State officials have approved a $110 million incentive package for an Egyptian firm that promises to build a fertilizer plant in southeast Iowa.
Orascom Construction Industries plans to build a $1.4 billion facility in Lee County, near the town of Wever. According to Iowa Governor Branstad, 165 people will work at the plant once it’s up and running, but before that a couple of thousand construction workers will be hired to build the facility.
“We knew it was a project that would invigorate the Iowa economy and landing in Lee County, one of our state’s hardest hit areas, we thought this was wonderful and we were excited to see this happen,” Branstad said today during a news conference in his office, “although there were some bumps along the way.”
Branstad and other state officials offered the firm $25 million worth of incentives earlier this year, but Illinois offered even more and Iowa had to up the ante.
“We were able to land this project by the skin of our teeth,” Branstad said.
In addition, Orascom executives questioned whether the offer from Illinois given that state’s “unsustainable” finances.
“After considering multiple locations, Iowa was a natural fit for our fertilizer plant,” said Orascom Construction Industries Nassef Sawiris, who joined Branstad at the statehouse news conference to announce the deal.
The facility will be called the Iowa Fertilizer Company.
“As the top corn-producing state in the country, Iowa is home to many of the farmers that will use Iowa Fertilizer Company’s products,” Sawiris said. “We look forward to being part of Iowa’s strong agriculture tradition and serving Midwest farmers.”
Branstad said the Egyptian company is making the single-largest commercial investment in the state’s history.
“The economic development impact will be great for Lee County and will ripple throughout our state,” Branstad said,” and will have a significant impact in helping us grow the kind of quality jobs and strengthen our strong, important agricultural economy that we have in this state.”
Branstad warned, though, that this deal nearly collapsed because Iowa’s property taxes as well as income tax rates for individuals and corporations are too high. Branstad used the news conference in his office to call on legislators to act in 2013 to cut those taxes.
“We must not continue to put ourselves in a situation where we have to compete on incentives when, in fact, by making our tax structure more competitive we’ll be able to compete on a much more effective basis for both growing existing industry and new business,” the governor said.
The incentive package includes $7.4 million in refunds on the state sales taxes the company will pay on construction materials. In addition, the company received $50 million worth of investment tax credits. State officials have promised to extend another $50 million of tax credits in future years if legislators don’t enact tax cuts. Iowa officials have also extended a $1.6 million combination grant/forgivable state loan to the company.
Orascom is the largest publicly traded company in Egypt. The firm’s CEO told reporters Orascom also will acquire the Weitz Company – a Des Moines-based construction firm — which will build the plant in Lee County, but he didn’t disclose any other details about the take-over.
AUDIO of news conference.