Lawmakers hope incentives will lure fertilizer plant

Lawmakers hope incentives will lure fertilizer plant

TUSCOLA — Local legislators say they're optimistic that Illinois' package of incentives will help attract a $1.1 billion urea fertilizer plant to the west side of Tuscola.

Gov. Pat Quinn on Thursday signed SB 20 which has a number of economic development projects, including a third Chicago area airport at Peotone, construction of an arena for DePaul University near McCormick Place in Chicago and help for the development of a port of East St. Louis on the Mississippi River.

The fertilizer plant, proposed by Chicago-based Cronus Chemical LLC, is the plum for East Central Illinois, say state lawmakers. Illinois and Iowa are vying for the plant.

State Rep. Adam Brown, R-Champaign, said the incentives offered by local and state governments, if fully used, are worth "roughly $30 million." They include roadway improvements to U.S. 36 and U.S. 45, plus sales tax and utility tax abatements and up to $12 million in local property tax abatements.

"It would be such a great shot in the arm for us," said Sen. Chapin Rose, R-Mahomet. "The construction costs alone more than pays off the incentives. It's off the charts."

Cronus spokesman Dave Lundy said a decision is "extremely likely" by the end of September.

"Getting the governor to sign that bill and getting the incentives passed was critical to putting Illinois onto the same footing as Iowa, in terms of how the incentives are shaping up," Lundy said. "At this point Cronus is working to finalize all the cost estimates at each of the respective sites. That's a process that should take 30 to 60 days. Once they have a strong understanding of what that looks like, and that includes working with contractors and working through various cost expenses, they'll be making a decision, and we'll be making an announcement on our site selection."

Brown said he's optimistic Tuscola will be successful.

"It's looking really good. I can't say 100 percent for sure, but I'm pretty positive we've built a framework here that makes it almost irresistible for the company," he said. "When they see the infrastructure there as well as the incentive package that we crafted on their behalf, they pretty much outlined exactly what they would need from us and eventually we met those goals.

"I think within the next 30 days they'll make a decision and I personally think they'll choose Tuscola."

Illinois' package of incentives is worth less than the $35 million offered by Iowa, Brown noted, "but when they look at our site, they see the natural gas pipeline is already there, and there are roadways and railroads ready for them."

The Tuscola site includes convenient access to U.S. 45, Interstate 57 and the CSX, Union Pacific and Canadian National railroads, plus gas pipelines west of the city.

"Natural gas is the feedstock. In order to produce urea, you need some feedstock," Lundy said. "It's oftentimes coal, but in this case we're using natural gas, which is much cleaner. You need a very large quantity of natural gas. It's a noncombustible type of ammonia that they convert it to and then that's converted into urea, which is the fertilizer."

Cronus Chemical is a recently formed corporation backed by Swiss and Turkish investors, Lundy said. Its CEO is Erzin Atac, the former president of Transammonia Fertilizer, who has 30 years in the fertilizer industry.

The proposed plant, which would take 30 months to build and employ 1,000 during construction and 225 permanently, would be located just west of the Cargill grain elevator in Tuscola.

It would manufacture up to 1.4 million tons a year of granulated urea fertilizer, which is safer than the ammonia nitrate fertilizer made at the plant in West, Texas, that blew up in April, according to Rose.

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Political Observer wrote on July 27, 2013 at 3:07 pm

Uh-oh!  This is bad, bad news when Adam Brown and Chapin Rose "gang up" (tag-team style, we'd presume) to try to push something into law:  This is far, far worse than "The Gang that Couldn't Shoot Straight!'...(It's more like "The Gang that Has Absolutely No Idea What It's Even Shooting At!...Or Why?!")
So can we trust these two Tea Party legislators to have done any kind of due diligence whatsoever on the organization they want to shower with business incentives of "roughly $30 million??"   Ha-ha-ha-ha-hah!!...Mentioning Adam Brown and Chapin Rose in the same sentence as a phrase like "due diligence" is a guaranteed laugh line at pretty much any stand-up comedy night in Central Illinois!
After months of Top Secret negotiations behind the scenes, with only "Secret Agents" Adam Brown and Chapin Rose privy to the identity of the industrialists who want to set up the plant, we finally find in this News-Gazette article that it involves the former president of the company Transammonia.
"Cronus Chemical is a recently formed corporation backed by Swiss and Turkish investors, Lundy said. Its CEO is Erzin Atac, the former president of Transammonia Fertilizer, who has 30 years in the fertilizer industry."
Put the name Transammonia in a search inquiry box along with another word like sanction, and see if anybody still wants this company to come to Central Illinois!
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http://www.cnbc.com/id/40647455 
Although U.S. companies are prohibited by the Treasury Department from engaging in business transactions with Iran, CNBC reported last week that the Transammonia subsidiary—100% owned by Transammonia in the United States—purchases ammonia from Iran. (See video for CNBC's full investigation).Ammonia is made from natural gas and Iran controls the world's second largest natural gas reserves. According to an economic plan released by the Iranian government, the country is trying to increase ammonia production by 60 percent in the next five years. Ammonia is used in crop production as well as household goods like Windex. It is also used for explosives, including roadside bombs in Afghanistan.Transammonia also sent the release to Stuart Levey, the Under Secretary for Terrorism and Financial Intelligence. Levey oversees the process by which American companies receive licenses to operate in Iran. More than 300 companies received licenses to do so last year, most for humanitarian reasons.Transammonia has never applied for a license and experts tell CNBC the company would not receive one given the importance of ammonia to Iranian economic growth plans. The prohibitions against doing business in Iran are part of the US strategy to economically pressure Iran into curbing its nuclear ambitions and its tacit support for terrorist activities.

