The Jamestown/Stutsman (N.D.) Development Corp. Board of Directors unanimously approved Thursday participating in a tax incentive for the planned CHS nitrogen fertilizer plant in Spiritwood.
CHS announced Sept. 5 that it is proceeding with the construction of a $3 billion plant to produce nitrogen farm fertilizer in Spiritwood. Construction is expected to begin this fall, and the plant is expected to begin operations in the first half of 2018.
The JSDC will pay $235,000 each year for 20 years to CHS as a rebate on the $3.235 million payment in lieu of taxes CHS will make annually. CHS and Stutsman County agreed earlier last week to the payment in lieu of taxes payment by CHS in exchange for exempting the plant from property taxes for 20 years. The payment in lieu of taxes amounts to about 44 percent of the full property tax payment.
The annual incentive payment by the JSDC to CHS totals $4.7 million over 20 years and roughly equals the amount CHS would have been eligible for as a New Jobs Incentive Fund loan from the JSDC. That loan would have been repaid to the JSDC from the North Dakota income tax withheld from employees at CHS.
However, the JSDC does not have funds to provide that amount of a loan, according to Casey Bradley, auditor and chief operating officer for Stutsman County.
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"Obviously there is a cash flow situation for the JSDC," he said. "Instead of using the job incentive funds, this handles it as a tax incentive."
Stutsman County will pay 90 percent of the $235,000 with the city of Jamestown covering 10 percent. The payment will require about two-thirds of the current annual collections of the Stutsman County economic development fund. However, collections to the county economic development fund will increase by about $100,000 with the payment in lieu of taxes collection from CHS and tax collections from associated developments such as a natural gas pipeline and an electrical power substation.
The JSDC also agreed to facilitate CHS' participation in a New Jobs Training Fund, which will rebate to CHS $1.6 million collected as North Dakota income tax from workers over 10 years. This program has no cost to the JSDC, which will receive $250 per quarter for administering the program.
Bradley said the agreement to allow CHS to pay $3 million in lieu of a property tax bill that could be as much as $9 million is based on a CHS guarantee of 177 employees.
"If they don't fulfill their obligations we can revoke it at any time," he said.
The incentive payment now advances to the Jamestown City Council and Stutsman County Commission for review. The payment in lieu of taxes payment also requires the approval of the Spiritwood Township Board of Supervisors, the Barnes County North School Board and the Jamestown Rural Fire Department Board of Directors before it goes into effect.
Approval by those boards is anticipated in the next two months. CHS cannot start construction until the payment in lieu of taxes is finalized.
