Council considers ethanol plant grant
By Caitlin Davis, Senior Staff Writer
Mar 19, 2014, 14:01
HOPEWELL — A $250,000 grant to aid the Vireol ethanol plant in Hopewell has reached a roadblock. The grant would help facilitate the opening of the plant, which currently has not begun operations.
Vireol, a British company, purchased the former Osage Bio-Energy Plant last year for $13 million. The company announced in December that the plant would open and create 70 jobs, 45 being Vireol employees and 25 being sub-contractors. Since that time the company has been seeking economic development sources, according to City Manager Mark Haley at a council meeting on March 11.
One of those is the Agricultural and Forestry Industrial Development, AIFD, grant. In a letter penned by Haley in conjunction with executives at Vireol to Virginia Secretary of Agricultural and Forestry Todd Haymore, he states the plant is seeking support in the form of the grant to help open the plant.
“The decision to commence operations in the Commonwealth is not an easy or inexpensive one, and it is for this reason we are seeking a partnership with the Commonwealth, as could be demonstrated through a commitment from the AIFD fund, to secure final company approval for making investments and creating jobs here.”
Over a period of five years, the plant is expected to require an investment of $41.8 million and create 70 new full-time jobs. The capital investment would be approximately $29.6 million of new equipment and $12.1 million of real property investments at the site, according to the contents of the letter. Also in that five-year period, the plant is expected to produce 22 million bushels of Virginia “agricultural products as the feedstock for the facility.”
Vireol is also expected to use 5 to 8.5 million bushels of local corn in each of the fist two years of operations. The value of those bushels would be $25 million to $43 million per year.
“As Vireol has indicated many times, the company intends to purchase locally as much of its feedstock as possible,” the letter states.
Part of the stipulation of the grant is the city must match the $250,000 grant, which is given over a period of years, with $125,000 per year. To be able to make the match, the city is proposing to give Vireol a portion of the rebate from the Machinery and Tools tax.
The M&T tax is based on the appraised value of the plant which currently sits at over $178 million. The projected rebate from Vireol is $409,263 and the rebate is able to be given to companies located in the Enterprise Zone, which is endorsed by the state.
A performance contract is attached to the grant. In order to get the grant, Vireol must meet certain criteria, such as creating jobs and using a certain number of bushels of locally grown produce.
“They don’t get this money until they have met their performance obligations,” Haley said at the meeting. “Once the goals are met by Vireol then and only then would this grant be given to Vireol.”
As the motion was made by Councilor Wayne Walton to resolve to approve the matching grant with the addition of the stipulation of the performance agreement, silence fell among the remaining council members when Mayor Mike Bujakowski called for a second.
In the moments before the issue was brought before council, with Vice Mayor Jasmine Gore and Councilor Brenda Pelham not in attendance, Councilor Christina Luman-Bailey got up and left the room and did not return until the next item on the agenda was presented.
On the day of the meeting, Bailey filed a “State and Local Government Conflict of Interests Act, Transactional Disclosure Statement.” The form states Bailey is conducting research for Vireol for the United Kingdom, Europe and other projects in the U.S.
Bailey confirmed she is working as an independent contractor for Vireol, but said it is not at all connected to the plant in Hopewell.
This is very part time,” Bailey said in the days following the meeting. “This is stuff [renewable energy] I’ve been passionate about.”
According to the Code of Virginia, Bailey cannot be present for any closed session on any matter involving Vireol. However, she is allowed to be in the room during opening session but cannot vote or participate in the discussion.
With Gore and Pelham absent, Bailey not being able to participate, and Bujakowski not able to second the motion as per council rules, that left Councilors Jackie Shornak and Roosevelt Edwards to further the motion.
Councilor Shornak said she saw many red flags appear when the motion was called for a second, which prevented her from furthering the discussion.
“The city lost trust in this venture,” Shornak said in the days following the meeting. “It’s just been a roller coaster ride with the plant.”
One of the red flags for Shornak was the absence of a representative from Vireol, something she said is unusual when that much money is being requested from the city. The second red flag for Shornak was when Councilor Bailey left the room as the discussion on Vireol began, which for Shornak was odd due to her past and continued support for the ethanol plant.
“I was totally blindsided,” Shornak said. “If I put my approval on something, I need to know without a shadow of a doubt it will be in the best interest for the city. ... I was not given anything in order to make a decision.”
Due to the lack of a second the motion died on the table, however it can be brought up at a later meeting. Shornak said she is not opposed to the concept of aiding the plant and approving the grant, she just wants more answers.
“I just wish they [Vireol] had contacted each individual councilor for support,” Shornak said. “I would ask, ‘how would you spend $250,000?’ It’s only fair to the citizens to know. I will weigh it again. It was not the time or place to do it.”
As of press time, it is not clear when this matter will be brought before council again.
“I am hopeful council will address it at a later time,” Haley said after the meeting.