Susanne Posel | Based on a new mathematical reconfiguration of the false claims that CO2 is affecting the earth’s temperature that is circulating the web, a call for a “carbon deinvestment campaign” has been made.
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If there is one agency in the government that is directly obstructing the future success of the United States, it is the Environmental Protection Agency. While the Republican Party is decrying the EPA’s draconian regulatory regime, the agency is proceeding undaunted in its assault on free enterprise and on the ability of citizens to attain cheap, reliable energy.
That the EPA respects no bounds to its authority is kind of the point. After all, the environment is everywhere, isn’t it? So while conservatives have held out hope that a few remaining bastions of freedom would remain inoculated from the green plague, they should allay those ill-founded expectations here.
The United States Air Force has begun testing bio-fuels for its aircraft at the hefty price tag of $59 a gallon. This follows upon the U.S. Navy’s recent display of a demonstrative “green fleet” that ran $12 million worth of bio-fuels for a day.
The military brass should tell the hippies that the only kind of green that belongs in the military is Army Green. The military’s bowing to the environmentalist movement comes at the behest of an Obama administration directive to The Pentagon. While the programs may be purely symbolic at this point, Americans should not expect them to remain that way.
After all, the EPA has been on a tear through the economy since it was founded in 1970 under President Richard Nixon. The rogue outfit has increasingly navigated outside the bounds of normal constraints after a 2007 Supreme Court ruling that the EPA had authority to regulate five air pollutants along with the beneficial plant food and supposedly apocalyptic trace gas carbon dioxide. The ludicrous decision was echoed in a unanimous ruling in the U.S. Court of Appeals for the District of Columbia rendered June 27th, 2012.
Never mind that the planet has been cooling for two thousand years and it was actually warmer in Roman imperial times and in the Middle Ages than it is now, as self-proclaimed global warming alarmists confess. Even environmentalist gurus Phil Jones and James Lovelock concede that global temperatures have remained flat since 1998.
But the green movement is not about science, it is about politics. The EPA is promoting the left’s anti-capitalist agenda, and that is the agency’s raison d’etre. The only thing the group is efficient about is promoting inefficiency. Did we all forget, “under my plan electricity rates would necessarily skyrocket“? The EPA hasn’t.
In April, controversy exploded when the EPA ruled that new power companies should implement non-existent carbon capture technology to prevent earth’s delicate biosphere from being exposed to a gas vital for all life. The EPA chief Lisa Jackson risibly asserted that she did not expect additional compliance costs for affected industries. The head of the United Mine Workers of America compared the regime’s attacks to the order to kill Osama bin Laden.
If the name Lisa Jackson rings a bell, she is spearheading the EPA’s “fracking” idiotic campaign against injecting highly pressurized gas into deep rock strata formations in order to liberate natural gas. Complaints of the practice range from water contamination to potential earthquakes.
The opposition to the technology has most consistently been waged on grounds that it will contaminate water; however, researchers from the University of Texas at Austin concluded “there is no evidence” that fracking leads to polluted drinking water. EPA administrator Lisa Jackson even told the Ithaca Journal, “We have absolutely no indication now that drinking water is at risk.” Science advisor John Holdren could offer up no evidence to support the polluted water claims in Congressional testimony. Yet Ms. Jackson once had the temerity to claim that the new fracking regulations would not only benefit our health, they would lead to more fuel supplies brought to market!
Clean air, clean water — these are the supposed mandates for EPA action. But the agency’s puritanical drive is leading to the dissolution of individual rights in this nation. One of the more egregious assaults on property rights has come in the form of the EPA’s targeting of any pools of water on lots of land. Whether ponds, gullies, or even ditches, the agency has sought boundless enforcement of clean water regulations. Landowners received only temporary and qualified reprieve from such intrusive measures this March in the Supreme Court ruling Sackett vs. EPA. But to show how serious it is about enforcement, the EPA is using drones to advance its green agenda (the aerial kind).
Continue reading: IJR.com
It’s unfortunate The Derecho Project — the largest urban global warming mitigation experiment in history — has proven to be an abject failure. Really a shame, too since the project’s design was almost perfect.
