A Minnesota businessman whose construction company has built many of the nation's ethanol plants received state sales tax incentives Friday to complete construction on a previously idled project in southwest Iowa.
The Iowa Economic Development Authority board approved $4.2 million in sales tax refund benefits for the project proposed by Farmers Energy Cardinal to build a corn ethanol plant northwest of Atlantic. The company had sought $17.2 million in tax benefits, including investment tax credits and sales tax refunds, but the board took a cautious approach and approved just the sales tax incentives for the company, which promises to create 49 jobs.
The plant is designed to produce 150 million gallons of ethanol a year — a capacity that ranks it among the largest of Iowa's 44 corn ethanol refineries.
National ethanol production is nearly 15 billion gallons a year. Iowa leads the way with nearly 3.8 billion, followed by Nebraska's 1.8 billion gallons and Illinois' 1.5 billion gallons.
"Even though we have the largest amount of ethanol production we still have excess corn," said Monte Shaw, executive director of the Iowa Renewable Fuels Association, an industry trade group. "Iowa should still be one of the most attractive places to expand ethanol production whether it's with a greenfield plants like this proposal or through expansion to existing plants."
Historically, Iowa has awarded tax incentives to a number of ethanol projects that failed to attract sufficient investors to complete the project. The board said Farmers Energy Cardinal must finalize financing and begin construction within 12 months to fully receive the benefits.
The company said it expects to spend $190 million to build the plant.
FEC was founded in 2006 in Ohio by a group of experienced ethanol investors led by Ron Fagen, founder of Granite Falls, Minnesota-based Fagen Inc. He has helped build 100 biofuels facilities in the United States and will design and build the Atlantic facility.
Plans for the site began in 2006 by a group of farmer investors, but after millions of dollars of investment, fundraising for the project fizzled and the site and its buildings was left in various stages of completion. FEC bought it in early 2012.