RACS approves agreements for pellet maker

Magnetation LLC officials have made one decision about where to locate a new pellet manufacturing plant. The plant won’t be located in Illinois.

The Parkland Industrial Park, an annexed portion of the town just south of Superior, remains in the running. Sites in Itasca County, Minn., and Indiana also are under consideration.

“We have rejected the site in Illinois,” said Larry Lehtinen of Magnetation. “So we’ve gone from four possibilities really to three now. We’re still considering this site.”

Lehtinen said the site in Illinois was eliminated because it was going to take a long time to bring in electrical power needed for the manufacturing facility.

Monday, the Redevelopment Authority for the City of Superior approved three of agreements to keep the city in a running for 100-150 new manufacturing jobs.

The first is a cooperation agreement with Douglas County. The agreement allows the Redevelopment Authority to act on behalf of the county to transfer about 135 acres of land in the Parkland Industrial Park to Magnetation, should the company decide to locate in Superior. The agreement identifies the Redevelopment Authority as the body responsible for execution, delivery and performance of the project development agreement.

“From the county’s perspective this is a real nice process for us to be a part of,” said County Administrator Andy Lisak. He said by transferring it to the Redevelopment Authority, it gives the body oversight of the project and provides the county with flexibility to address issues it faces with a county-owned communication tower and to address utility issues for the site.

The authority also approved an option agreement that outlines terms to give the company control of the property so it can proceed with necessary permits for the project. It gives the company an option to purchase the property if officials decide to develop the plant in Superior.

Port and Planning Director Jason Serck said the option agreement is new and something the Redevelopment Authority doesn’t typically do.

“This is needed, more or less, for permitting and to give them a clear way to start working on their permits, particularly with the Department of Natural Resources,” Serck said.

Wetland and air quality permits are likely to be needed for the project, Serck said, but wetland permits are likely to be issued through Superior’s Special Area Management Plan by the city.

Lehtinen said company officials are meeting with the Wisconsin DNR today in Eau Claire to discuss the necessary permits.

“Essentially, if he doesn’t exercise his option, it goes back to Douglas County,” Serck said.

The Superior City Council meets Friday to consider the option agreement as well as the development agreement approved Monday by the Redevelopment Authority.

The development agreement outlines the terms of the project and the number of jobs to be created if the company does exercise its option to construct the $300 million facility in the Parkland Industrial Park.

“This agreement doesn’t have any incentives in it yet,” Serck said. He said when the project proposal does get further down the line, the city will consider tax increment finance.

The agreement does outline the terms of the project if Magnetation purchases the property for the project. According to the agreement, the company estimates a total capital investment of $300 million, with an estimated fair market value that would produce $24,000 in real property taxes by Dec. 31, 2016. It would also create at least 100 full-time jobs with an average salary and benefits of $68,000 per year, jobs that would have to be maintained for at least eight years.

If the company decides to purchase the land, it would pay about $1,200 per acre.

“This is essentially phase one and if we get to phase two, we’ll be bringing a package forward” for the council to consider, Serck said.

Lehtinen said the company’s experience on the Iron Range, where it is reclaiming iron oxide needed to make pellets, has been to under promise and over deliver. Without a plant design, he said it’s difficult to determine how many employees would be needed, but similar operations have up to 150 employees.

“There will likely be amendments to the development agreement” once the Redevelopment Authority has a better idea of the tools and incentives available for the project, said Attorney Bob Tofte of Fryberger, Buchanan, Smith & Frederick, P.A., who represents the city’s Redevelopment Authority.

The council considers the option and development agreements during a special meeting at 4 p.m. Friday. The county board approved the cooperation agreement Feb. 2.

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