Waiting for an ethanol plant in Sharon

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June 7, 2009
— If the best-laid plans hadn’t gone awry, Global Renewable would be making ethanol in Sharon right now.

That would mean 55 more jobs than the village has right now.

It would mean water and sewer mains would be flowing past the village’s industrial park.

It would mean the industrial park had some industry in it.

When Global Renewable announced in November 2006 that it would build an ethanol plant in the village, the Whitewater-based company expected the plant to be in production by now.

The company has yet to break ground, and President Jeff Knight has stopped saying when he expects to do so. He hasn’t given up hope, however, Knight said.

The village does not have the legal means to recoup attorney and engineering fees racked up during negotiations for an ethanol plant.

One village official said it’s a mistake the village didn’t have a cost-recovery agreement with Global Renewable. Others say the money spent is part of the risk municipalities take while attempting to increase their tax base.

Ethanol plans

Global Renewable proposed a $237 million ethanol plant on Highway 67 on the village’s west side.

The plant was expected to produce up to 120 million gallons of ethanol from 38 million bushels of corn.

Investors planned to buy the corn from within a 50-mile radius of the plant, which would have improved the company’s bottom line, Knight said.

By the end of 2007, investors had gotten together close to 90 percent of the financing needed for the project.

But a drastic increase in corn prices in 2008 along with the economic slow-down made those loans impossible today, Knight said.

“We’re on hold—I think as most of the country is—waiting for the financial situation to correct itself,” Knight said.

He hasn’t given up hope for the project and still is working to move toward construction of an ethanol plant in Sharon, Knight said.

Whether he builds it or someone else does, Sharon is perfectly suited for an ethanol plant, Knight said.

“We had a hill to climb to pull financing together,” Knight said. “We haven’t deserted the site. We believe that site in the long term is one of the best sites for an ethanol plant in the country.”

Other industry

The village of Sharon owns 44 acres adjacent to the site of the proposed ethanol plant. Global Renewable owns the 200-acre parcel where the proposed plant would be located. The two properties together make up the village’s industrial park.

Except there’s no industry.

The village is ready to donate village-owned land to a business or business that want to locate in the industrial park, village President Diana Dykstra said.

Former village President Chuck Dorn had been negotiating with Poly-Flex, an industrial liner manufacturing company.

But the deal fell apart after the April election when Dorn lost his seat to former board member Dykstra, Dorn said.

Dykstra said information wasn’t communicated from the former board to the current one.

Sharon needs to be ready when another company says, “Yes,” Dykstra said.

The village board last month gave staff direction to apply to the Wisconsin Department of Transportation for the permits necessary to build water and sewer mains to the industrial park, attorney Brian Schuck said.

But the village has not approved construction plans at this point, Dykstra said.

The village estimates it will cost $2.1 million to run water to the industrial park, Dykstra said. Officials want some commitment from a business before they break ground.

“It’s such a risk to put those improvements on our backs without commitment from somebody who’s going to come in,” Dykstra said.

That’s one thing she and Dorn agree on.

“It was anticipated that we would do the actual improvements upon a serious entity wanting to locate,” Dorn said. “From a cash flow standpoint, it wasn’t feasible to put water and sewer in and then sit and wait for somebody to come along.”

The price

It’s been more than a year since the village of Sharon has spent money on the ethanol debate, Clerk Dawn Redenius said.

It’s not clear when the village will start getting money back on the investment.

Redenius said the village spent more than $40,000 on attorneys fees. Dorn estimates the village is out close to $100,000 on attorney and engineering fees.

An attorney worked to write pre-annexation agreements for the project. Professionals also negotiated terms for tax-exempt industrial revenue bonds and worked to help the village create a tax incremental finance district.

The tools were intended to support Global Renewable’s search for financing.

The problem, Dorn said, is the village never signed a cost-recovery agreement with Global Renewable.

That means the village doesn’t have legal means at this time to recover the money it spent during negotiations.

When he asked, Global Renewable said it would not pay for attorneys and engineers fees, Dorn said.

“They’ve told me they’re not going to pay us for it, for us to engage in bond counsel,” Dorn said. “That’s when things kind of broke down.”

Bob Carlson was the village president when Global Renewable started negotiating with the village.

Spending tax dollars is part of doing business as a municipality, Carlson said.

“On some things, we just have to eat it,” Carlson said. “It’s like a TIF district. Some people don’t like TIFs. But a TIF is us gambling with the taxpayers’ money. If it fails, the tax dollars are lost.

“But if it works …”

Dan Thompson, the executive director of the Wisconsin League of Municipalities, doesn’t have statistics on how many municipalities create cost-recovery contracts in early negotiations with businesses.

But his gut tells him it’s common for many municipalities to invest a certain amount of money in groundwork in an attempt to land businesses, Thompson said.

It’s not easy for a municipality to ask a potential new business to agree to share costs before they even agree to a location, Thompson said.

But the alternative is doing nothing and waiting for a bolt of good luck, he said.

“When a deal goes sour, it makes ugly headlines,” Thompson said. “What I say to veteran and newly elected officials is, from my perspective, the risk-adverse nature of municipal decision making is one of the biggest drawbacks to economic development.”


November 2006—People pack Sharon Village Hall to hear Global Renewable announce plans to build one of the biggest ethanol plants in the state. Officials expect the plant to open by early 2009 at the latest.

March 2007—The village of Sharon annexes 518 acres. The land is slated as a home for the ethanol plant as well as an industrial park. The village starts to create a tax incremental financing district to help entice the plant to locate in Sharon.

April 2007—The Sharon Village Board approves the sale of $60 million in tax-exempt revenue bonds. The bonds never were sold, and the money never borrowed.

The planning commission approves $13 million in tax-increment financing for infrastructure improvements.

June 2007—Global Renewable gets air quality and construction permits from the state Department of Natural Resources. The permits have since expired.

December 2007—Global Renewable reports that it’s raised more than 80 percent of the $237 million needed to build the ethanol plant. The U.S. Senate passes a bill calling for the nation to produce 36 billion gallons of biofuel annually by 2022.

July 2008—The Janesville Gazette reports that Global Renewable plans to break ground by fall. It’s the last time a company official shares a timeline with the newspaper.

June 2009—A Global Renewable official says the company still hopes to build in Sharon, although he cannot say when.

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