Legislature to consider $1.3 billion in incentives for steel project

CLOSED HOLE

We've had a great working relationship with the Mesabi team. Out of respect for a company we hope to welcome as a long-term corporate citizen and partner in our region, we're not sharing more on location or project specifics than their team has shared at this time.”

Emily Benjamin, CEO Lee County Economic Development Group

LEE COUNTY – The special session set for Friday morning could be considering tax incentives in excess of $1.3 billion dollars.
According to a single slide shared with Pen City Current, Mesabi Metallics has asked for a 10% Investment Tax Credit under the state’s MEGA plan administered by the Iowa Economic Development Authority. That incentive is currently set at 5%.
The dollar amount on that 10% request would amount to $1,145,200,000 according to the IEDA slide sent to lawmakers on Thursday.
Other incentives that will likely be discussed on Friday morning include a Sales and Use Tax Refund of $154,350,000 and a payroll state withholding tax credit of $60,504,528. These incentives would likely be recognized over a 10-year period as the construction is completed and the proposed facility gets up and running.
The other section of the information sent to state lawmakers was a “local property tax exemption”. That incentive had no dollar figure attached and was only addressed at TBD, or To Be Determined.
Supervisors have not been approached by the company as a full board, however negotiations could be currently underway outside of a quorum, which is not uncommon. The same procedure was undertaken when Iowa Fertilizer Company and Orascom negotiated a PILOT program with the county, which was a Payment in Lieu of Taxes.
That agreement resulted in an abatement of about $133 million over 20 years and has about five years remaining.
But supervisors have been wary of putting any new developments into  abatement or exemption programs because new property tax laws could result in the county never seeing the true tax growth of that new construction.
The county did retain legal counsel out of Des Moines, BrownWinick, who specializes in government relations, real estate, and international law. They voted to retain the firm more than a month ago to help them negotiate ordinance language, and are now likely involved in negotiating with Mesabi Metallics at the local level.
No supervisors have confirmed any negotiations are taking place.
Mesabi Metallics has yet to identify exactly where the $15 billion proposed facility would be built, and are waiting on results of Friday’s special legislative session. The session is set to begin at 8:30 a.m. in Des Moines with both the House and Senate chambers looking at identical bills through subcommittee debate, Ways and Means consideration, and then full Chamber debate and floor votes.  It is unknown what, if any, rules would be suspended for the special session.
The facility is projected to produce 10 million metric tonnes of steel annually as part of an upper Midwest steel complex connecting iron ore fields and pellet production in Nashwauk, Minnesota with the envisioned electric arc furnace facility. The Minnesota facility is currently under construction.
Lee County Economic Development Group has been quiet on the project other than praising the potential of discussions. President Donald Trump unveiled the project commitment Monday from the Oval Office with an Iowa delegation, U.S. officials, and Mesabi ownership.
Emily Benjamin, CEO of LCEDG, on Tuesday said the President’s announcement was a milestone.
"Monday's announcement is a milestone for Iowa. Mesabi Metallics' plans for a $15 billion steelmaking complex, with more than 6,000 construction jobs and 1,750 permanent jobs, would be one of the most significant industrial investments our state has ever seen,” she said.
“We've had a great working relationship with the Mesabi team. Out of respect for a company we hope to welcome as a long-term corporate citizen and partner in our region, we're not sharing more on location or project specifics than their team has shared at this time.”
Benjamin said projects of this scale bring opportunity, but also raise important questions about workforce, infrastructure, housing, and community services.
“We take both seriously. Our job is to help make sure growth like this benefits the people who live and work here, and we'll keep the public informed as there is more to share. It's a great project for Iowa, and we can't wait to continue to play our role in the transformation of the regional economy.”
The company had financial struggles with the State of Minnesota and, according to an article in Bemidji Pioneer, had their mineral lease agreements suspended while they caught up with payment and project deadlines. However, according to the Des Moines Regiter, the company is now current with its obligations to the state. The U.S. Import-Export Bank approved a $770 million loan to support Mesabi’s project in Minnesota.