Renewable Energy Group is running out of time, and the biodiesel company is in discussions to amend its incentive compliance agreement with the city.
The plant was to have been completed and running by Aug. 31 in order to receive incentives, according to an agreement that already has seen extensions since the spring of 2007. So far, the project is only 20 to 25 percent complete.
“They’re functionally out of compliance,” said Kent Heermann, president of the East Central Kansas Regional Development Association, noting that it will be impossible to complete the project by the end of the month. “They’re in the process of having discussions to amend or extend the incentive compliance agreement. They’re not going to fold up their tent and quit, but they need to work on an agreement with the city that’s equitable and fair to both parties, so that’s where we’re at.”
REG announced plans to build in Emporia in April 2007. Construction on the plant began that summer, but the project was put on hold in March 2008 because of tightening credit markets and rising commodity prices.
REG has so far invested $18 million in the Emporia plant. The scope of the project was to create 30 jobs with an annual payroll of $1.35 million, Heermann said. Included in the deal was to be a capital investment of $4.5 million in equipment and $24.5 million in real property, which includes buildings and rail spurs.
City manager Matt Zimmerman said it’s too soon to tell whether or not an agreement will be reached.
“We’re going to cross that bridge when we come to it,” Zimmerman said. “Hopefully we’ll reach an accommodation to extend the deadline.”
Heermann said the company still faces hurdles because of the economy.
“It’s still very much of a challenge because the credit markets are still very tight,” he said. “They’re starting to loosen up a little bit, but biodiesel is kind of lumped into the category of ethanol, and that kind of fell out of favor and some of the economics fell out of favor.”
Officials with REG could not be reached for comment.
justthinkin (anonymous) says...
Surprised ? - NOT ! Extensions since spring, 2007 and only 20 - 25% complete ---- Good Planning - Good Grief.
How much as the City invested so far?
August 12, 2009 at 3:27 p.m. ( permalink | suggest removal )
vankamp (anonymous) says...
I would like to see the RDA make REG keep the area up that they walked out on. It is overgrown with weeds and trash, the roads are all torn up and they just walked out & left a mess. They should either clean it up or pay a fine. I 'll bet you any amount of money that something would have been done by now if Mr. Heermann or his cronies on the RDA lived across the street from that. Shame on you for turning a lovely country setting into a dump!!!!
August 12, 2009 at 3:33 p.m. ( permalink | suggest removal )
justthinkin (anonymous) says...
Take the incentives, then RUN, that's the Lenze way.
August 12, 2009 at 3:37 p.m. ( permalink | suggest removal )
reddog (K. B. Thomas Jr.) says...
First of all, I want to thank Chris Walker and the Emporia GAZZETTE for this wonderful forum. I remember being at the planning commission and listening to an ESU professor saying, what if the commodities market go haywire? Good question. This question was not addressed and brushed aside. I remember K. B. Thomas JR making a comment that maybe, we need to slow down and think things through. MR THOMAS said, I feel very uncomfortable about zoning heavy industry right in front of a residential home without just compensation. Unfortunately there is no law allowing just compensation. The misrepresentations by our city manager and Mr Kessler were compleatly uncalled for. The city manager said, there is no difference between light industrial and heavy industry. Mr Kessler had the nerve to say that this project would not hurt property values. IN THE NEAR FUTURE I will be introducing some new legislation concerning the misrepresentations of City Commissioners and city managers. I want the citizens of the state of KANSAS to send a message that were not going to tolerate any more mickey mouse'n AROUND.
August 12, 2009 at 8:06 p.m. ( permalink | suggest removal )
Steve_Corbin (anonymous) says...
Well, I for 1 hope REG comes back and fininshes the plant.
HOWEVER, If the property is in the city limits, (I think it is),
Then the city's mowing ordinance pertains to the property and should be enforced.
Who ownes the land, REG or the city?
August 12, 2009 at 9:06 p.m. ( permalink | suggest removal )
Tell (anonymous) says...
It is time for new leadership in the RDA. When they originally pulled out Mr Heermann was saying they just shut down for the winter how many years can this kind of crap go on?
August 12, 2009 at 9:39 p.m. ( permalink | suggest removal )
Tell (anonymous) says...
The county couldn't wait to get out to the old pallet plus building and clean it up at the owners expense. Steve I also would like them to finish but maybe its time to cut bait and run before the city sinks anymore money into what clearly is a bad investment.
August 12, 2009 at 9:47 p.m. ( permalink | suggest removal )
Paccifier (anonymous) says...
I think Ray Toso had the best idea- get Honor vodka from Lawrence to convert the site into a huge vodka distillery (you do distill vodka, right?).
August 12, 2009 at 10:21 p.m. ( permalink | suggest removal )
b3bill (anonymous) says...
Looks like REG is running the whole show, not RDA or the city. REG has used different excuses to stall and have done what they wanted. Not keeping the place mowed is a pure insult to all surrounding property owners from both REG and the city.
What kind of excuse is it to say the credit market tightened, therefore construction at REG had to be suspended? Didn't REG have all the money allocated/borrowed **before** construction began? Isn't this something that RDA/city would have required before allowing REG to build?
Don't forget that soon after REG used the credit market excuse that it was reported they bought a competitor company (in Texas, I believe). If the commodity market was going out of favor for them (another excuse), then why buy a competitor company at that time and increase exposure to the commodity market? Kind of odd they had enough money for purchasing a competitor, yet had to stop construction here.
Let's face it, REG isn't into honoring a commitment and has little interest building here. I bet REG doesn't even think about the property here, except when reminded. Even if they complete the project, who would trust them to be around very long before pulling out or once again suspending operations? They're good at excuses and making themselves into the victim.
I hope they have to pay back all the city money they have received and pay taxes on the property like you or I would have to. If REG decides to not complete building here, they should be required to remove everything and return the land back to it's original state, or else find a buyer to assume the liability or use of the property. I bet the RDA/city doesn't have that covered in their legal paperwork with REG.
If REG ever completes construction and is in business here for as long as they've stalled and fallen behind, then maybe consider giving them some incentives. REG has screwed Emporia good by receiving a lot of money and not delivering (now look at the city budget), plus consumed countless hours of city time that could have possibly been spent on finding a real business to locate here.
August 12, 2009 at 11:18 p.m. ( permalink | suggest removal )
reddog (K. B. Thomas Jr.) says...
Just after Emporia made a commitment to REG another company came along and wanted to locate in Emporia. They were turned down because, it was a similar operation but, they used different ingredients and located in STRONG CITY. And now you know, the rest of the story. Good night and God bless.
August 13, 2009 at 12:06 a.m. ( permalink | suggest removal )
Steve_Corbin (anonymous) says...
b3bill,
I think that the REG corperate name was retained by another company that really bought out the old REG.
Most of their other plants in the company use another product other than soybeans in their manufacturing process, like the Emporia plant would have. With over 18 million invested so far, we can only hope the Emporia project will get finished.
But you never know.
Remember Proliance, the company that bought the Modine Emporia plant and then closed it down and moved everything to Mexico?
They just declared Bankruptcy!
Maybe the business credit market is a little tight.
August 13, 2009 at 12:06 p.m. ( permalink | suggest removal )