 

Political Observer wrote on July 28, 2013 at 4:07 pm

I wonder if our ace Tea-Party legislators, Adam Brown and Chapin Rose, have had a chance to investigate whether the "Swiss and Turkish investors" who formed the new "Cronus Chemicals" company are the same "Swiss and Turkish investors" who were illegally doing business with Iran?? ----------- http://en.wikipedia.org/wiki/Erin_Burnett-----------On December 7, 2010, [CNBC correspondent Erin] Burnett did an investigative report on chemical giant Transammonia[25] doing business in Iran. She reported that a Transammonia subsidiary—100% owned by Transammonia in the United States—purchased ammonia from Iran. On December 13, 2010, as a result of the CNBC report, Transammonia sent a press release to congressional leaders stating that Transammonia's Swiss subsidiary would not enter into new contracts with Iranian companies and would wind down its business with Iran "as soon as possible."[26] The following year, the investigative report was nominated for an Emmy. [27]




 

Political Observer wrote on July 30, 2013 at 12:07 am

Here's a link to the text of the letter that Mark D. Wallace, of United Against Nuclear Iran (UANI) wrote to Transammonia in December of 2010:

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http://www.businesswire.com/news/home/20101210005993/en/UANI-Calls-Transammonia-Business-Iran

 United Against Nuclear Iran (UANI) calls on Transammonia to cease all business dealings in Iran. This includes not only Transammonia’s subsidiaries here in the United States, but overseas as well. Transammonia is currently using foreign subsidiaries, in this case Transammonia AG in Switzerland, to circumvent U.S. law. More broadly, Transammonia has had business dealings with the Iran Petrochemical Commercial Company (IPCC), which is the subsidiary and international trading arm of the National Petrochemical Company (NPC). As recently as February of this year, Transammonia purchased over 23,000 tons of ammonia from IPCC. (Chemical News & Intelligence, February 24, 2010) 

NPC and IPCC are of particular concern because NPC is wholly-owned by the Iranian government so its profits directly facilitate Iran’s ability to pursue nuclear weapons and advance its weapons of mass destruction programs. Given the nature of NPC and IPCC as well as their business dealings in ammonia, UANI also has concerns about these companies’ ability to contribute to the production of roadside bombs. These bombs are now the primary killer of U.S. troops in Afghanistan, leading President Obama to launch a worldwide effort to stop the flow of ammonium nitrate into the country (The New York Times, “U.S. Tries to End Flow of Bomb Item to Afghanistan,” November 15, 2010).

 

In light of above mentioned concerns, on June 16, 2010, the U.S. Treasury Department added NPC and its subsidiary IPCC to the Iranian Transactions Regulations (ITR), which “prohibit transactions between U.S. persons and the Government of Iran.” (U.S. Department of Treasury, “Fact Sheet: U.S. Treasury Department Targets Iran’s Nuclear and Missile Programs,” June 16, 2010). Other governments, including the United Kingdom and Japan have also identified NPC as being an entity of proliferation concern.

 

UANI calls upon Transammonia to end its business dealings in Iran and stop hiding behind foreign subsidiaries to circumvent not only the law, but the clear intent of the American people. While many responsible corporations are pulling out of Iran, it is especially important for Transammonia to do so because the business dealings that the company and its subsidiaries have had with NPC and IPCC line the pockets of the mullahs in Tehran, thereby enabling them to pursue policies which threaten the broader region and the United States.

 In light of the above concerns, please let us hear from you by December 20, 2010 as to your intentions regarding your business dealings in Iran.