The sample was composed of liberal environmentalists in Maryland, D.C. and Arlington who should have been eager to personally have a role in reducing the nation’s carbon footprint.
Final selection for participation in The Derecho Project was entirely random: if a tree fell and knocked out a family’s power, they instantly became part of the sample. No lengthy interviews, affirmative action hurdles or concerns about income disparities since the threat of climate change demands immediate action.
It was a golden opportunity for “green voters” and anyone with an authentic Ken Salazar 10–gallon hat to put their lifestyle where their affectations are. It’s no longer enough to read the Chevy Volt review in the Consumer Reports Auto issue and dream of becoming a climate warrior.
Over one million Maryland, District and Northern Virginia residents were saved the trouble of traveling to the Amazon to sample carbon–neutral living at its finest. This eminently sustainable lifestyle was right here and didn’t involve an encounter with touchy–feely TSA guards. But what did progressives do when they were finally on the front lines of the battle against climate change?
These green exemplars didn’t behave any better than warmist deniers. They huddled in the nearest Starbucks and whined on their Facebook pages about the inhuman hardships they were suffering, all the while estimating how long it would be until the truffles defrost.
If these had been conservatives instead of “environmentally conscious Democrats” they could have turned a quick profit by selling carbon offsets until power was restored. (Then used the money to buy a gasoline generator in preparation for the next Act of Pepco.)
The eagerness of these progressives to re–embrace the electric power grid made them no different from the conservative control group that continued to use electricity blissfully unaware of how their selfish lifestyle threatens to submerge the Solomon Islands beneath the Pacific.
Where were the hardy greens recharging their iPads with solar panels, cooling their house with wind power, enjoying a siesta to adapt their body clocks to new temperature realities and using methane gas from their compost heap to cook dinner?
These examples were nowhere to be found. MD, VA and DC progressives weren’t any more prepared for sustainable living than your average Wal-Mart shopper. Instead we read about extension cords from houses with power snaking across driveways, alleys and streets to reach those without power. Which sounds a lot more like a PWC trailer park than it does Takoma Park.
Having sampled for a week the carbon–neutral lifestyle their environmental policies would condemn third–world residents to for a lifetime, progressives are now screaming for vengeance on any and all power companies.
The WaPost quotes Montgomery County Council President Roger Berliner (D–Tumbrel) demanding Pepco be hit with large fines. “You get to $20 million, you get to $30 million, to $40 million, then you start getting people’s attention,” Berliner said as he confused a quasi–judicial proceeding with an auction.
Large fines sound good and make for a great copy point in a re–election brochure, but fines alone won’t bring true accountability, because a fine doesn’t hold those at the top personally accountable.
The top executives don’t pay fines. The money comes out of stockholder dividends, which in turn penalizes investors — who may have been out of power themselves — and pension plans. The executives have to answer hostile questions during hearings and may hear rumblings in board meetings, but that’s about it.
Real accountability only comes when the executive feels your pain. My solution is any time more than 500 customers lose power, regardless of the reason, regulators flip a switch and all Pepco’s top executives lose power, too.
The executive’s electricity returns after the last customer rejoins the grid.
Finally, am I the only conservative bothered by the media’s use of the term “derecho?” What happened to “severe thunderstorms?” When I was a boy in Oklahoma — one of the largest consumers of thunderstorms and tornadoes in the nation — weather poodles never used this word.
But now its suddenly “derecho” this and “derecho” that. Could it be because “derecho” is also the Spanish word for “right turn?” Is this yet another mainstream media attempt to persuade the public to subconsciously associate conservatives (the “right wing”) with disaster and privation?
How about using the German word for environmentalist? If we’re going foreign, “umweltschützer” not only has that continental flair, but just saying it sounds like thunder in the distance.
