Invest in loop? JSDC Board to decide on railroad loopWhether to invest almost half of its funds into a railroad loop to serve Spiritwood Station, Dakota Spirit AgEnergy and prospective tenants is a $3.75 million question to be answered by the Jamestown/Stutsman County Development Corp. Board in a special meeting Wednesday.
Whether to invest almost half of its funds into a railroad loop to serve Spiritwood Station, Dakota Spirit AgEnergy and prospective tenants is a $3.75 million question to be answered by the Jamestown/Stutsman County Development Corp. Board in a special meeting Wednesday.
Representatives from Great River Energy’s Spiritwood Station presented a railroad loop proposal to the JSDC Board at its regular meeting Monday. The railroad loop is a circular-shaped track a train can travel to access businesses. The railroad loop would be located at a site called Spiritwood Energy Park Association.
The railroad infrastructure would serve the various businesses allowing for incoming and outgoing materials. Sandra Broekema, GRE’s manager of business development, said the railroad loop benefits GRE because with the loop, GRE has a better chance of attracting potential steam partners.
One of GRE’s byproducts is steam and it can sell it to neighboring businesses. One of its partners is the up and coming Dakota Spirit AgEnergy biorefinery.
JSDC benefits too, Broekema said, saying the railroad infrastructure is attractive to potential businesses. JSDC CEO Connie Ova said some businesses have already expressed interest including Green Vision Group, which intends to create energy from sugar beets, and Rough Rider Renewable Fuels biorefinery.
Dakota Spirit AgEnergy and any future tenants would benefit from the shared cost of rail access, Broekema said, saying the community benefits too. More than $98 million in additional personal income and tax revenues would be added to the regional economy, she said.
“You have a real gem out there in terms of infrastructure,” Broekema said.
Dakota Spirit AgEnergy and any future tenants have an incentive to attract more businesses, she said. The tenants would split the rent between them. So if Dakota Spirit AgEnergy pays about $960,000 the first year, after a second tenant is added, the two tenants would each pay about $450,000, she said.
To create the loop, GRE would contribute the 451 acres it owns in the industrial Spiritwood Energy Park located about 10 miles east of Jamestown. The loop would be located near 93rd Avenue and 35th Street Southeast. The JSDC Board also unanimously agreed Monday to invest 100 of its adjacent acres, a $400,000 value.
GRE plans to invest its 451 acres, a $1.7 million value. SEPA, the Spiritwood Energy Park Association, would also borrow $3.75 million. The funding is all contingent on Dakota Spirit Ag Energy obtaining its funding, Broekema said.
Broekema said JSDC could expect a 5 percent return on its investment.
But the $3.75 million cash investment requested from JSDC generated many questions. How much money does JSDC have in reserves? When’s the last time the organization spent this much money on one project? JSDC Board member Brion Bittner questioned if it’s wise to invest so much money in one project.
Ova said JSDC has about $8.4 million in reserves and is sometimes criticized for not spending it. In the bank, the $8.4 million grows by about 0.25 percent to 2 percent annually, she said. JSDC is also seeking grant funding for the project as well, she said.
One of its biggest investments JSDC ever made was $6 million to the corn-based ethanol plant originally proposed by Harold Newman in 2006. As corn prices rose, however, the project was no longer feasible. JSDC recovered its investment.
JSDC President Alex Schweitzer said the investment is actually into multiple companies, because more than just Spiritwood Station would benefit.
“I think it’s worth the risk,” he said.
Mayor Katie Andersen said JSDC could one day sell its shares if the board so chooses. Tenants could buy out JSDC, she said, and own the land instead of rent it.
“We would have the ability to sell our shares,” she said.
Stutsman County Commissioner Dale Marks questioned what sort of salaries the employees at these businesses would be paid, saying to some, even $40,000 per year isn’t a living wage. Ova said JSDC wouldn’t consider the project unless a majority of the jobs it created paid $15 an hour or more plus benefits. Broekema said most jobs would pay more than $40,000.
“To me, it’s a complete upside, win-win situation,” Schweitzer said.
The board will reconsider the request at a special meeting at 11:45 a.m. Wednesday.
In other business, a site visit is scheduled for Netbriefings, a web communications company. Joel Nash, owner of AsystMe, which generates software for automated personal assistants, plans to visit Jamestown on Thursday.
Also, the Kim Price Beef Processing Facility requested an option on 55 acres of JSDC’s Ag Food Processing Park.
Also, the JSDC elected two new board members: Todd Hudspeth, CEO of Jamestown Regional Medical Center, and Gerald Horner, vice president of lending and branch manager for Northland Financial in Medina. The two are replacing Bittner and Dave Smette, who are not seeking re-election after three-year terms.
Sun reporter Katie Ryan-Anderson can be reached at 701-952-8454 or by email at firstname.lastname@example.org