Editor’s Note: This article has been updated to correct information regarding a quote from Joe Steil. Steil said that the Fort Madison Economic Development group. owns land in the Siemens/Pinnacle area and not the Lee County Economic Development Group. The Current apologizes for incorrectly quoting Mr. Steil.
BY CHUCK VANDENBERG
WEVER – After close to five years and $3 billion, the Iowa Fertilizer Company is now producing nitrogen fertilizer.
On Wednesday, more than 300 dignitaries, IFC and parent company OCI N.V. officials were on hand as Iowa Governor Terry Branstad and Nassef Sawiris, CEO of OCI, cut a large blue ribbon with the backdrop of steel tubing, tanks, and a resolution of a highly controversial dream turned reality.
“The start of production at Iowa Fertilizer Company plant in Wever is a transformative moment for the agricultural industry,” Sawiris said.
“As one of the most innovative and efficient manufacturing plants in the nation, Iowa Fertilizer is leading the way in providing American farmers a stable, high-quality, and domestic source of nitrogen fertilizer products. Given its location among the highest nitrogen-consuming acres globally, on the border between Iowa and Illinois, the number one and two corn-producing states in the nation, the site houses not only a premier production facility, but also an industry-leading distribution centre.”
The fertilizer facility commenced production of sellable ammonia several days ago and is in the final stage of start-up for downstream products – urea ammonium nitrate, granular urea, and diesel exhaust fluid. The plant will produce approximately 1.5 to 2 million metric tons of nitrogen fertilizer products annually and can alternate between products at short notice, depending on market demand.
Branstad, who was joined by Lt. Gov. Kim Reynolds and several state directors including Bill Northey, Iowa’s Secretary of Agriculture, said the project has helped Lee County and the state improve unemployment numbers and has had an impact on area families.
“In Iowa, we have created a road map that attracts new businesses and supports key industries that drive long-term economic growth,” Branstad said. “At the outset of the Iowa Fertilizer project, the unemployment rate in Lee County was the highest in the state at 8.0%. That is why we fought so hard to encourage the company to locate its new fertilizer plant in this great community. Today, the county’s unemployment rate is down nearly three points to 5.3%, providing a positive and meaningful impact on working families in the area.”
The facility is one of the largest private sector construction projects in Iowa’s history and the first world-scale, greenfield nitrogen fertilizer facility built in the United States in more than 25 years.
Larry Holley, President of Iowa Fertilizer Company, said the plant will generate $25 million in payroll annually and an additional $25 million in maintenance contracts per year.
Lee County Economic Development Corporation CEO Joe Steil said it’s a true victory for the county.
“Today is a tremendous victory for Lee County and Des Moines County as well, having this $3 billion investment that we can work on now and going forward, and bringing in other industry,” Steil said.
“I’ve seen this in my lifetime in another area of Iowa with a fertilizer plant that did much of the same thing. Now that was many years ago, but this is the first facility of this type in 25 years. We can see the vision that other industries will look at this for. You hope it creates a cluster effect of who they will buying their products from.”
Economic officials had hoped that Siemens would see the same type of clustering but that only happened sparingly.
“There is land that is owned by the Fort Madison Economic Development group that is available and spade ready. We’re just waiting for the right opportunity.”
Steil also said that the facility is planning on 200 full-time employees with some indirect employees as well. It’s not close to the 3,500 working on the facility during the construction phase, but the distribution phase will bring additional employee resources.
“What the speakers didn’t talk about today was, yes, we’re in a phase down of construction with the contractors being gone. But that’s a transition and now what will happen is they will be replaced with distribution folks. At peak they should be rolling 300 trucks per day and rail could be 5,000 to 6,000 rail cars per year. When you start looking at those jobs that’s more payroll dollars that will roll over here.”
The facility is currently under a 20-year tax abatement, however Teresa Murray, Lee County Assessor said the IFC is making payments to the county on several levels in lieu of the abatement.
Murray said corporations like IFC get a 10% rollback on their assessment so they are assessed at 90% of value. As of Jan. 1, 2017, the assessed valuation at the facility was $49,240,480 on improvements including paving, fencing, lighting etc. She said the state changed tax codes 10 to 15 years ago that exempted machinery and equipment from taxation. However, IFC has been paying tax on the land as that is not included in the abatement and Murray said the land is assessed at $7,264,410 annually.
She said the Lee County Board of Supervisors also negotiated a payment in lieu of taxes for the first 20 years.
“They created what’s called a “development agreement” and they told the fertilizer company that they couldn’t just not pay anything,” Murray said.
“So IFC is paying what are called pilot payments per an agreement that was signed on Sept. 5, 2012 and those are exact amounts of money each year.”
The payment schedule yields, per year, $370,ooo for the first five years,, then $600,000 for years 6-10. The payment moves to $1 million for years 11 through 15 and from years 16-20 IFC will pay $1.3 million, for a total of $16,350,000 over the 20-year span that began Jan. 1, 2014. In 2034 the facility would be scheduled to go on the tax rolls. The pilot payments are dispersed according to county levies.
Murray said it’s important to note that the 20-year abatement is already in year three.
“I started assessing them Jan. 1, 2014. Work started before that in 2013, but by law I couldn’t assess them until Jan. 1,” Murray said.
The county will also benefit from a tax on the natural gas that is used in the production process. Murray said the Iowa Department of Revenue sets the assessment on that tax and the funds are paid to Lee County, but she said she hadn’t been informed of what those revenues would be yet.