The Enid News and Eagle, Enid, OK

January 10, 2013

Canola plant focus of ERDA quarterly meeting

By James Neal, Staff Writer
Enid News and Eagle

ENID, Okla. — A proposed canola processing plant was the focus of the Enid Regional Development Alliance quarterly meeting Thursday at Oakwood Country Club.

Neil Juhnke, president and COO of Northstar Agri Industries, provided the keynote address on a canola processing plant the company plans to build between 66th and 78th, east of Enid and about one mile north of U.S. 412.

Juhnke told about 200 attendees Thursday he has been impressed by and felt welcome in the Enid community.

“It seems the work ethic and the folks I meet here make me feel very much at home,” Juhnke said.

Juhnke was one of six Minnesota and North Dakota partners who founded Northstar in 2006. The partnership gathered local investors in northwestern Minnesota and financed the company through an 88 percent equity exchange to PICO Holdings in 2010.

Northstar built its first plant near Hallock, Minn., and ran its first production of canola oil and meal last April.

Northstar’s Minnesota plant is capable of processing 345,000 tons of canola seed annually, producing 280 million pounds of oil and 195,000 tons of canola meal, commonly used as a livestock feed.

Juhnke said the Enid plant will have twice the production capacity of the Minnesota plant, and will be able to process 28 million bushels of canola into 580 million pounds of oil and 450,000 tons of meal per year.

Supplying the plant with enough canola for its operating capacity will require increasing canola planting in the local region, shipping it in from North Dakota and Canada, or a combination of both.

Juhnke said the United States currently consumes 7-8 million acres worth of canola annually, but only 1.2-1.7 million acres of canola are grown in the U.S. each year. Most of the current U.S. consumption comes from Canadian-grown canola.

Juhnke said the southern Great Plains has the capacity to grow 1.6 million acres of canola per year. He said if 15 percent of wheat acres in western Oklahoma, Texas and Kansas were transitioned to a canola rotation, it would add 815,000 new acres of canola and meet the supply demand for the proposed Northstar plant in Enid.

But, it’s not just the region’s canola growing capacity that attracted Northstar to Enid.

Enid Regional Development Alliance has helped broker a proposed Tax Increment Finance district that would generate as much as $27 million in incentives for the plant over 25 years.

Estimates for the plant investment range from $150 million to $250 million, with TIF compensation ranging from $12 million to no more than $15 million.

Under the terms of the proposal, 90 percent of the increased ad valorem taxes from the TIF district would go toward Northstar’s investment compensation, compensating the city of Enid for infrastructure improvements and interest on both counts.

All tax-receiving entities would continue to receive ad valorem revenue from the current assessed value of the 399 acres on which the plant will be built, plus 10 percent of any increase in ad valorem revenue due to the plant’s development over the next 25 years.

Tax-receiving entities affected by the ad valorem tax drawn from the TIF district are: Pioneer-Pleasant Vale Public Schools; Garfield County, through the county general fund and the county school levy; Garfield County Health Department; city of Enid sinking fund; and Autry Technology Center.

Once the TIF expires, the tax-receiving entities could see a combined net gain in their ad valorem revenues of up to $2.2 million per year, according to figures provided by The Public Finance Law Group.

Over the 25-year term, the TIF district is projected to generate $50 million in ad valorem revenue. Of that $50 million, $5 million would go to the tax-receiving entities over 25 years, and $45 million would pay for Northstar’s compensation up to $15 million, the city’s $12 million in infrastructure improvements and 25 years’ worth of interest on the obligations to both Northstar and the city — more than $23 million.

The city’s $12 million-worth of infrastructure im-provements would include running water and sewer lines to the plant and improving 66th Street to support industrial traffic.

Enid assistant city manager Joan Riley said the canola plant would use city water, and plans presented to the city call for the facility to use 550,000-750,000 gallons of water per day in its processing operations.

Riley said the city already has budgeted and made pre-parations to bring online one million additional gallons per day in the city’s water supply this year, and another two million gallons per day capacity in 2014.

The canola plant is not projected to begin operations until March 2015.

Riley said the city is increasing its water supply by obtaining new water rights and by increasing or improving infrastructure to utilize existing water rights.

She said the city is increasing its water supply infrastructure both to increase residential supply and to increase water supply for new and existing industry.

The canola plant is projected to employ 55 workers, with an annual payroll of $3.75 million.

The Metropolitan Area Planning Commission recommended approval of the TIF district Tuesday. The plan is expected to come before Enid City Commission for final consideration during the commission’s regular meeting Tuesday.