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Incentive offer came before fertilizer plant rezoning requestqrcode

Oct. 9, 2012

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Oct. 9, 2012
Scott County and Orascom Construction Industries officials agreed to an incentive package for a proposed $1.3 billion fertilizer plant that would have generated $26.25 million in property taxes in the agreement’s 15 years.
The $78.75 million incentive package was submitted two weeks before a zoning request for the project was made public, according to documents provided Monday to the Quad-City Times through an open records request.
County calculations show Orascom would have received $78.75 million in rebates over the course of the 15-year incentive package, but the taxing bodies still would have received $26.25 million over the 15-year period and $60 million from a natural gas replacement tax. Davenport Community Schools would have received the majority of the revenue.
The farmland where the project would have been located will generate $18,100 annually and $271,500 in the same time period.
The county offered a 75 percent property tax rebate based on an assessed value of $248 million, according to documents received through the open records request. The county submitted the offer to Egypt-based Orascom on June 27, two weeks before the rezoning request was made public on July 11.
County Board of Supervisors chairman Tom Sunderbruch called the offer reasonable and fair.
“We thought we weren’t giving them any money and would be receiving more than $18,000 per year,” he said. “We thought it was a good investment.
“It wasn’t money out of our bank; it was money we wouldn’t be receiving for 15 years,” he said. “At some point, you have to increase revenue, and this was an opportunity.”
Orascom announced that it wanted to build a nitrogen fertilizer plant on 318 acres of farmland between Davenport and Walcott. After the rezoning request failed at the county’s Planning and Zoning Commission meeting that same month, the company pushed back public hearings with the Board of Supervisors before announcing Sept. 4 it would build the plant in Lee County.
The Scott County Board of Supervisors wouldn’t have voted on the incentive package until after the rezoning process was complete.
Lee County offered a 100 percent rebate over 20 years, with a payment-in-lieu-of-taxes system in place.
The difference in incentives didn’t sink the project in Scott County, Scott County Administrator Dee Bruemmer said.
“We couldn’t provide land that was zoned properly in their time frame,” she said, explaining that Orascom had a very aggressive timeline for the project.
Tina Hoffman, spokeswoman for the Iowa Economic Development Authority, said the Lee County deal stands as announced and there hasn’t been a request from any of the parties involved to amend or change the terms of the agreement.
Senate Democrats and others have questioned the support by Gov. Terry Branstad’s administration for the deal, which includes a record-setting amount of state incentives for a single project.
Along with the Quad-City Times open records request, the county also received one from Davenport attorney Ralph Henninger, who represented landowners who live near the proposed Scott County site. At the Planning and Zoning Commission meeting, Henninger threatened a legal challenge if the rezoning request passed.
Orascom sought and won an injunction in August blocking the release of the records sought by the Times and Henninger. Scott County got the injunction withdrawn last week.
Emails between Orascom, Scott County and Quad-Cities Chamber of Commerce officials began June 7, with information about a timetable of the zoning process and the application process for incentives. Scott County and Orascom officials met at the Scott County Administration Building on June 15.
Orascom officials wanted an incentive package nailed down before moving forward with the rezoning request, according to emails.
“Yes, it is very important to us to develop a firm understanding of the incentive package before we begin the public rezoning process,” Ahmed El-Hoshy, of Orascom’s corporate business development and investments, wrote in an email dated June 25. “Due to the highly competitive nature of the fertilizer sector, the incentive package is a key factor for our evaluation of this site and other sites we are considering in Iowa and Illinois.”
Other options discussed for financial incentives ahead of the June 15 meeting date were use of the Bi-State Revolving Loan Fund that offered $7,500 per job created, Revitalize Iowa’s Sound Economy program that required up to a 50 percent match, the Railroad Revolving Loan and Grant Program that also would have required up to a 50 percent match.
Orascom officials showed they did their homework, providing information on nine economic development projects from across the state that showed incentives offered for ethanol plants, a steel heat-treating plant and data centers. Those incentive plans ranged from property tax rebates to tax-increment financing. Five of the projects included 100 percent tax rebates of at least 10 years in length.

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