They say the deal has huge ramifications for Grand Forks. Although officials close to the deal did not disclose the value of the company’s likely investment, they said it was “historic.”
âThis is the largest private equity investment in the history of the region,â said Keith Lund, who heads the Local Economic Development Corporation.
The deal was revealed this week during a meeting with the Herald. They say the plant will be a “wet corn molding” facility, owned by Fufeng Group Limited, and could consume up to 25 million bushels of corn once it is operating at full capacity, around 2024 or 2025. The Fufeng Group did not describe the product line of the facility, but the company would have produces a sweetener based on starch, corn oil, amino acids, xanthan gum and a range of other additives.
City officials say the company’s products are used in the food and beverage industry, pharmaceuticals, the oil and gas industry and beyond. Most of the Fufeng group’s operations are based in mainland China. The Grand Forks site would be the company’s first North American production site, city officials said.
The company plans to build on a 370-acre site north of the city, within the existing agro-industrial park.
Brandon Bochenski is shown in this Herald file photo in June 2020, around the time he was sworn in as mayor of Grand Forks. Photo by Eric Hylden / Grand Forks Herald
“We do not yet have details on the square footage of the current facility, but we do know there will be a lot of rail and infrastructure upgrades needed to service the project,” Mayor Brandon said. Bochensky.
In the near term, Grand Forks is expected to see an explosion in economic activity to build the facility. Work is expected to start in early 2022.
âAdding value to our corn and other raw materials is critical to North Dakota’s long-term economic success, and this value-added project represents a huge opportunity for producers and workers in the Grand region. Forks and our whole state, âGovernor Doug Burgum mentioned. âWe are grateful for the leadership of Mayor Bochenski, city and county officials, and the Grand Forks area EDC in bringing this important project closer to completion. “
EDC Business Development Director Brandon Baumbach said it was a âgame-changingâ development for farmers in the region.
“I consider it a regional project because of it,” he said. âThe base for corn has historically been weaker in Grand Forks due to prolonged expenses associated with the logistics of bringing it to market. But a value-added project like this will immediately increase that price and require more square footage as well. “
The future site of the Fufeng Group project at the northern end of Grand Forks. Eric Hylden / Grand Forks Herald
EDC chairman Keith Lund called it “essentially a regional project” and said “the benefits to the farming community and farmers will be significant”.
The new development could be a major setback for Grand Forks, which has grown over the past 10 years but nowhere near as fast as its counterpart cities including Fargo, Minot and Bismarck. In 2019, UND economist David Flynn said the community was “run to stay still. ”
The plant itself will likely create 233 jobs in Grand Forks and indirectly create at least 500 more, Lund said.
The news leaked to the Herald this week during an editorial board meeting in downtown Grand Forks, but has a behind-the-scenes story that Bochenski says dates back to June 2020. The 16 months working saw the Fufeng Group slowly shrink a field of dozens of potential cities for its settlement before selecting Grand Forks.
Besides Bochenski, Lund and Baumbach, city administrator Todd Feland also attended the meeting with the Herald. They said a draft deal with the company was not yet publicly available, but would be disclosed in the coming weeks. They refused to name any of the other cities vying to land the Fufeng factory.
Mayor Brandon Bochenski, Governor Doug Burgum and City Manager Todd Feland share a laugh as they cut a ribbon to open North Third Street in downtown Grand Forks on Tuesday, October 5, 2021 while visiting Burgum in downtown Grand Forks. Photo by Eric Hylden / Grand Forks Herald
“We are extremely pleased to make Grand Forks our North American home,” Eric Chutorash, COO of US operations for the Fufeng Group, said in a statement. âFrom the start we thought Grand Forks was a great place to be. It was evident from the start that there was a strong collaboration between local and state government as well as with non-government partners and this became even more evident as our assessment process progressed. . They all really stepped up to ensure that our project’s needs were met and that the manufacturing site would be a success now and in the long term.
During the meeting with the Herald, Bochenski, Feland, Lund and Baumbach discussed a host of direct economic benefits that could accompany the new venture, as well as potential side benefits. For example, they noted the expected increase in property taxes collected by the city and the boost that could come to the local school district with additional workers, and their children, relocating to the city. They also discussed what they expect to be an economic boost for retailers, restaurants, hotels and apartments, starting with the groundbreaking and construction phase.
âIt’s exciting when you put in so much work and land something like that. Economically, aside from jobs, property taxes and population growth, these are all factors that will boost the community, âBochenski said. â(Also) this is a new agribusiness that is joining not only North Dakota but also here in Grand Forks. It could potentially open the door to even more business opportunities. I think it puts the city on the back burner. card in an important way. “
Courting the business
The fierce competition for the Fufeng Group business has led the city to woo the company with incentives, such as temporary breaks on property taxes. Local leaders are also expected to push ahead with water supply projects and road construction that will connect it to the city’s infrastructure network.
Bochenski said there is an agreement in principle to give the new facility 90% tax relief for its first 10 years of existence, followed by 75% tax relief for the next 10 years, before returning. at normal property tax rates. Commonly known as TIF – Tax Raise Funding – it is similar to the offerings the city has made to other developers in recent years.
Grand Forks will also have to meet the plant’s needs for reinforced infrastructure, such as the supply of water from the Red River, increased wastewater capacity, road access, etc. Feland said those costs could reach between $ 80 million and $ 100 million over the next few years. He said that prior to this deal, $ 44 million was already expected to be spent over the next 10 years – although that timeline is now being accelerated.
These costs include the millions of dollars that city and county leaders have already allocated towards sewage improvements, Feland said.
COVID relief funds, city cash reserves, money from creditors, and state and federal government support will all be important sources of revenue sought for these projects. Notably, the public announcement by city leaders comes just days before state lawmakers gather in Bismarck to spend hundreds of millions of dollars in federal COVID relief funds.
âWe do not anticipate any rate increases for average residential users in wastewater and water,â Bochenski said. âWe don’t expect taxes to go up at all. Projects like these, ultimately, are expected to increase the economic pie and the property tax base. So that should help property taxes go the other way – go down. “
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Bochenski said that while the plan to bring the Fufeng Group to the city depends on these spending and tax deals – which are subject to the scrutiny of local elected officials – he is confident the community will support the deal to bring the Fufeng group in the city.
âWe are working very hard to attract businesses to the city,â he said. âIf you don’t have business growth, you won’t have salary growth. This is a great opportunity for Grand Forks to grow the economy and hopefully it benefits everyone. It’s one more piece to come and it’s a sign that the plan is working.
Bochenski and other leaders also pointed out that they saw the spending as an investment – an investment that will eventually generate significant income for the city in the form of property taxes, water user fees, etc. He said some of the city’s expenses will be “reimbursed through tariffs and some through special assessments as well.”
And he defended the proposed tax incentives for similar reasons.
âIn the environment we’re in, you’re going to have to come up with these kinds of assessments to get (a deal),â he said, noting that if the city doesn’t offer incentives, it won’t. there is no new income at all. “One hundred percent of zero is nothing.”
Bochenski added that he will be in Bismarck next week to testify before lawmakers on the need for greater availability of natural gas. Heads of state are currently considering
âIt’s also a big piece of the puzzle,â said Bochenski.
Representatives of the company are expected to visit Grand Forks later this month, when further negotiations take place.
When announcing the project, Feland credited Bochenski, who he said “brought energy and motivation” to economic development.
âWe understand that this is going to be important in the amount of work that we have to do over the next few years in addition to what we are already doing,â said Feland.
But, he said, “we know we are in a historic period.”