Orascom Construction Industries expects to begin production this year at this $1.9 billion fertilizer plant in Algeria.  Orascom also is building a $1.4 billion fertilizer plant in Iowa's Lee County.  The company chose Iowa in part because of $110 million in state tax credits and $130 million in local tax breaks it was offered. (FILE PHOTO)

DES MOINES — When Iowa Gov. Terry Branstad pulled the trigger on the biggest incentive package in state history, he said he did so, in part, because of competition from neighboring Illinois.

But economic development officials with Illinois Gov. Pat Quinn’s administration say they wanted no part of the project after they got wind of Iowa’s “excessive” bid for the

$1.4 billion fertilizer plant for which the Branstad administration offered up to $240 million in state and local tax breaks.

“To be clear — the state never put an offer on the table. We recognized early on that Iowa’s bid was excessive, and we were not going to engage in a bidding war,” Marcelyn Love, communications manager for the Illinois Department of Commerce and Economic Opportunity, wrote in an email.

Love’s remarks fly in the face of comments by Branstad last week that Iowa secured the deal with Egyptian conglomerate Orascom Construction to build the plant “by the skin of our teeth.” Egyptian billionaire and Orascom CEO Nassef Sawiris, who stood alongside Branstad at the Sept. 5 news conference, also said that Illinois’ offer to the company was “richer” than Iowa’s, but he chose Iowa anyway.

The selected location is a 500-acre site just east of Wever in Lee County in Iowa’s southeastern corner.

It’s possible that Sawiris’ decision was helped along by the fact that the Iowa Economic Development Authority agreed to sweeten the state’s commitment by more than tripling the potential value of tax credits it previously agreed to — from $31.5 million to as much as $107 million — just hours before Branstad and Sawiris met with reporters to announce the agreement.

On Thursday, Branstad called the Quinn administration’s assertion “baloney.”

“They’re sore losers; we won, they lost,” he said. “The truth of the matter is we won because we have clean government, and we don’t have the massive debt they have in Illinois. They just don’t like the criticism for the way they mismanaged their state for so many years.”

No verification

Tina Hoffman, spokeswoman for the Iowa Economic Development Authority, said the authority relied on the word of Orascom corporate officials and news reports to determine that Illinois was making a play for the fertilizer plant.

“Company officials indicated the tax savings would be in excess of $130 million. That information was validated when an Illinois senator was quoted in several news outlets about the bill he was sponsoring to assist a project like the one Orascom was proposing,” she wrote in an email.

That bill came to the Illinois Senate on May 31, the final day of the legislative session. It would have created a $100 million incentive package designed to erase a tax advantage Orascom would receive if it located in Iowa.

The measure flew out of the Senate, but it was not taken up in the House as the General Assembly gaveled to a close for the summer.

Meanwhile, after turning away from its initial site in Iowa’s Lee County because of flood-plain issues, Orascom officials began looking at a potential site of 318 acres between Davenport and Walcott in Scott County and indicated there still was potential interest in Illinois and in Texas.

Hoffman said a newspaper story mentioned the possibility of a special session to pass the incentive package. That special session never occurred, and no package to bring Orascom to Illinois was ever approved.

Asked if the authority ever tried to verify the claims of Orascom officials and the newspaper reports, Hoffman said it wasn’t practical.

“We’re competitors in this,” she said. “Telling them what we’re offering or them telling us what they’re offering would be like scoring a touchdown for the other team.”

Illinois effort

Iowa House Speaker Kraig Paulsen, R-Hiawatha, said the assertions by Orascom officials and the word of Iowa Economic Development representatives are proof to him that Illinois was in the running.

“I surely trust them more than the Illinois government with its history of corruption,” he said.

Although the Quinn administration never submitted a formal package to Orascom, there was a lot of behind-the-scenes work on Illinois’ part.

Illinois Sen. Chris Lauzen, R-Aurora, says he and Sen. Dave Koehler, D-Peoria, worked hard to secure a deal for the plant. In April, the duo put together a rapid-response team to work with company officials who were interested in a spot in Koehler’s area.

Koehler said an Orascom representative met with Peoria-area economic development officials, as well as people from the utility and transportation sector. They toured three sites in or near Peoria and began crafting an aggressive proposal.

The action then shifted to Springfield, where top brass in the Quinn administration went into scramble mode. Agency officials from the Department of Commerce and Economic Opportunity were at a table with a bipartisan mix of legislators, as well as agency directors at the state Environmental Protection Agency, the Department of Revenue and the Department of Natural Resources.

“There was an enormous effort,” Lauzen said. “It was a good job.”

Koehler said even though the measure still needed approval in the House, he believed it might serve as a signal to Orascom that Illinois was serious and that talks could continue.

The Quinn administration, meanwhile, figures Illinois dodged a bullet.

“Due to Iowa’s offer, Iowa taxpayers are handing Orascom a very lavish tax incentive while Illinois taxpayers are spared,” Love wrote. “The key benefit here is lower anhydrous ammonia prices for farmers in Iowa and Illinois. Our farmers obtain that benefit regardless of where in the Midwest the plant is located.”