The Crookston Housing and Economic Development Authority (CHEDA) advisory committee for Epitome Energy met Tuesday morning for the first time since their introductory meeting in early July. While no action was taken, the committee discussed the loan requested by Epitome Energy, a land option agreement and business subsidy.
In June, Epitome Energy requested a $1.25 million-dollar loan to get a head start on their air permitting with the Minnesota Pollution Control Agency. The request asked that the loan have a zero percent interest rate. City Attorney Corky Reynolds explained during the June 24 Ways & Means Committee meeting that such a loan would require a business subsidy agreement. Executive Director Craig Hoiseth said the city has been exploring other ways to jump-start the air permitting without a business subsidy. “If you do a market-rate loan we found out that you don’t need a business subsidy,” said Hoiseth. “That would perhaps accelerate the process. We also want to evaluate if another entity, such as the non-profit innovation center, could use those funds, or if the Department of Ag has the ability to borrow that money directly for air permitting. All of these discussions are on the table in trying to do what’s most advantageous for Epitome Energy and the City of Crookston.”
The Department of Agriculture has already awarded the money for the air permitting to Epitome Energy in their 2020 budget, but the money wouldn’t become available until next July. A loan could start the air permitting process, which takes 10-12 months before the year is out.
The group was presented with drafts of a land option agreement and a business subsidy agreement with Epitome Energy. This business subsidy would be for the transfer of 100 acres from the CHEDA to the Epitome Energy upon agreement and payment of the land option agreement of $10,500. “This has been something that we have been talking about at closed meetings for a couple of years now,” said Hoiseth. “The City Council and the CHEDA board have given me the direction to be aggressive moving forward with the land asset. In terms of if we need to give it away to do that, a zero-price tag per acre. It seemed like the other communities that were vying for Epitome Energy were all offering the land for no cost. And that was one of the stipulations Epitome Energy wanted with Crookston. Even though that is a sizable piece of land and a nice asset for Crookston we didn’t purchase that land ten years ago to farm it. We purchased it for economic development purposes. And this would fit directly into that as we try to build up our tax base and create new jobs.”
Because the land is offered for free, it requires a business subsidy as well. The combination of the land option agreement and business subsidy work as insurance for the City of Crookston to not lose the property with no facility built. “A business subsidy agreement is required to be put in place by statute,” said Hoiseth. “As we move forward, that developer’s agreement business subsidy is going to ensure that the facility is built. And all the conditions of a business subsidy are that good jobs are being created. That environmental concerns are being addressed, and all those things you need to check the boxes off to get a development like this to happen. Essentially what the business subsidy will do is state that without a biodiesel soybean crush facility being built, there is no reason to divest of that asset. So we want to make sure they walk in harmony, that when we divest of those acres, we end up with $150 million-plus facility there.”
Hoiseth explained that once the project the Tax Increment Financing (TIF) District are complete, the city will see a significant return on investment with a highly valued property. “The advisory committee asked me to come forward with some of those numbers,” said Hoiseth. “In subsequent meetings were going to delve into some of that return on investment scenario. After the TIF District elapses, we’re going to see a $150 million or plus facility there that is going to drive the property taxes to somewhere in the neighborhood of $10s of millions to even $100 million. You don’t have to do very much arithmetic to see that the payback is very rapid.”
The committee will review the drafts of the land option and business subsidy agreements they were provided and reconvene August 6 at 7:00 a.m. at Valley Tech Park.
