Lee county approves millions in state tax credit benefits

DES MOINES - The Iowa Economic Development Authority Board approved another $25 million in tax credits for an Egyptian conglomerate that's building a fertilizer plant in southeastern Lee County.

The unanimous vote by the board on Friday makes a total of $82.5 million in state tax credit benefits available to Orascom Construction, parent of the Iowa Fertilizer Company.

The $1.8 billion plant is expected to employ as many as 165 workers when completed. The tax credits awarded Friday are an installment of an incentive deal that brought the company to Iowa last year, but they couldn't be awarded at the time because of a Legislature-imposed cap on annual tax credit awards.

“We were aware at the time of the initial reward. This $25 million was completely anticipated,” said board Chairman David Bernstein. “This was going to be a $100 million request.”

But state Sen. Steve Sodders suggested the board delay the vote for a month so the attorney general's office can review if the authority is following the legislative intent of the tax credit program.

The authority is allowed a certain amount of money it can dole out in tax credits every year for all its projects. This fiscal year it's $170 million; when the Orascom deal was struck, it was $120 million.

The law also allows carryover. If, for instance the authority spends more than its cap in one year, it can take that allotment off from the following year's cap.

“I'm not saying they're doing anything wrong, but is having these payments stretch out over however many years what the Legislature wanted?” Sodders said. “You can be sure that this is a discussion we'll have in January.”

The General Assembly resumes in January.

Economic Development Authority Director Debi Durham said the authority was “in complete compliance” with the law by spreading out the tax credits to Orascom.

“From our perspective this was originally presented as $100 million (in tax credits) for which they would have to come back for in future years,” Bernstein said. “We're just acting now to get the $100 million out in (investment tax credits) and we're not there yet.”

He added the company won't get any of the tax credits until the plant is built and begins operations.

Durham and Gov. Terry Branstad have come under criticism for their handling of the Orascom deal by some who believe the incentives offered were too rich.

Aside from the state incentives, the company received local breaks from Lee County, including $133 million in tax abatements over a 20-year period. It also qualified for federal tax-exempt bonds worth an estimated $300 million.