Hoiseth: Minnesota Department of Ag changes its match ratio, and equity drive scope expands to outside investors.
The CHEDA-based advisory committee tasked with moving the process along toward Epitome Energy constructing a $150 to $180 million soybean crush biodiesel facility on Crookston’s south end, when it meets Tuesday, will discuss the potential establishment of a tax-increment financing (TIF) district that would be a critical component of the overall financing package.
But, on the heels of last week’s CHEDA Board of Directors meeting, the committee will also address a new development that involves the Minnesota Department of Agriculture, which had previously committed $1 million to the permitting process, changing the way its going to disseminate the funds. The $250,000 loan agreement with Epitome to also help with the permitting process with the Minnesota Pollution Control Agency and other agencies specifies that MDA come forward with the $1 million, and there are documents making that commitment official, CHEDA Executive Director Craig Hoiseth said.
But, while the MDA initially said it would match local dollars dollar for dollar, the agency has since concluded that it wants “more bang for its buck,” Hoiseth explained, and its match formula now requires $4 local dollars for every $1 MDA dollar. In the bigger picture, that means MDA wants Epitome Energy to spend $4 million in order to get the full MDA $1 million commitment.
With the first $50,000 installment coming due to the consulting engineers working with Epitome and the MPCA on the permitting process, Hoiseth said the MDA’s modified approach warrants further discussion.
The change in MDA’s approach, CHEDA Board Member Paul Eickhof noted, is “significant.”
“I thought so, too,” Hoiseth said.
So, factoring in MDA’s new match formula, he explained, it would disseminate $12,500 once the $50,000 installment is made. “It would go in increments in that direction (toward the $1 million),” he said. “The commitment hasn’t changed (from MDA), but the timing of the commitment has changed.”
Although nothing has changed in regard to the $250,000 loan itself, Hoiseth said the MDA shift should be discussed further, and the advisory committee on Oct. 29 will do just that.
The Epitome Energy equity drive has also expanded its scope to include outside investors. The goal early on was to accumulate as many local and area investors as possible, Hoiseth said, with the idea being that local and area investors providing the initial $2 million would get the most beneficial stock incentive, which decreases somewhat with the next $10 million invested.
But, with commodity prices being what they are, a trade war and saturated fields, Hoiseth said it’s proving to be a tough ask to get farmers around these parts to write checks to Epitome Energy.
“I think we can acknowledge it’s a tough year for farmers and for them to write checks from their own liquidity, especially the past few weeks,” Hoiseth noted. “If you were farming today, you’d say, ‘I need to hold onto what I got.’”
It adds up to those leading the equity drive needing to expand their scope.
“They have to move forward, so they’re moving the equity drive out of the region,” Hoiseth continued. “We’re losing some local wealth with that, but it’s necessary. We’ve seen some local checks written, but not to the level they need.”