Supervisors kick around Iowa Fertilizer tax numbers

Resident asks about taxable value and payments to the county


LEE COUNTY – As politicians continue to collide over the proposed sale of one the largest industrial facilities in the state, locals are examining the value of the facility’s tax contributions to the county.
At Monday’s Lee County Board of Supervisors meeting, local resident Ted Stein who lives close to the facility and is a former chemical engineer, asked supervisors if numbers reported under a Payment in Lieu of Taxes (PILOT) program were correct.
Supervisor Ron Fedler said the numbers were correct in the progressive tax program and the program was necessary to secure the facility from competing counties, including Scott County in Iowa.
According to information obtained from an ISP spokesperson on Monday evening, there was also competition from Illinois counties.
A sale is currently pending for Koch Industries to acquire the facility from OCI Global for $3.6 billion. The move has drawn the attention of Iowa State Auditor Rob Sand and a reaction from State Sen. Jeff Reichman (R-Montrose).
“I’m curious to see what the fertilizer plant is currently assessed at,” Stein asked.
Budget Director Cindy Renstrom said it was her understanding that the facility isn’t assessed in its entirety but only portions allowable under Iowa tax laws. She said the facility is assessed currently at about $58 million.
Stein said that sounds like it’s only being assessed at 10% because a facility that size, compared to his past experiences with energy producing facilities, would be valued at closer to half a billion.
Fedler said he’s spoken with former Supervisor Larry Kruse who was a supervisor when the deal was struck to build in Lee County.
“The entire facility is not taxable, only certain parts,” Fedler said. “That progressive PILOT payment program was one of the big reasons they came here. Otherwise, we would have lost it to (Scott) County.”
Fedler said OCI also tried to negotiate a way out of paying the natural gas consumption tax which he said is close to $3 million a year.
“They tried to negotiate not having to pay a consumption tax on the natural gas. That didn’t happen and that’s huge.”
According to the number received from Iowa Fertilizer Monday, the company placed “replacement” taxes to Lee County of approximately $2.5 million in 2023. That includes the annual PILOT payment and the natural gas consumption tax.
Renstrom said those monies are not just Lee County’s but also get distributed to other local agencies that are represented in a regular property tax bill including such entities as public school districts, ag extensions, Southeastern Community College, and others.
“Because Iowa Fertilizer Company uses natural gas, we are subject to the replacement tax, as well. In 2023, we paid replacement taxes to Lee County of approximately $2.5 million, including $540,000 in 2023 under the PILOT Agreement,” the spokesperson said.
IFCo also contributed $250,000 to the Lee County Economic Development Group and Career Advantage Center, and $11,500 to the three county public school districts’ school lunch deficits.  
The IFCo spokesman said the PILOT rules are not specific to Iowa Fertilizer. They are general laws in Iowa that apply to the state’s energy companies.  
OCI invested more than $2.5 billion to construct the first world scale fertilizer plant built in the United States in more than 30 years – making it one of the largest, if not the largest, private construction project in Iowa’s history.
At the peak of construction, OCI employed more than 3,500 workers. Originally, the company projected to employ approximately 1,600 workers during the construction phase. OCI currently employs more than 260 people at the facility, while originally committing to 165.

Lee County, Iowa, Iowa Fertilizer Company, sale, taxes, PILOT, code, Pen City Current, Ron Fedler, Supervisors, Board of Supervisors, resident


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