The Status of the Biodiesel Plant------

(Ed.note; The following is a portion of the minutes from the Committee of the Whole from Last Saturday, April, 5, 2008)


E. North Prairie Productions. Wietecha presented a copy of a November 13, 2007, memo. He noted that North Prairie is not in default on the development agreement nor is the City pulling the plug on the project. However, with construction still suspended, North Prairie will either need to resume construction or revisit the development agreement soon to avoid becoming in default.

Although the City committed approximately $2,355,000 to support the biodiesel project; funding was set to be made as construction progressed. At this point, the City has incurred about $600,000 toward the project; about two-thirds of which is securable by special assessment levies against the property.

The overall project notwithstanding, there are two specific issues that the City will need to consider in the immediate future. Anticipating $250,000 in state grants for the project, the City bonded for less than the construction costs on County Road M. This will result in a temporary cash-flow problem this spring. The City had intended to provide about $1.9 million as a development incentive. With construction on hold, the City is incurring unnecessary interest expenses on these moneys. The City will be paying off the associated State Trust Fund Loan to avoid the interest expenses; new funding can be secured when construction resumes.

Wietecha said that while the biodiesel project has been on hold, a soybean crushing facility has been gaining momentum and now looks quite promising. Although the North Prairie agreement did have a number of safeguards to minimize the City’s exposure; the City may want to negotiate a pay-as-you-go arrangement on future tax increment projects of this magnitude.