Cronus' arrival comes with a cost: $52 million

Cronus' arrival comes with a cost: $52 million

TUSCOLA — A package of economic incentives worth $52 million has been assembled by state and local agencies to bring a $1.4 billion fertilizer plant to East Central Illinois.

This morning, Cronus Chemicals announced its plans to build a nitrogen fertilizer plant west of Tuscola. Governor Pat Quinn is expected to attend the announcement.

State officials believe it is the largest private investment in central Illinois since the Chrysler-Mitsubishi plant was built west of Bloomington-Normal in the 1980s, according to Dave Roeder, spokesman with the Illinois Department of Commerce and Economic Opportunity.

"We see this as being just a wonderful boost for the central Illinois economy and for the construction trades there," Roeder said.

The total package of incentives offered to the company now reaches more than $52 million.

A good portion of the subsidies — $35 million — come from enterprise zone-like benefits outlined in legislation passed last year. These allow for sales tax exemptions, which will waive any sales tax the company would pay for buying expensive pieces of equipment for the plant.

Additional incentives include $12.3 million for road improvements from the Illinois Department of Transportation. The plant will be built west of town on Highway 36 and the money will help pay for a road into the property and could address property issues with adjoining land owners, according to Roeder.

"The intent is to improve access to the site," he said.

An estimated $3.9 million will be extended to the company against its state income tax liabilities over 10 years as part of the state's Economic Development for Growing Economy, or EDGE, program. To qualify, a company must provide documentation that it reaches certain jobs and investment targets.

Building the plant will require about 2,000 union construction jobs and when operational the plant will employ about 175 permanent jobs, according to the state. A Cronus office in Chicago will employ about 25 people.

Cronus also will receive a $1 million state grant for public infrastructure improvements, such as work on water and sewer lines.

Finally, the company also can receive a job training grant of $78,500 from the state. What kind of job training will be developed in consultation with Cronus, according to Roeder.

"We are going to make out on this deal. It more than pays for itself," said State Sen. Chapin Rose, R-Mahomet, who sponsored legislation with State Rep. Adam Brown, R-Champaign, last year that created economic incentives for the project.

Before picking Tuscola, Cronus investors looked at 76 sites in nine different states, including Mitchell County, Iowa.

"They looked hard at Iowa and finally chose Tuscola, I think, because of terrific transportation connections, the availability of a strong work force and access to water lines and natural gas lines that they need," Roeder said.

Manufacturing nitrogen fertilizer requires natural gas.

Residents have been awaiting the news for some time and anticipation of the announcement has been building in recent months.

"The multiplier effect on this is huge," Rose said. "The plant will benefit the economies of not just Douglas and Champaign counties but also Decatur and Mattoon. Unions in Champaign and Decatur will get a boost."

He also credited Brian Moody with the Tuscola Economic Development Authority; the Urbana-Champaign Sanitary District, which approved an agreement with Cronus to sell about 6.3 million gallons a day of treated wastewater for the plant's manufacturing process; and the farm bureau, for gathering easements for the pipeline connecting the sanitary district with the plant.

"This is a true local effort where everybody worked together, where everybody pushed for the common good. It's really, really exciting," Rose said.

Cronus, incorporated in Delaware in 2012, is made up of Swiss, Turkish and American investors with backgrounds in the fertilizer industry. The plant would produce 800,000 tons per year of anhydrous ammonia, much of which would be converted into granular urea, a nitrogen fertilizer. Production is expected to start in early 2017, according to the company.

The operation itself will be called Cronus Fertilizers and the company is Cronus Chemicals LLC.

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shapemaster wrote on October 29, 2014 at 9:10 am

I think a new plant anywhere in Illinois is great news.  Just because we need to discount the taxes we may have gained from this company does not mean it "costs" us anything.  If they do not come here we get all of nothing.  If they do come we get less of a lot.  TIFF districts and similar type programs allow for a company to phase in costs over time.  While it can be skewed in a news article that the community is paying for this or losing out the fact is we are getting a whole lot more than we are giving up in new taxes.

This is better than paying for windmills to generate power at a loss isn't it?

I'm glad that union workers will have incomes while building the plant, roads, etc. I'm happy that long term employees will find jobs that are meaningful and provide for stable income.

This is a "win-win" for Illinois and our area.  My thanks goes out to the folks who helped to bring this new plant into our area, Senator Chapin Rose and Representative Adam Brown as I understand it worked on this project.

 

shapemaster wrote on October 29, 2014 at 8:10 am

I think a new plant anywhere in Illinois is great news.  Just because we need to discount the taxes we may have gained from this company does not mean it "costs" us anything.  If they do not come here we get all of nothing.  If they do come we get less of a lot.  TIFF districts and similar type programs allow for a company to phase in costs over time.  While it can be skewed in a news article that the community is paying for this or losing out the fact is we are getting a whole lot more than we are giving up in new taxes.

This is better than paying for windmills to generate power at a loss isn't it?

I'm glad that uniion workers will have incomes while building the plant, roads, etc. I'm happy that long term employees will find jobs that are meaningful and provide for stable income.

This is a "win-win" for Illinois and our area.  My thanks goes out to the folks who helped to bring this new plant into our area, Senator Chapin Rose and Representative Adam Brown as I understand it worked on this project.

 

AreaMan wrote on October 29, 2014 at 10:10 am
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I'm fine with temporary tax incentives to fuel growth, but the $12.3 million dollars from IDOT is a direct corporate subsidy from the government agency. That is money that could have been spent on other projects or infrastructure maintenance.

787 wrote on October 29, 2014 at 10:10 am

It depends...  if it is a $12.3 million improvement of US Route 36 and other area roads, that *everyone* can use... that's one thing.  

If it a $12.3 million construction of a new road that dead ends at the plant... then that's completely different.

BruckJr wrote on October 29, 2014 at 1:10 pm

Why all the discussion of 2000 'union' construction jobs?  Is the company not allowed to hire whichever firms that they want?

C in Champaign wrote on October 29, 2014 at 1:10 pm

I will try to get in ahead of the corporate subsidy/business incentive haters, and say that an investment of $52 million that results in a return of $1.4 billion is a huge win. The vast majorty, almost 80% of the incentive is a waiver on sales taxes for the materials used in the construction of the plant, and in a defined waiver of future state corporate taxes. The only real "cash" (up-front investment) being thrown at the project appears to be for roads to get to it. And so what if it is a road that is "just" for the new plant's use. A cynic might say that the money is simply for the benefit of the plant owners, but the truth is that the road is used by the plant AND the thousands of people who will be employed in its construction and operation. $12.3 milion pales in comparison to the benefits that Tuscola, the surrounding communities, and the state will receive in ruturn.