By Mark Fischenich
JANESVILLE — Announced, delayed, constructed, mothballed, bankrupt, thrice sold, the long-awaited Janesville ethanol plant will be fully operational this fall, according to its new owners.
The plant — completed but never put into operation when its second owner declared bankruptcy — will be sold by AgStar Financial Services of Mankato to an ownership group made up of nine existing locally owned ethanol plants, according to AgStar and the new owners.
At 110-million gallons, the facility’s production capacity makes it one of the state’s largest ethanol plants. It’s likely to be Janesville’s second biggest employer of full-time workers. And it will soon be Waseca County’s largest taxpayer.
For Janesville residents who have watched the plant’s laborious birth, Tuesday’s news was encouraging. But they also vowed to remain skeptical until they saw the plant taking its first breath.
“Nobody’s putting a lot of stock in this until they see the steam coming out of the stacks,” said Paul Pfenning, chairman of the Janesville Chamber of Commerce.
The plant is expected to bring about 50 full-time jobs, which would likely put it behind only the public school system among Janesville’s employers, said Janesville City Administrator Clinton Rogers. Although the plant was built just east of town — meaning there will be no direct boost in the city’s property tax base, the new jobs and potential for higher incomes for area farmers should benefit the city’s businesses.
“It’s obviously going to affect the local economy in a good way if you have more employees moving into the area,” Rogers said. “It’s definitely going to affect the stores and businesses.”
Like Pfenning, Rogers injected some caution into his optimism.
“I certainly hope it’s successful,” he said.
Any uncertainty would be lessened with the closing of the sale — which could come as soon as Sept. 15 with full operations beginning 30 to 60 days after the closing, according to AgStar Financial. The Mankato-based ag-focused financial services company took ownership of the plant in January in an auction approved by a bankruptcy court.
AgStar was the lead lender for the facility, being constructed by VeraSun Energy of Brookings, S.D., which declared bankruptcy last fall. VeraSun had become owner following a merger with U.S. BioEnergy, the original developer of the project, in April of last year.
AgStar paid $55 million for the facility, essentially what lenders had loaned VeraSun for the project. Terms of the deal announced Tuesday weren’t disclosed and the sale is not final, but new owner Guardian Energy of Shakopee is confident the sale will be completed by the end of September.
Randall Doyal of Guardian Energy said he can’t offer iron-clad guarantees that there won’t be further setbacks.
“But I’m pretty confident that things will be running well before the end of the year,” said Doyal, CEO of Al-Corn Clean Fuel, the operator of an ethanol plant in Claremont, east of Owatonna. “Sometime mid-to-late fall at the latest.”
The plant is well designed and constructed, and the few workers kept on the job throughout the bankruptcy process have done well to keep the completed but inactive facility properly maintained, Doyal said.
“It’s a good facility,” he said. “I think it will run well. I think people will be pleased with what they see out of it.”
So far, the plant has mainly produced bad feelings. Contractors involved in the construction wondered if they were ever going to get paid, Pfenning said.
“A lot of creditors got stuck,” Pfenning said, mentioning one local contractor who was “sweating bullets for quite a while.” “Most of them got paid, but it still left a sour taste in their mouth.”
Farmers who entered into contracts with VeraSun to sell corn at guaranteed prices found out in November that the bankrupt company was reneging — eliminating an estimated $55 million in revenue for affected corn farmers nationwide.
Waseca County narrowly avoided being on the hook as well. When the plant was first proposed in 2005, the county had made tentative offers of — and U.S. BioEnergy had initially accepted — $4.5 million in subsidized loans and $1.2 million in property tax abatements.
Those deals were never finalized and aren’t part of the sale from AgStar to Guardian Energy, said Waseca County Coordinator Bruce Boyce.
The county financed $220,000 in road improvements for the project, but the plant is slated to pay more than $125,000 in property taxes in 2011 based on the current plant market value of $4.4 million, Boyce said. That market value, and the related property taxes, will grow dramatically once the plant is operating.
“Ultimately, they will be the largest taxpayer,” he said, adding that the larger economic impact will come from the jobs produced and the opportunities for farmers to sell corn.
“A stable ownership will mean a lot to this county,” Boyce said. “... It’s exciting that it will be operating, employing people, buying local grain. It’s been a long time coming.”
