Letter from the editor

Monday, December 4, 2006

Ethanol: deal or no deal?

Negotiating with big business takes the same kind of steely nerves as prom dating.

One cannot afford to appear too needy or too eager. You can't return phone calls too quickly. You have to drop hints that there might be other mysterious potential paramours out there. You walk a careful line to not scare away a potential hottie, yet keep your eyes open in case a better match should appear before you blow the allowance on a corsage.

And so it is as Buena Vista County and a potential second big ethanol producer flirt cautiously with each other.

The negotiation is pure spectacle:

Oh no, we as a county can give no more - we may swoon at even the thought. This our absolutely final offer, at least until the next absolutely final offer.

And, oh no, we as a huge ethanol company simply cannot accept a penny less than our demands, at least not until we decide to. We're looking at other pretty places, by the way, though we aren't exactly saying where "they" might be. Though we stand to make millions, we simply can't stand to pay taxes on the place, until hell isn't quite frozen over, but you can sure see your breath.

There are a couple of warring schools of public thought here.

One, whatever you give away to get some economic development, it is better than having 100 percent of nothing. There's some truth to that, folks.

Two, why do corporate giants need taxpayer charity? If their business plans so weak that they can't manage to make a decent profit while paying their fair share of taxes, do we need them?

In the case of Buena Vista County's current round of ethanol deux negotiations, there is a third point of view being heard from some.

Why would the county give away 20 years of tax abatement for an ethanol plant that would compete with the ethanol plant we just gave 20 years of tax abatement to in order to get off the ground?

There is only so much corn coming out of the local fields. We are told that the plant at Albert City, in which the public has been invested via incentives, would use the equal of all the yellow gold this county produced last year. Are we competing against ourselves by giving longterm tax breaks to two companies that may very well compete against each other for the same raw material to achieve longterm success, when we apparently haven't enough local raw material for both? What if crowded competition in the region leaves neither plant viable long enough to see the payback?

Making deals with industry is nothing new. Back in the '80s and early '90s, it became an art form. Iowa was so hungry for jobs that towns and counties would hire slick headhunters and give away whatever it would take, even for some forms of industry that might not in the long run be so great for their job market or environment. In some cases some gave cash, spot zoning, utilities, roads, the kitchen sink as well as their taxation patience. Many towns, Storm Lake included, tried to build up bigger "war chests" than competitors to lure in factories (remember the spec building?)

We have never really gotten out of that mindset. No matter how huge and rich and profitable the company, they expect big breaks from whatever area they choose to consider locating a plant. That's just how it works, especially off the beaten transportation path.

Today, the hot development is ethanol, wind and bio-energy. It's so hot just the word "ethanol" seems to sizzle off the tongue, doesn't it? There is a great deal of money to be made, fast, in the current landscape, at least. And like any other industry, the plants want the most advantageous local situation they can get.

The two ethanol plants that have approached BV, despite what some say, are probably not at all out of line with requests made elsewhere for impact developments. It is not necessarily wrong to make concessions up front to build up the jobs market and tax base down the line.

Twenty years is a long, long time to commit, however. Just ask your spouse on that big-two-oh anniversary.

It is darn likely that not a single member of the board making the decision will still be around the courthouse to see that day come. Children will be born, grow up and go off to colleges or careers before a plant under any such deal would even begin paying its property tax into the county coffers.

The county too, must bargain from a standpoint of what is best for its investors (taxpayers, that is.) After all, the general public doesn't expect a 20-year 100 percent break in return for establishing their household within the county, or for opening a small shop on one of our Main Streets.

If the second ethanol plant does come to Alta, we will have a vested interest in seeing both local plants succeed in a very long term in order to fully reap the tax base reward for our generosity. Twenty years from now, thought, the alternative fuels science could and probably will look a whole lot different than it does now. The federal incentives, the market demand, the technology, the competition - it could all change greatly long before a twenty-year local deal would run its course. We have no crystal ball. Corn prices are already changing at a rate that is historically rapid.

Buena Vista County seems to be ground zero for alternative energy prospects these days, and we may have to sit down and look at a bigger picture of what we want to be, how we want to leverage these opportunities, and how much we want to invest in making new developments happen.

The plants bring money, but they also impact the rural skyline, have potential risks - however slim - for environment and distaster management. There are factors such as wear and tear on roads, and additional emergency equipment to consider as part of our public investment in such developments.

Perhaps the county supervisors will, if they have not yet, turn to the Storm Lake Area Development Corporation, which has been around for a long time, and has some experience in bargaining with industry, as well as considerable introspection about what kind of developments we want and don't want for our future.

Though jobs and revenue are mighty strong motivators for a snap decision, the deals we cut today will have an impact that may well last longer that we will... deals that our grandchildren may have to ultimately judge for us.

I'm not saying that the supervisors shouldn't offer a lengthy concessions package to put the county further into the ethanol arms race, or that it should short-sheet the offer and let a potential development slip away.

I just wonder if we shouldn't take a little time here to think about that big picture, which may be a lot bigger than one ethanol plant before all this energy revolution is done.

If we knew we'd be stuck with that prom date 20 years, we would look him/her over a whole lot more carefully.