Illinois denies it made offer for fertilizer plant; Branstad: 'baloney'

2012-09-14T14:30:00Z 2012-09-15T22:37:21Z Illinois denies it made offer for fertilizer plant; Branstad: 'baloney'Mike Wiser and Kurt Erickson The Quad-City Times
September 14, 2012 2:30 pm  • 

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.”

Copyright 2015 The Quad-City Times. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

(19) Comments

  1. freesenior
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    freesenior - September 16, 2012 9:02 am
    I suspect there is a whole lot more to this than what we see right now. The Times has a lot more to do, but it had best be cautious when looking into places where smoke and mirrors abound. Not much of this makes sense at the moment, unless you buy into speculation.
  2. docpaulsen
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    docpaulsen - September 15, 2012 9:13 am
    Then Tina Hoffman and Brandstad should be offering Illinois an apology for all their harsh remarks, by they way they are already just listening instead of checking on what is really going on.
  3. docpaulsen
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    docpaulsen - September 15, 2012 9:09 am
    What happans when they leave in 10 years did anyone check what they are doing in other countries? They are fighting paying taxes with their Djezzy corp, in Algeria who is to say they won't do it here?
  4. TruthOnlyBeTold
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    TruthOnlyBeTold - September 14, 2012 5:14 pm
    In answer to your question, here is how Orascom will pay it's fair share towards road maint. and other county services. This is from the Keokuk Daily Gate City.


    "“Iowa code would allow the company to get a five-year sliding scale of tax abatements regardless of which option we choose,” Kruse said. “Since the company meets the state’s requirements for the creation of High Quality Jobs, the county can give a 100 percent, 20-year tax abatement. We chose to use the tax abatement approach versus the county borrowing money.”

    Because Lee County would incur expenses associated with the project “and the company’s desire to know what their costs will be, we developed a PILOT payment schedule in lieu of property taxes,” Kruse said.

    PILOT payments can be used how and where the county decides.

    “We would propose that we use the funds in the same proportion as on current property taxes, which would require us to have side agreements with other entities such as the Fort Madison School District,” Kruse said. “The school district would get about 51 percent of the payments. The agreement does give the company a 100 percent property tax abatement on the improvements added to the site, but the company will pay property taxes on the land value.”

    Kruse said that in the later years of the agreement, PILOT payments would add up to about a $50 million assessed valuation.

    “This will make Iowa Fertilizer Company one of the largest revenue sources for Lee County,” Kruse said. “In addition to the PILOT payments, IFC will pay a replacement tax on the natural gas they use in their process.

    Because the fertilizer company would use large amounts of natural gas in fertilizer production, the replacement tax also could be a significant source of revenue for the county.
  5. zetar
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    zetar - September 14, 2012 3:10 pm
    "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."

    Looks like Iowa got played.
  6. docpaulsen
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    docpaulsen - September 14, 2012 2:19 pm
    That is correct we were not against having it in our county, we wanted someone to find a place that it would fit. But, now that they are getting more tax incentives, I am glad they are not here I would not want to be a part of it.
  7. docpaulsen
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    docpaulsen - September 14, 2012 2:17 pm
    Your welcom sir, and as far as that goes I want to see what you call all this tax revenue, they were given a 20 year tax abatement as well. You must not be reading much
  8. beman101
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    beman101 - September 14, 2012 1:41 pm
    Iowa is not out any money where do you get your info from? who has to maint the roads? clean the mess they will make are you nuts? Branstad has sold out the taxpayers again.
  9. murphyterence
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    murphyterence - September 14, 2012 12:47 pm
    Good for Iowa! And for all those who don't quite understand what a tax incentive is, Orascom will get a break on future taxes. Iowa is not out any money, in fact they get to collect income tax from all the employees this will create as well as any new developments and sales taxes this will generate.
  10. getinvolved
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    getinvolved - September 14, 2012 9:09 am
    Branstad got fooled into giving away millions. Good Lord, I guess a law license doesn't give you bargaining brains.
  11. rocco789
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    rocco789 - September 14, 2012 8:46 am
    Didn't realize this was an article about the federal gov't or even GOP vs dems. Mrgadfly, where was that written in the article? I missed that section.
  12. TruthOnlyBeTold
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    TruthOnlyBeTold - September 14, 2012 8:08 am
    I agree. When the first Lee County site for the new plant didn't work out, what did Lee County do? They offered another site that DID work out.
  13. MrGadfly
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    MrGadfly - September 14, 2012 7:39 am
    Yeah Illinois wouldn't lie. Look at their track record. Agreeing with state union workers to give them a raise, then NOPE! Raising taxes will fix our problems...NOPE. Love how a few of you on here are against things like this....Jobs pay taxes. Let them all go overseas. Last I checked our lovely Dem party gave how much to Solyndra, and where did the money go? I recall the pres of that company being a BIG time donor to the OBAMA campaign. Yes it is always the RNC that is the problem, ha ha. At least this facility will be here for many years and will be taxes.
  14. TruthOnlyBeTold
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    TruthOnlyBeTold - September 14, 2012 7:30 am
    Sounds like sour grapes to me. Of course they wanted that plant. They had legislative proposals to allow for their incentive offer. Did Orascom get the best deal they could by playing one state against the other? Of course they did. I do the same thing when I buy a new car...play one dealer against another. Lets face it, with today's job/business market, incentives are the name of the game.


  15. bigguy
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    bigguy - September 14, 2012 7:09 am
    Terry can't believe that big business will play one state against another for the biggest tax breaks,sometimes being a loser isn't so bad when you have give the state a way!
  16. PainfullTruth
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    PainfullTruth - September 14, 2012 6:57 am
    I would brag also if I was Brandstad. How many jobs and how much tax revenue will be created by the construction and employment of the new plant? How much does Illinois have?

    Thanks again to all the Scott County cry-babies who whined so much that it chased good jobs away (again). Way to go NIMBY's. Hope your happy.
  17. rocco789
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    rocco789 - September 14, 2012 6:32 am
    Could it be possible Orascom played the State of Iowa to get more money? That never happens in business let alone politics. Remove the wool from your eyes Terry, or is this your damage control mode?
  18. Riles1
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    Riles1 - September 14, 2012 6:15 am
    Everybody is interested in grabbing the golden goose except a handful of idiot farmers in Scott county. Go figure. Have they started crying about the crops yet? I'm sure they are waiting for their yearly government hand out. Can anyone tell me which candidate opposes doing that............they will get my vote.
  19. coffee cup
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    coffee cup - September 14, 2012 5:33 am
    So Terry is bragging that Iowa was better at grabbing their ankles than Illinois was?
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