The Crookston Housing and Economic Development Authority (CHEDA) advisory committee met on Tuesday morning to discuss the first two invoices related to the air permitting and environment assessment worksheet for Epitome Energy. Along with those invoices, the committee also received information that the Department of Agriculture grant of $1 million to Epitome Energy would have a four to one match rather than the one to one match they had previously indicated.
The two invoices for permitting were $23,350 for Wenck Associates and $25,000 for Sunde Engineering. CHEDA Board President Kurt Heldstab said it was important for the advisory committee to review and approve the invoices as well as consider the change in leverage with the matching dollars. “In the last few weeks, we’ve discovered that it’s not a one to one match, it’s a four to one,” said Heldstab. “We had a great discussion today with my advisory board and other people, a few council members, and acting Mayor Dale Stainbrook. We did have a couple of invoices totaling $50,000 for starting on the air permitting. The advisory committee now will recommend that CHEDA pay those bills to keep the process going, and any other bills will come to the advisory committee. And we’ll see how we’re going to continue to move forward on that, but we have to keep this moving forward.”
Epitome Energy will accumulate the rest of the grant by using funds from their equity drive, which needs to escrow to $2 million before they spend any. Nick Nicholas asked Epitome Energy President and CEO Dennis Egan if he were confident the equity drive would proceed on time to keep the air permitting on pace, given the change in matching dollars. Egan said he was confident in the drive and that Epitome Energy was committed to not making an additional ask of the City of Crookston for permitting. “The Department of Ag has been a huge partner with this project from day one,” said Egan. “They allowed us to rework the language so that we can use that $1 million grant that was given to Epitome Energy for our permitting and EAW work. And the City of Crookston, on a number of occasions, has come back and said we want to continue to support the growth of Epitome Energy and its development. They again put forth their commitment on that $250,000 loan and what that looks like, but it is incumbent on Epitome Energy to continue our equity drive so we can continue to leverage the dollars from the Department of Ag and the $1 million grant. That was our commitment again today. Every day I think about how we are going to finance, raise equity, raise debt, to build a soybean crush facility in Crookston.”
Egan said recent discussion with the Minnesota Pollution Control Agency (MPCA) had indicated their queue for permitting has a five-month wait, with a five-month review process, and the permitting and EAW applications would take seven months increasing the time to groundbreaking out to about 17 or 18 months. Nicholas also asked if the permitting timeline would affect the Innovation Campus, and the short answer was yes. Egan explained that even though they are fundamentally different entities with different boards, the MPCA sees them as a co-development on a single location. Representative Deb Kiel also attended the meeting and said the Innovation Campus was tied to the University of Minnesota Crookston, although they were not linked financially.
Egan also informed the advisory committee that Epitome Energy had made the internal decision to move forward with building a 42-million-bushel crush plant over the initial plan to start with 21-million bushels. Egan said the change would increase the initial cost for the facility to $215 million, up from the original projection of $150 million. Egan said that he’d also like to get a new land option agreement together that reflects the increase from 60 acres to 100 acres to satisfy equity investors about having the land for the project. “We had a document in place for the 60 acres, and then we wanted to be able to control that 100 acres, so we’re redoing that option agreement,” said Egan. “We have said we need to get that in place sooner than later. My goal over the next 30 days is to craft that language and have an agreement we can bring to the advisory group so we can sign those documents. It’s just important that when you’re raising equity, people know where you are going to be, where are these dollars being invested in. Our commitment has been to Crookston, and Crookston’s commitment has been identifying that land, so let’s just put that in writing and finalize that.”
Jake Fee asked how that would affect the bonding bill for the City of Crookston. CHEDA Executive Director Craig Hoiseth said that the key was giving assurances to investors that Epitome would have the land option agreement on the land will still show a community benefit for bonding. “The advisory board was grappling with the fact we need to do a bonding bill into the legislature,” said Hoiseth. “Of course, that wants to serve the entire municipality. The bonding money is not going to go just to Epitome Energy. It’s going to go for the innovation center, the spin-off businesses, Vertical Malt. We want to make sure the $7 million is going towards all those businesses, not just Epitome. The other piece of that puzzle is the land option agreement where a lot of the players that are coming forward for the equity drive are asking – do we have control of the land and that acreage. Epitome needs to say yes to that so, we’re going to work on the delicacy of that language. How the option can be presented that Epitome does have control but still make sure we interface and secure the bonding dollars if available.”
Hoiseth also said he had spoken with Senator Mark Johnson about applying to have the sales tax on construction waived for the project and that they needed to start moving forward on that. Hoiseth said they would work on the language to work with the Department of Revenue on securing that waiver. “We are talking about what that language will look like so we can interface with the Minnesota Department of Revenue and try to get the sales tax portion of the construction cost waived,” said Hoiseth. “Again, there is some work to do down in the legislature, but we feel that we’re ready and moving forward with both the bonding bills and sales tax exemption.”
According to Egan, Epitome Energy is also working with its equity drive team to create a new program for the local soybean grower. Egan said that due to the local grower struggling this fall, they intentionally haven’t inserted themselves into a stressful harvest and instead will roll out the new investment package towards the end of November. “Over the last six, seven weeks, we’ve been intentional not coming up and engaging the local growers,” said Egan. “They’ve been struggling and continue to struggle. Our neighbors are underwater, in the mud with broken trucks, all of those things. For us to come in and insert ourselves when they are struggling, doesn’t make a lot of sense. When [the harvest] is done, we will be rolling out a program for any local grower that invests in Epitome Energy. Not only will they see the improvement in their basis, but they will have a premium on every bushel of beans, they want to commit to the project if they’re an equity investor. We’ll roll that out to them probably sometime near the end of November, depending on how the weather shakes out.”
Egan also stated that Epitome Energy has been gaining traction with large equity investment groups around the country. “We know that raising money in rural ag community right now has been a struggle with everything they were dealing with before the weather with the trade issue and the like,” said Egan. “So, we have been talking to other large equity groups on both coasts and continue to do that. We’ve gotten some traction, and we’re very optimistic that we’re going to move forward as planned. Each day, with each new group, the people that we talk to know that this project needs to happen. So, we continue to push forward, and we’ll continue to do that.”
The initial costs for the permitting is available by CLICKING HERE. It doesn’t include all of the costs as they are still unknown, but half a million dollars is already accounted for.
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