6:10 am in acre tract, cairo egypt, construction contractor, corporate welfare program, distribution platform, Egyptian-owned Iowa Fertilizer Company, fertilizer company, fertilizer plant, fertilizer plants, fertilizer producer, green bay bottoms, Headlines, iowa farmland, lee county iowa, levee break, Local News, million metric tons, naguib sawiris, Naguib Sawiris – CEO of Orascom Telecom, Nassef Sawiris CEO Orascom Construction Fertilizer, nitrogen fertilizer, Orascom Construction Co, orascom telecom, samih sawiris, Samih Sawiris – CEO of Orascom Development Holdings, southeast iowa by Trent Thevenot
Part 3: Egyptian-owned Iowa Fertilizer Company Plant Proposal…Continued
Looking into who owns Orascom, what connections do the owners have and do they really need USA and Iowa taxpayer-funded incentives to build the Iowa Fertilizer Company in the Green Bay Bottoms (a 14,000-acre tract of southeast Iowa farmland ravaged by a levee break here July 11, 1993) found in Lee County, Iowa?
The company proposing to build the nitrogen fertilizer plant in Iowa is Orascom Construction, Co. It is a subsidiary of Orascom Holdings – a construction company started by Osni Sawiris, who built it into the giant company it is today with the help of his three sons: Naguib Sawiris – CEO of Orascom Telecom, Samih Sawiris – CEO of Orascom Development Holdings, and Nassef Sawiris – CEO of Orascom Construction and Fertilizer.
The proposed fertilizer plant would be owned and run by Orascom Construction & Fertilizer, a company which, in 2011, grossed $8.4 Billion [*1], but it is still working every corporate welfare program being offered to it by the Iowa Economic Development and the politicians in Lee County.
According to the OCI website [*2]:
We are a leading international fertilizer producer and construction contractor based in Cairo, Egypt. We are one of the region’s largest corporations with projects and investments across Europe, the Middle East, North America, and North Africa.
Our Fertilizer Group is a strategic owner and operator of nitrogen fertilizer plants in Egypt, the Netherlands, the United States, and Algeria with an international distribution platform spanning Europe, North and South America, Southeast Asia and Africa. Our nitrogen fertilizer operations will reach 7.0 million metric tons of capacity by the end of 2012, positioning OCI among the top global nitrogen-based fertilizer producers. Our operations are also capable of producing a combined total of 1.0 million metric tons of melamine and methanol.
As you can clearly see, this isn’t some small, American start-up trying to break into the fertilizer industry, one of which might actually need all the tax-breaks and bonds that the IEDA and the Federal government are giving the huge OCI [*2]. No, this is a multi-national corporation owned by Forbes’ wealthiest Egyptian: Nassef Sawiris [*3]. The question one must ask is: Does it matter? Corporate welfare is still corporate welfare, regardless if the taxpayers’ money is being given to the new, smaller businesses or to foreign-owned global giants. So does it really matter which company receives millions or billions of taxpayer money? As was demonstrated in our previous article —– the return on the taxpayers’ investment (ROI) is going to be minimal from the Orascom company, as compared to the return that might come back to taxpayers when they invest in an American company: those dollars may be returned in the form of taxes the company pays on its profits, jobs will be created locally and stay in the area (as opposed to crews being brought in from the outside for a temporary economic boost). The other issue one must address is the connections the CEOs (and others involved) may have, that may not be in the best interest of our own country.
Please bear with me as I provide you with details which should help you to better understand my previous questions and statements.
The Rio+20 Summit and OCI
This week, global leaders and businessmen and women are converging upon Rio De Janero, Brazil for the Rio+20 Summit:
At the Rio+20 Conference, world leaders, along with thousands of participants from governments, the private sector, NGOs and other groups, will come together to shape how we can reduce poverty, advance social equity and ensure environmental protection on an ever more crowded planet to get to the future we want.
The United Nations Conference on Sustainable Development (UNCSD) is being organized in pursuance of General Assembly Resolution 64/236 (A/RES/64/236), and will take place in Brazil on 20-22 June 2012 to mark the 20th anniversary of the 1992 United Nations Conference on Environment and Development (UNCED), in Rio de Janeiro, and the 10th anniversary of the 2002 World Summit on Sustainable Development (WSSD) in Johannesburg.
The Rio+20 Conference: It is envisaged as a Conference at the highest possible level, including Heads of State and Government or other representatives. The Conference will result in a focused political document.
