DES MOINES – Iowa Senator Joe Bolkcom, chair of the Ways and Means Committee, is calling an economic development for a Orascom fertilizer plant the “worst Iowa economic development decision ever.”
The Des Moines Register reported that Orascom Construction Industries agreed last year to build a $1.4 billion fertilizer plant in Iowa “after state economic development leaders agreed to up the incentives ante for the project.”
Now, Iowa Democrats have called on the Branstad Administration to explain how it didn’t know that a subsidiary of Orascom – the recipient of one of the largest state incentive packages in Iowa history – was under investigation by the US Government for fraud.
“To understand why Orascom is the worst Iowa deal ever,” Bolkcom said Tuesday in the legislative chamber, “you only need to understand one number.
“That number is $300 million. 300 hundred million dollars. Iowa had a $300 million advantage over Illinois before Governor Branstad put a single state tax dollar or a single local tax dollar on the table.”
According to Iowa Democrats, Governor Branstad announced last year that his administration was going to give foreign-based Orascom more than $100 million in state aid to build a new fertilizer plant in Iowa. The $200 million total incentive package was one of the largest corporate aid packages in Iowa history. Democrats say that no one with the Iowa Economic Development Authority knew an Orascom subsidiary was under investigation for defrauding the federal government.
The plant is under construction in southeast Iowa and will employ about 165 people when completed, according to reports.
Watch video:
httpv://youtu.be/hPu398_WQSA
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Transcript of statement made Tuesday in the Iowa Senate regarding Orascom
This is day two of the story of the Iowa’s worst economic development deal EVER.
I’ve passed out a map this morning that describes what I’m going to talk about.
There are lots of numbers involved in these economic development deals.
But to understand why Orascom is the worst Iowa deal ever, you only need to understand one number.
That number is $300 million. 300 hundred million dollars.
Iowa had a $300 million advantage over Illinois before Governor Branstad put a single state tax dollar or a single local tax dollar on the table.
A $300 million advantage from the get-go. To compete with Iowa, Illinois would have had to pony up $300 million in cold, hard cash just to be as attractive as Iowa was before we put one thin dime into the deal.
That’s the truth. And that is really what makes this the worst Iowa economic development deal EVER.
Here’s what I’ve been talking to the Iowa Economic Development Authority and others.
Iowa had available to it so-called Midwestern Disaster Area (MDA) bonds. There are federal bonds that help businesses recover from the 2008 floods.
Private companies can apply to the Iowa Finance Authority use bonds at tax-exempt rates. Iowa actually got about 2.6 billion dollars in disaster bonds.
Orascom was approved for $1.2 billion in MDA bonds—the expected cost of the fertilizer plant–by the Iowa Finance Authority on April of 2012.
If you can use MDA bonds, if you do use them to borrow money, you can save basically 1 to 2 percent on the cost of that borrowing. Access to these bonds will mean a savings of approximately $300 million to Orascom.
Every proposed Orascom site in Iowa qualified for the bonds, in terms of Scott County and Lee County.
But not a single site in Illinois that this company looked at had access to bonds because in 2008, those counties where they were considering locating did not have flooding damage in 2008.
So the question this morning for the Governor is “How did this happen? Was the competition from Illinois real, or simply a fabrication?”
Madame President, we’re going to explore this in a little more detail tomorrow.
