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American Crystal asks EGF to sponsor bond for $15 million pellet mill project

American Crystal Sugar Co. is asking East Grand Forks, Minn., to sponsor bonds to help it build a new pellet mill at its local plant. The project, which is expected to cost up to $15 million, would replace an outdated mill, said Lisa Maloy, the c...

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American Crystal Sugar Co. is asking East Grand Forks, Minn., to sponsor bonds to help it build a new pellet mill at its local plant.

The project, which is expected to cost up to $15 million, would replace an outdated mill, said Lisa Maloy, the company's treasury operations manager. The equipment dries leftover sugar beet pulp into pellets, making it usable in animal feed.

"We are already doing drying, but the (current mill) is old and is not working as well," Maloy said. "So we needed to get a new one to replace it."

To finance the project, American Crystal is asking East Grand Forks to sponsor bonds. The city would not be liable for interest or be responsible if the company defaults, according to Maloy and City Administrator David Murphy.

"The city has no liability for it," Maloy said, adding that the company has used these bonds previously. "The bonds themselves have to be sponsored by a city, and the factory itself is in East Grand Forks."

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"They're just a conduit," she added.

A proposed resolution presented during a City Council meeting this week states the project would "increase the level of economic activity in the city and would increase" its tax base. American Crystal employed 563 people in the Grand Forks area as of June, according to the Grand Forks Region Economic Development Corp.

Maloy said obtaining the bonds would help American Crystal get a lower interest rate. The resolution states it would help lower borrowing costs and make the project "significantly more feasible."

The pellet mill project will likely be done next summer, Maloy said.

The City Council will discuss the request in a work session next week and hold a public hearing next month, Murphy said.

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