Themes of the Conference
The Conference will focus on two themes: (a) a green economy in the context of sustainable development poverty eradication; and (b) the institutional framework for sustainable development. (Emphasis mine.)
Seven priority areas
The preparations for Rio+20 have highlighted seven areas which need priority attention; these include decent jobs, energy, sustainable cities, food security and sustainable agriculture, water, oceans and disaster readiness.
The goals of the Rio+20 Summit are in accordance with the UN Global Compact Agenda 21 agreements put forth in previous UN Environmental Summits, and are implemented, in part, by the UN Global Compact program initiative [*4]:
….the Global Compact exists to assist the private sector in the management of increasingly complex risks and opportunities in the environmental, social and governance realms, seeking to embed markets and societies with universal principles and values for the benefit of all.
There are 10 Principles in the UN Global Compact:
The UN Global Compact’s ten principles [*5] in the areas of human rights, labour (Their spelling. Not mine.), the environment and anti-corruption enjoy universal consensus and are derived from:
- The Universal Declaration of Human Rights
- The International Labour Organization’s Declaration on Fundamental Principles and Rights at Work
- The Rio Declaration on Environment and Development
- The United Nations Convention Against Corruption
The UN Global Compact asks companies to embrace, support and enact, within their sphere of influence, a set of core values in the areas of human rights, labour standards, the environment and anti-corruption:
Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;
Principle 4: the elimination of all forms of forced and compulsory labour;
Principle 5: the effective abolition of child labour; and
Principle 6: the elimination of discrimination in respect of employment and occupation.
Principle 7: Businesses should support a precautionary approach to environmental challenges;
Principle 8: undertake initiatives to promote greater environmental responsibility; and
Principle 9: encourage the development and diffusion of environmentally friendly technologies.
Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.
What/Who connects Orascom to these issues?
According to OCI, the company joined the UN Global Compact in 2002 [*6]:
In December 2002, OCI joined the Global Compact at the invitation of United Nations Secretary General Kofi Annan. The Global Compact is an international initiative to bring companies together with UN agencies, labour and civil society to support ten principles in the areas of human rights, labour, the environment and anti-corruption. Through the power of collective action, the Global Compact seeks to advance responsible corporate citizenship so that business can be part of the solution to the challenges of globalization. In this way, the private sector “in partnership with other social actors “can help realize a more sustainable and inclusive global economy. Today, nearly 2,000 companies and other stakeholders from more than 70 countries are engaged in the Global Compact. OCI is among several companies in Egypt to join in this global initiative.
Not only are they part of the UN Global Compact, but they also have one of the UN Global Compact’s Directors on the OCI board: Mr. Arif Masood Naqvi [*7]. Mr. Naqvi was appointed to the Global Compact board in April of 2012. His role with the UNGC is [*8]:
The new appointments bring the total number of Board members to 31, representing all regions of the world and a wide range of industry sectors. The increase in the number members reflects the Board’s expanded mandate to advise the Secretary-General on the rapidly evolving UN-business partnership agenda. As the UN’s central interface to the private sector, the Global Compact is currently leading a system-wide effort to build a portfolio of professional partnership services that will include matching, monitoring and evaluation, as well as acceleration of effective partnerships to reach further scale.
Arif Masood Naqvi isn’t the only questionable Orascom connection as one must look no further than Nassef Sawiris’ older brother and Orascom Development Holding CEO, Samih Sawiris, to find another hardcore environmentalist/sustainable developer dressed in an Armani suit (The following excerpt was taken DIRECTLY from the website of the Sawiris Foundation):
Eng. Samih Sawiris is Chairman & CEO of Orascom Development Holding (ODH), a newly established Swiss-incorporated company… ODH develops, constructs and manages fully integrated touristic towns. Its flagship is El Gouna on the Red Sea, which was initiated in 1989 and holds 15 hotels, real estate property, numerous recreational, entertainment and water & land-sport facilities, shopping arcades, more than 10 kilometers of beaches, its own marina, an international school, a hotel school, a hospital and an airport…El Gouna was awarded four “Green Globe 21″ certificates, granted by the World Travel & Tourism Council for its respect of environmental principles and conformity with Agenda 21…
The Sawiris Foundation is a non-profit organization founded by the Sawiris:
The Sawiris Foundation was founded on the belief that development is only sustainable when its beneficiaries are equal partners in the process. We aspire to be a recognized pioneer in the provision of innovative and sustainable development initiatives, promoting increased empowerment of, and participation by, the people of Egypt…Our mission is to contribute to Egypt’s development, create sustainable job opportunities, and empower citizens to build productive lives that realize their full potential.
