Rising costs associated with pandemic lead to a dramatically scaled back AIC
Crookston’s one-of-a-kind Ag Innovation Campus is still going to be constructed this year and begin operations in 2022 on around 10 acres of land on the city’s southern edge, its project manager assured the CHEDA Board of Directors this week. But, citing dramatic increases in materials and other construction-related costs related to the COVID-19 pandemic, Jim Lambert said what ends up being built, at least initially, will be significantly scaled back from what was originally envisioned.
How scaled back?
• The facility’s original dimensions were 160 feet wide by 430 feet. What will now be constructed will be 65 feet by 250 feet.
• Initially, 60 full-time jobs were expected to be created as part of the AIC’s original scope. Now, 21 new full-time jobs will be created.
• Ten bays for AIC business and commodity partners to rent for research and other related activities has been reduced to two bays.
“This is what COVID has done to us,” Lambert said. “It’s very dramatic to go from 160 by 430 to 65 by 250.”
The City of Crookston and CHEDA are extending a new road to the AIC and are seeking state bonding dollars to cover most or possibly all of the costs. CHEDA Executive Director Craig Hoiseth sought to make sure his board realized that scaling back the AIC’s initial construction is not an “AIC strategic decision” and instead is being driven by the impact of the pandemic on materials and construction costs.
“So this is a COVID-related decision?” Hoiseth asked Lambert.
“It’s pretty much all driven by COVID,” Lambert responded. “…It’s a reaction to reality.”
In addition, for the larger facility first envisioned, approximately $1.3 million was expected to be needed for site-related infrastructure work. Now, Lambert said, that cost has been reduced to around $800,000. But in speaking to the CHEDA Board, he asked that CHEDA and/or the City consider helping with that cost by providing up to $400,000. Lambert mentioned proceeds coming to Polk County and Crookston through the pandemic-related American Recovery Plan as a potential source of funds. Lambert stressed that AIC leaders are also looking elsewhere for financial assistance.
AIC leaders are estimating an overall construction budget increase of 40% that makes the scope of the initial facility no longer possible at this juncture.
The concern about dramatically rising construction costs was not limited to the AIC at the CHEDA Board meeting. Hoiseth recommended that plans for the Crookston High School Construction Trades class in 2021-22 to build a new house on Eickhof Boulevard be scrapped in favor of a housing rehab project instead. The money that would need to be invested in materials would likely result in a completed house with a sale price unreasonably high in order for CHEDA and the school district would at least break even financially. Anecdotally, city council member Joe Kresl, longtime maintenance staff member at UMN Crookston, told the CHEDA Board that he recently needed to buy a sheet of Plywood for the campus that normally costs around $20, and it was more than $60.
“It’s unprecedented, the amount (of cost increases) we’re seeing across the construction industry,” Lambert said. “It’s pretty real, and we’re seeing it when we’re going out for quotes.”
Soybean crush facility is critical
Lambert stressed that the three-station soybean crush facility at the AIC will remain and will be a critical component to the non-profit venture’s success because revenue from crush operations will help the AIC cash-flow. Any profits, he added, will be reinvested in the facility.
The three crushing lines at the facility that will operate 24 hours a day, seven days per week will crush approximately 240 tons of specialty soybeans per day. Other commodities could be crushed as well, Lambert said, which is why the initiative is called the “Ag” innovation campus and not the “Soy” or “Soybean” innovation campus.
“This crush facility does not care what kind of crush product goes into it,” he explained, mentioning canola and hemp as potential commodities to be crushed.
“This is very exciting and very unusual; this facility will be unique in the country because there really isn’t a place that you can take soybeans, crush them, then take the byproducts to do the animal feeding trials you need to do,” Lambert continued. “We’re following up with potential customers in Crookston, and we feel we can get rid of all of our (soybean) meal within 60 miles of Crookston.”
A small amount of soybean oil is produced during the crushing process as well, he said, and there’s a market for that as well, especially with poultry producers.
Lambert credited the Minnesota Soybean Research and Promotion Council, which has been funding soybean research for more than 30 years, with being the main driving force behind making the AIC in Crookston a reality.
“The sad thing is that things would be funded, then kind of die on the vine because there was no place to get commercialized,” Lambert explained. “The (Minnesota Soybean Research and Promotion Council) said, ‘We’re going to do something about this,’ and the AIC was born.”
Lambert said Crookston is a “very prime” location.
“Some of the cheapest soybeans in the country are right here,” he said.