 

Political Observer wrote on July 30, 2013 at 1:07 am

OK, let's summarize the earlier posts above a bit, so the questions of interest become easier to see.

Adam Brown and Chapin Rose, two tea-party state legislators who deplore government spending, have lined up some $30 million in government incentives (to use Brown's estimate) to try to lure a fertilizer plant to Tuscola.  The company thinking of building the fertilizer plant is a brand-new one, Cronus Chemical, so very little is known about it; about all we know from local news reports is that its new CEO is Erzin Atac, who is the former president of Transammonia Fertilizer and who has 30 years in the fertilizer industry (and there are apparently also Turkish and Swiss investors backing the new company).

Well, if you do a bit of websearching to supplement this limited information, you find that Erzin Atac went to school in Istanbul, Turkey and has also lived in Zurich, Switzerland (among a number of other places).  You also find that Turkish and Swiss interests (including the Transammonia subsidiary in Zurich) were conducting business in Iran in 2010.

So one of the first questions it would be important for us to get an answer to is: Was Erzin Atac involved with the Transammonia subsidiary in Zurich at the time it was conducting business in Iran?  Likewise, for the Turkish and Swiss investors that Atac has recruited to form Cronus Chemical:  Were these individuals also involved in conducting business in Iran?

Local Yocal wrote on July 30, 2013 at 5:07 pm
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Great work, Political Observer. Too bad the Yee-haw Tea Partiers don't research anything beyond how much property taxes they plan to give away so a few jobs, and fewer construction jobs can be created, probably by out-of-state contractors. This bribing us with our tax dollars or suspension of our tax laws, in order to stand next to a shovel come "breaking ground day," so we think them "economic developers" come election time, has got to stop.

The pattern is pretty clear by now from Clinton to Homer to Tuscola: toxic corporations doing toxic things to soil and water are raiding the lands of ignorant rural communities, desperate for jobs and "progress," demanding permission, infrastructure, and no taxes. And nobody can say no to them lest the corporation sue for being personally discriminated against- the bizarre "[un]civil rights" bestowed by our conservative, Yeehaw Supreme Court.  

ericbussell wrote on July 31, 2013 at 2:07 am

Thanks to "Political Observer" for sharing that story.  I sat and watched the original Erin Burnett story and it was quite interesting.  She did a great job with that piece and I'm not surprised she was nominated for an Emmy!  The story confirms that it was legal for a foreign subsidiary to conduct business with Iran and that the foreign subsidiary in question immediately moved to wind down business with Iran after the story ran.  That situation was certainly not ideal, but I believe taxpayers would gladly welcome a $1B+ investment by Chronus Chemical, LLC in Central Illinois. 

According to current and past N-G articles on the Chronus project, it appears the state is offering a sales tax waiver of $14.5M.  With the income tax from construction alone expected to bring in $15M in the first year, the state taxpayers would see positive cash flow in year 1 on an investment that requires no cash down.  From a financial perspective, it seems illogical to argue against such a package and I'm not surprised there is strong bipartisan support for this measure.  

I would never argue that all tax incentives are good, but I have trouble respecting the extremist view that all tax incentives are bad.  I commend Adam Brown for his leadership on this effort and I hope that Central Illinois benefits from the $1B+ investment and the 200+ full-time jobs that is estimated to generate $300 million in annual economic impact within a six-county area.  It's amazing that some people would be willing to throw away all the financial benefits when there is minimal (if any) financial downside.   Thankfully, policy makers do not seem moved by the poor business argument.

Local Yocal wrote on July 31, 2013 at 9:07 am
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"I would never argue that all tax incentives are good, but I have trouble respecting the extremist view that all tax incentives are bad."

Great. Then you won't mind if I choose to not pay my property taxes. I need the incentive to stay in town.

selguy wrote on July 31, 2013 at 8:07 pm

Mr Bussell:

Good to see this discussion on a forum that people read.    Do you know of any forums that are even halfway interesting, where the comments of "Political Observer" would not have been erased ?

selguy wrote on July 31, 2013 at 9:07 pm

Why did not "Political Observer" do this good work before the incentives bill passed the legislature ??

Political Observer wrote on August 01, 2013 at 2:08 pm

You've asked a fair question, Selguy, and you deserve a reasonable answer.  First, let me thank both you and Local Yocal for your comments here.  It's always good to know that there are at least a few people out there who believe that their local officials and elected representatives should do at least a modicum of "due diligence" before giving away some $30 -35 million of public money!...And especially if the money may be going  to people who may have been inappropriately dealing with an Iranian business that the U.S. government would definitely have declined to issue a special permit for trading with!