The Foundation does do some very good work for the people of Egypt; however, its Board of Trustees is an interesting group and reads like a celebrity list of potential Global Compact/Agenda 21 Directors and has some very interesting connections themselves within the Sustainable Development and global governance arenas.
Take a moment to peruse the list for yourself, and do a Google search on a few, and you will see what I mean.
A list of OCI connections would not be complete without mentioning the fact that until late this spring, OCI was invested in US grains merchant Gavilon along with George Soros and hedge fund manager, Dwight Anderson. Gavilon was taken over by the Japanese firm, Murabeni, at a price (for OCI’s shares) of $605 million.
The whole irony of the situation:
Orascom is dedicated to the preservation of the environment and is anti-corruption as demonstrated by its involvement with the UN Global Compact; however, it is willing to forgo that dedication to build a nitrogen fertilizer plant on a known flood plain, known as the Green Bay Bottoms, using American taxpayers’ money. These issues cause one to question exactly what is really driving Orascom to go against all its principles and propose a project that could do long-term damage to the environment while only providing 160 permanent jobs to the Lee County area with the majority of the project’s funding coming from Iowan and U.S. Taxpayer dollars.
Stay tuned more to come…
4:55 am in beaumont texas, bond program, detailed explanation, disaster area, fertilizer company, fertilizer plant, floods, Headlines, heartland, illinois senate, income taxes, IRS, Kim Jong-il North Korea, lee county iowa, Local News, MDA bonds, Naguib Sawiris (of Orascom), Naguib Sawiris with Kim Jong-il in North Korea, oci, orascom, peoria county illinois, southeastern iowa, tax credits, tax loopholes, tax relief act by Trent Thevenot
By Trent Thevenot
Last Tuesday we began a series devoted to the possible building of a fertilizer plant in Southeastern Iowa by Orascom. The name of the new corporation is Iowa Fertilizer Company which is looking at possible build sites in Lee County, Iowa, Peoria County, Illinois (with Illinois Senate passing final day tax credits, or expanding their Hurricane Ike damaged facility in Beaumont, Texas. Another interesting note that deserves to be added to this ongoing investigation is that Iowa Fertilizer Company was incorporated in Delaware where Orascom found a number of additional tax loopholes to latch onto.
A detailed explanation of MDA bonds and how they benefit Orascom, otherwise known as OCI, and how taxpayers will be the big losers in this venture.
The Federal Politics
The MDA bond program was created in response to the 2008 storms and floods that hit the Midwest. The program was part of the Heartland Disaster Tax Relief Act of 2008. Congress’ objective was to provide a mechanism for companies to get lower interest rates if they need to borrow money to rebuild. Congress was not lending the money, just providing incentives for lower interest rates from lenders.
In all, congress allowed a maximum of $14.4 billion to be borrowed through this program. Congress specified particular amounts to each of several states affected by the floods. To assure their intent was met, Congress required that businesses using the bonds (1) had been impacted by the floods and (2) had existed in a county declared a disaster area.
How the Bonds save Orascom (OCI) money and ‘cost’ the Federal Government and you the Taxpayer
Congress was not authorizing the federal government to loan or give money to the companies rebuilding after the floods. Congress was forgoing money that would come to the federal government via income taxes paid on interest from the borrowing.
Typical bonds sold by companies involve IRS income tax. Companies that borrow money through bond sales agree to pay interest to the bond buyers–the lenders. The interest lenders receive is taxable as income. If a bank or individual lends money through regular bonds, the interest payments received is taxable income. What Congress did through the MDA bonds was say that lenders who buy this specific type of bond will not have to pay income taxes on the interest.
