Hopewell OKs grant for ethanol plant
By Caitlin Davis, Senior Staff Writer
Mar 26, 2014, 11:33
HOPEWELL — City Council approved a $250,000 grant to help the Vireol ethanol plant get running. The move Tuesday night came after council hesitated to take action two weeks ago.
The company is seeking an Agricultural and Forestry Industrial Development grant that they say will help boost the local economy.
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. Also in that five year period, the plant is expected to produce 22 million bushels of agricultural products as the feedstock for the facility.
Vireol is also expected to use five 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.
Ged Russell, technical director for Vireol Bio-Industries, PLC, stood before council at the special meeting on Tuesday night, explaining the position of the plant and the need for the grant.
When Vireol purchased the plant last year, the intent was to strip the usable equipment overseas to England for a similar project, Russell began. However, over the course of almost a year, studies were completed that confirmed the plant in the city could indeed open and be a viable resource for the state of Virginia.
“We reached the conclusion that we could indeed potentially operate the plant using locally grown feedstocks so we have carried out a detailed engineering study now into how we might restart the plant,” Russell said. “How we would operate it, how we would use those local feedstocks to produce ethanol, which would be sold into the greater Richmond area market.”
In addition to the economic advantages of being located in Virginia rather than a Midwest state, Russell said export opportunities are available as well as the plant being able to contribute and work with the livestock industry here in the state.
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 also 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. The grant is also contingent upon the Governor’s approval and the amount of funds that will be available for the grant, with the maximum being $250,000.
“We believe it is a very exciting economic development opportunity for Hopewell,” Russell said. “It will create 70 full-time jobs on the site and it will lead to future capital investment on the site.”
Despite the varying levels of uncertainty, such as the governor’s approval, and that the vote at the meeting was only to support the plant in going after the AIFD grant, a couple council members were still uneasy giving their support.
Council voted 3 to 2 in favor of supporting Vireol’s efforts to obtain the grant, with Councilor Jackie Shornak and Councilor Roosevelt Edwards voting against. Councilor Christina Luman Bailey was not present at the meeting.
“I feel that my constituents and a lot of people that have talked to me, I just can’t support it right now,” Shornak said. “I really have problems putting my stamp of approval on it right now.”
She also noted that the money in the city is “tight” and she is looking various other entities in the city that are needing funding right now, such as the schools and the city employees.
“I have a hard time when you come into the city and we haven’t seen any type of revenue really coming in right now,” Shornak said, addressing Russell as well as Frank Parent, the CFO of Vireol.
Councilor Edwards also spoke out against supporting the grant, located in his Ward, Ward 2.
“This is environmentally unsafe. It’s in my Ward,” Edwards said. “I just think that it should not even open and I have to step out on faith and I have to step out there and go on what the people in my Ward wants. We can’t support it.”