Last week, VeraSun, the #2 producer of ethanol in the U.S., filed for bankruptcy. You would think they would shut the doors and end up selling their assets. This won’t be the case thanks to the millions of dollars North Dakota citizens have paid in special incentives and taxes for VeraSun.
From the North Dakota Policy Council:
VeraSun,The Sioux Falls, S.D. – based company filed for Chapter 11 bankruptcy protection late last week. The Fargo Forum reported in its Sunday issue that the company has $1.9 billion in debt and nearly $3.5 billion in assets. VeraSun’s biggest creditor is Wells Fargo Bank with $447.4 million in bond debt.
What this means is that Wells Fargo Bank could wind up with the short straw. However, taxpayers could be right there with them.
VeraSun has operated 17 plants in the midwest and one of their main plants is in Hankinson, North Dakota.
“Taxpayers have shelled out millions to support just the Hankinson branch of VeraSun’s operations. The city of Hankinson is the recipient of a $1 million Economic Development Administration grant. The North Dakota Department of Commerce gave the city another $410,000 through a Community Development Block Grant. The state and county helped foot the bill for upgrading area roads and the city is in the process of giving VeraSun a property tax exemption.”
To top it off, the Hankinson plant will probable qualify to receive more state funds through the Ethanol Production Incentive.
From the North Dakota Department of Commerce:
Ethanol Production Incentive
In November of 2002, Governor John Hoeven announced a proposal to provide incentive funding for new ethanol plants built in the state. Subsequently, the 58th Legislative Assembly approved Senate Bill 2222 which set forth the ethanol production incentive program in the North Dakota Century Code. This bill was signed into law and has received revisions in subsequent legislative sessions. The currently applicable chapter of the Century Code is 17-20.
The ethanol production incentive currently in place for North Dakota is a counter-cyclical program. This means it helps producers during adverse times when ethanol prices are unusually low and/or corn prices are unusually high. When these prices are normal or better than normal, the incentive is phased out and market conditions are allowed to prevail.
Amazing. All the tax dollars being spent on corn ethanol besides the federal government subsidies being paid. Wonder if the people in Hankinson, North Dakota think they have a good return on their investment in corn ethanol?