By O. Kay Henderson (Radio Iowa)
The state’s top economic development official says her agency will negotiate a contract with the India-based company that announced it plans to build a steel plant in southeast Iowa.
The legislature approved a nearly $1.4 billion incentive package for the proposed plant on Friday and Governor Reynolds signed it into law on Friday night. Iowa Economic Development Authority Director Debi Durham told legislators the company must meet benchmarks before any incentives would be provided. “They have to build the capital of what they contract for. They have hire the jobs at the wage scale, plus full benefits and all of that,” Durham said during a House subcommittee hearing. “Before they get one tax credit issued to them, it has to be an operational plant.”
A Mesabi Metallics executive told lawmakers the company is still working out the financing for the project. The company has not obtained construction permits or the two-thousand acres in Lee County that’s envisioned for the steel mill complex. Durham said the Iowa Economic Development Authority’s Board of Directors must approve any contract for the pay-out to the company. “The magnitude of this deal is bigger than anything we have dealt with, so that we did bring in outside legal counsel as well that has a tax department,” Durham said, “that will help us to make sure that all the claw back provisions are there.” In other words, the document will say the company must repay the state if it fails to meet the terms of the deal.
A week ago President Trump announced Mesabi Metallics, which is owned by the India-based Essar Group, would operate a steel mill in southeast Iowa. State officials say Iowa was competing with other states for the plant and Governor Reynolds signed a Memorandum of Understanding that gave Iowa an exclusive 60-day period to negotiate with the company. “This transformational opportunity will change the economic trajectory of our state for decades to come,” Reynolds said Friday night during a bill signing ceremony in her statehouse office.
Over 100 of the 149 members of the legislature voted for the incentive package. Senator Dan Dawson of Council Bluffs was among six Republicans in the Senate who opposed the deal. He called it the largest corporate give-away in state history. “Is it fair that this overseas company gets $1.2 billion in income tax credits…while the other Iowa companies that have been here for decades with vastly more employees pay a 7.1% tax rate?” Dawson asked.
The incentives approved by the legislature include sales tax breaks on materials and tax credits for each employee hired, plus over a billion dollars in income tax credits that would equal to 10% of what the company spends to build the steel mill complex. Mesabi executives have pegged the cost at $15 billion.
