The Board of Commissioners this week voted unanimously to offer a performance-based incentives package for Chemtex International to locate to a 166-acre tract in the Turkey area. The company would bring with it a total of 65 jobs by 2014, with the annual average wage of $48,415. There would be a total taxable investment of $90 million, including a $15 million facility and $75 million in equipment.
With a site selection decision expected to be made this month, John Swope, executive director of the Sampson County Economic Development Commission, presented the board with several incentive package alternatives to entice the company.
“We are in competition with a neighboring county, so we are hoping that we can be selected sometime in July and can move forward quickly,” said Swope. “It would be to the advantage of Sampson County to come to a decision tonight.”
While Sampson has offered 166 acres on N.C. 24, east of Clinton in the Turkey area, Wayne County has committed to provide a site at no cost to Chemtex.
Chemtex has proposed to develop and construct a 20 million gallon per year cellulosic ethanol production facility, which would utilize “energy grasses” and other biomass materials to produce ethanol biofuel. Most of the energy grasses would be grown on existing hog lagoon spray fields in Sampson, and the facility would not use food crops such as corn.
Swope said the project provides a “new and improved economic opportunity for North Carolina swine farmers while maintaining and enhancing overall swine lagoon effluent management standards.” It is also a vital step in utilizing forestry and non-foods agriculture biomass resources as feedstock to produce biofuels, while achieving a state goal of 10 percent reduction of dependence on foreign petroleum, he said.
Chemtex was founded in 1958 and has been a part of Wilmington for years. Chemtex and its parent company M&G broke ground in Italy earlier this year on a similar cellulosic ethanol plant, planned to start up operations next year. The technology is based on two years of successful trials, officials said.
“Chemtex International has positioned their technology to be able to accept a wide range of ‘energy grasses’ and other biomass materials for the production of cellulosic ethanol,” stated Swope. “Although they can locate this facility in several different climates and regions within the United States they are working to locate the first of these facilities in eastern North Carolina to utilize the undervalued spray fields of hog lagoons.”
‘An attractive boost’
Allana Whitney, project manager for Chemtex International, said the company likes the site, has enjoyed working with local officials and hopes to locate in Sampson.
It is anticipated the project will be one of those selected by the end of September as part of the U.S. Department of Agriculture BioRefinery Loan program, with an environmental impact study and permitting to follow in November. Contracts with farmers for purchasing of energy grasses will be required in December, before Chemtex can obtain financing for the project.
Land is set to be acquired in March 2012 and construction is scheduled to start several months later in July 2012. Construction will be completed in December 2013, with start up set for January 2014.
“We do not believe that is a fast track schedule,” said Whitney. “We believe that is very achievable.”
As part of the project, Chemtex proposes to utilize specialty energy grasses that would be grown on existing hog lagoon spray irrigation fields primarily located within Sampson, Duplin and Wayne counties. It is estimated that about 100,000 acres within the three counties are currently being utilized as spray fields for hog lagoons.
The planned Chemtex facility will require 30,000 acres of grasses to provide the feedstock to produce 20 million gallons of ethanol per year. If the facility is opened in Sampson, Chemtex could potentially contract approximately 15,000 of the estimated 45,000 acres in hog lagoon spray fields in Sampson, or half the grass acreage required.
“This facility would be an attractive boost to Sampson County’s employment and tax base as well as provide secure long term contracts for hog farmers to grow energy grasses that provide a higher return than they currently crops grown on hog lagoon spray fields,” Swope stated.
Commissioner Albert Kirby said he wanted to ensure the “local team” of farmers was taken care of before entering into an agreement that might potentially shut them out. Board chairman Jefferson Strickland expounded on that, asking if Sampson farmers would be able to have more of an advantage in becoming contract growers.
Whitney said Chemtex would obviously want to cut down on any additional costs, notably in transporting feedstock to the facility. A high percentage of producers will likely be located in close proximity to the plant, she said.
“Transport is such a huge dollar amount,” she said, “so any farmer located closer is going to have an economic advantage automatically.”
Steve Yost, director of North Carolina’s Southeast, said the commission has had the opportunity to work with Chemtex and believed that the company could work to pull the three sections of the Sampson County seal — pork, manufacturing and agriculture — together in one venture.
“It’s kind of a way to return to what we’ve always had,” he said. “We look forward to being a part of it as it moves forward.”
John Cooper, managing member of public affairs firm CompassNC, said the project would act to benefit Sampson and its citizens for years to come.
“It’s going to be one of the technologies that will lead this country as far as the corn and biofuels,” said Cooper, a Sampson native. “It is one of the first in the country and we’re glad to have it here at home. It will provide jobs and it has been getting a lot of positive attention at the North Carolina General Assembly.”
It is expected the project will receive tax incentives from the state totaling $36.7 million.
Paolo Carollo, executive vice president of Chemtex International Inc. said contracts would be honored at all time and, should Chemtex leave or be purchased at any point, those contracts would contain language that would make them binding to any successor.
Strickland noted the limited risk to Sampson County in offering the incentives.
“We’re not purchasing anything up front and it’s all performance based,” he said.
There were three alternatives laid on the table, revenue plans over five, seven and nine years. Longer agreements would mean tax revenue would be seen quicker, but also meant a larger percentage of grant back incentive payments to Chemtex and a smaller percentage of revenue for the county over the first decade of the project.
Chemtex will pay property taxes of approximately $5.2 million over the first 10 years starting in 2013. The county will see the largest amount of that, 45.1 percent, or $2.36 million, under the five-year plan. The rest — $2.87 million — will go back to Chemtex.
Under the five-year plan, Alternative A, the county will not see a dime in tax revenue for the first five years, but will receive the bulk of Chemtex’s annual property tax in year 6 and all of it from then on. The seven-year plan, Alternative B, would generate about $300,000 less revenue for the county, while the 9-year plan, Alternative C, would generate close to $500,000 less.
“Alternative A would be a little unprecedented to not get revenue for five years, but we would get nearly half a million dollars more,” said Kirby. “We’ve been ensured there is no risk, so I’m for Chemtex. I’ll just come out and say it. I think we ought to give them incentives, we ought to give them the opportunity.”
After short discussion, commissioners said they were in favor of giving incentives on the front end of the project, in order to receive the most revenue at the back end of the first decade. Before voting, Strickland hit Chemtex representatives with a candid query.
“ If we adopt this package, do we have some type of nod that Chemtex will act in the affirmative in locating to Sampson County?”
After a few moments, Carollo offered a response.
“I think we’ll start thinking about a site here,” he said. “If approved and the USDA money comes through, I would say yes. We would be extremely happy and honored to be here.”
Chris Berendt can be reached at 910-592-8137, ext. 121, or by email at email@example.com.