stutsman County Department of Tax Equalization indicated an ethanol plant costing $100 million to build would have a building and land value of about $35 million. The remaining $65 million in costs would be for plant equipment not subject to county property tax.

Based on the $35 million in value for taxes, an ethanol plant could be expected to pay about $445,000 per year in property tax. The bulk of that money would go to the Barnes County North School District with lesser amounts to Spiritwood Township and Stutsman County.

With no exemption, the ethanol plant would pay about $4.4 million in property taxes over 10 years. The plan promoted by Great River Energy would have reduced that liability to $890,000.

However, the county approved a scaled-back plan of a 100 percent exemption lasting three years, followed by a reduction in the exemption of 10 percentage points per year for seven years. After that, plant would be taxed fully.

“We get a lot of static from people about tax breaks for these corporations,” said David Schwartz, county commissioner. “This scales it back some.”

The tax burden for the ethanol plant for the first 10 years under the plan adopted by the commission is $1.2 million.

Christianson said project planners would review the new numbers.

“If the commission thinks that is where they need to go with this we understand,” he said. “If the business case is still there we go ahead. This is a business decision.”

In other action, the commission approved three of the six grade raises they had requested quotes on. Only two companies bid on the projects with each only submitting quotes on three projects.

Bids from Guthmiller Earthmoving totaling about $1.2 million were accepted. Engineer’s estimates for the three projects had been about $1.1 million. The approved projects were all in the Cleveland and Streeter areas.

Bids on two other projects by Lindberg Brothers construction were each about twice the engineer’s estimates. The commission instructed Steve Thompson, project engineer for Interstate Engineering to review the projects with the North Dakota Department of Transportation for discussion at a special meeting scheduled for 4 p.m. today at the courthouse.

All the projects are considered emergency grade or road raises but to qualify for 100 percent funding they must be complete by Sept. 18, which is 180 days after the initial disaster declaration.

“We want to award as soon as possible because every day counts,” Thompson said. “But you’ll want to check the finances on these because these bids are very high.”

Schwartz raised concerns the county would not have enough financial reserves to pay the contractors when the work is done while waiting for reimbursement.

“This is a 100 percent reimbursement but when are we going to get it?” he said. “We’re still waiting on reimbursements from 2009.”

If the work is not done by the Sept. 18 qualifying date the projects could revert to a 20 percent local cost or, if delayed for longer, a 100 percent local cost, said Noel Johnson, county chief operating officer.

“It’s 100 percent (grant) money and based on past history you will get it,” he said. “The cost of waiting could be like a 20 percent negative interest on the money.”

Sun reporter Keith Norman can be reached at (701) 952-8452 or by e-mail at knorman@jamestownsun.com

Tags: local news, news, county, ethanol, energy