Political Observer wrote on August 01, 2013 at 2:08 pm

Anyway, the answer to your question, Selguy, is an easy one.  The article above that I responded to is the first time the News-Gazette mentioned Erzin Atac and it's also the first time they mentioned the company name Transammonia in connection with this business proposal.  (Up to this point, whenever the N-G referred to the proposed Brown-Rose Plant, they referred to the secret company behind it only as Cronus.  And, of course, since Cronus was only recently incorporated in Delaware in November, 2012, most search inquiries are going to end in dead ends, since there's not much history there to be revealed.)
As I suggested in my first post in this thread, if you use a websearch inquiry like [Transammonia, sanctions], just to check out what kinds of trouble Transammonia may have gotten into in the past, you get a lot of interesting search results, and that's what led to my doing the research that led to the series of posts here.

Political Observer wrote on August 01, 2013 at 2:08 pm

I guess the real question I have, for the "insiders" like Secret Agent Adam Brown and others, who have been dealing with the people behind Cronus for quite some time, is it really so difficult to do something like type  a websearch inquiry like [Transammonia, sanctions] into a search engine, and see what comes out as the search results?  Apparently, it must be!


So what does Secret Agent Adam Brown say about Cronus?  Well, here's what he said, according to an article that appeared  in the Bloomington-Normal Pantagraph:
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The state’s offer includes state and local tax breaks, the construction of roads and the connection of a pipeline to Champaign that will provide treated waste water to the facility.


Brown said he believes taxpayers will be protected.


“I’ve met with the company. I believe their intentions are good,” Brown said.

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 http://www.pantagraph.com/news/state-and-regional/illinois/government-and-politics/house-panel-endorses-plan-to-give-tax-breaks-to-fertilizer/article_5febd6c6-a317-11e2-b843-001a4bcf887a.html
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(I guess I just can't help wondering, is this like when George W. Bush in June 2001 declared that he'd looked Russia's Vladimir Putin in the eye and “was able to get a sense of his soul?!”)

Political Observer wrote on August 01, 2013 at 3:08 pm

I'd like to thank Mr. Eric Bussell for sharing his thoughts here, earlier in this discussion forum.  And I'd also like to thank the News-Gazette for providing a forum for its readers where it's possible for people with all points of view to contribute their observations, even if those observations may happen to challenge the underlying assumptions made by other readers (and even if the writings of some may be considered somewhat less than halfway interesting by others).


I'd like to point out to Mr. Bussell that the newly-registered corporation seeking to build the Brown-Rose Plant spells its name "Cronus"... not "Chronus"...Evidently rather than identifying with the personification of time, Chronus, the corporation has chosen to identify itself instead with the Greek god, Cronus, who used a sickle or scythe to castrate and depose his father, Uranus, and then devoured the first 5 of his own offspring, so that they couldn't do a similar thing to him.  (Wow!  That's such an interesting use of symbolic imagery for the name of a corporation, wouldn't you agree, Mr. Bussell?)


Now, I understand that the very notion of "due diligence" may seem quite offensive to some people, particularly those practitioners of the Ayn Rand, lasse faire, "business sells" philosophy (which may sometimes be abbreviated as the "bus. sells" or "bus. sell" philosophy), which stresses the primacy of greed and immediate, short-term benefits for the self over any collateral damage to others that may occur later on, on down the road. Nevertheless, it would seem that there are still definitely some times indeed when one would be wise to "Look a gift horse in the mouth"...especially, as history reminds us, if there happen to be Trojan soldiers hiding inside it!

(Heh-heh-heh! This last brief whimsical exegesis is intended for those readers who can see the humor in responding to an earlier, un-named, straw-man argument with an "un-named," "bus. sell," "wooden-horse" argument!)

Political Observer wrote on August 07, 2013 at 12:08 am

Speaking of politicians and various government employees failing to do "Due Diligence" and/or choosing not to "Look a gift horse in the mouth," there was a case not too long ago of an Egyptian fertilizer plant that southeast Iowa "won," after Illinois "lost" a Tax-Giveaway Competition to them...and it turns out that it may be rather a good thing that we indeed "lost" that "prize!"  (I wonder if some of the  people in Iowa who failed to do their "Due Diligence" were claiming,  "It's amazing that some people would be willing to throw away all the financial benefits when there is minimal (if any) financial downside.   Thankfully, policy makers do not seem moved by the poor business argument.")

Here's a link to an AP article about the plant::

http://www.boston.com/business/personal-finance/taxes/2013/02/14/apnewsb...