If lenders receive, for example, $1 million in interest from MDA bonds, it is tax exempt. By contrast, in the case of regular corporate bonds that are taxable, lenders receiving interest are prepared to hand approximately 30% to the IRS. So, their truer profit from lending the money is no longer $1 million; it’s $700,000.
Continuing this example, Orascom has the option of selling regular bonds that require their lenders to pay 30 percent of the interest to the IRS, or Orascom can use MDA bonds that require their lenders to pay nothing to the IRS. Orascom is not impacted by this situation; it’s their lenders who pay the income tax. At this point in the example, Orascom has no incentive to use the MDA bonds.
Lenders would prefer to pay no federal income tax. So they offer Orascom lower interest rates if Orascom will go through the MDA process. It’s a way to share the tax savings with Orascom, which is what Congress anticipated. Congress knew that non-taxable bonds, bring lower interest rates to the borrowers. So instead of expecting $1 million in interest, the lenders lower the interest rates so that they receive, for example, $800,000 in interest payments from Orascom. That gets Orascom to borrow through the MDA program.
Orascom comes out ahead because they pay out less money in interest. The lenders come out ahead because they keep all the interest money; they don’t have to pay federal income tax on the interest. The loser is the federal treasury (you the taxpayer) because nobody pays income tax on the interest. The $300,000 that should have gone into the federal treasury is kept by the lenders and by Orascom.
Again, this is a simplified example. The true situation depends largely on Orascom’s credit rating. However, the Iowa Finance Authority and the Iowa Policy Project each have a model [*1].
The Iowa Policy Project (in the attached MDA Orascom Fertilizer Plant Bond Analysis Excel spreadsheet) predicted extremely conservatively that if Orascom used the MDA bonds to borrow $1.2 billion (instead of regular corporate bonds) the company would save the equivalent of being written a check today for $85 million. By plugging in the Iowa Finance Authority’s assumptions [*2], the savings for Orascom would be more like receiving a check today for $280 million.
The difference in the two estimates is caused by several factors that are unknown at this time. The Iowa Finance Authority assumed that MDA bond users would borrow for 20 years and would have a BB credit rating or higher. Their interest rates would be between 8.5%-9.5% with typical bonds and 6%-7% with MDA bonds. The IFA example expects that companies would pay approximately 25% less in interest over the life of the bonds. (The IPP assumed only a 15% discount and a better credit rating, which is why the two models differ.)
The 25% discount is consistent with a presentation by Bradley and Riley PC [*3], a law firm with offices in Iowa. The firm and other sources state that non-taxable bonds bring interest rates that are 25%-30% lower than if the same company with the same credit rating uses taxable bonds. By this account, even the IFA savings prediction of $280 is conservative.
Corporate Welfare—Orascom’s likely take from the Federal Government and you the taxpayer
In order to understand the full impact on the Federal Treasury and you the Federal Taxpayer, one must determine what Orascom’s interest payments would generate in federal income tax without using the MDA bonds. That tax would be paid by the lenders.
The company plans to borrow $1.2 billion. The Iowa Finance Authority predicted that the average company participating in the MDA program would pay between 8.5% and 9.5% if they were not participating. The law firm of Bradley and Riley PC predicted 7%. We will use 8%. [*1 & *3]
Plugging that 8% rate into a spreadsheet provided by the Iowa Policy Project, Orascom would pay approximately $1.25 billion in interest payments for 20-year bonds. If Orascom finances the project with 30-year, taxable bonds, the interest payments would amount to $2 billion. Being conservative, we’ll take the lower number.
In a typical (non-MDA) situation, Orascom’s expected interest payments of $1.25 billion would be taxable as income by the federal government.
Most of the lenders for these government and quasi-government bonds are in higher tax brackets. First, few lower income entities have money to invest. Second, tax professionals with the backing of simple equations discourage people in lower tax brackets from investing in these type bonds. Consequently, most of the entities lending their money to these companies are in the tax brackets of 28%, 33% and 35% [*4 ].
Again, we’ll be conservative and use the 28% tax bracket.
If Orascom paid $1.25 billion in interest, and its lenders paid 28 percent of that in income tax, the federal government would receive $336 million over 20 years.
Where is that money going? This is not money that the federal government is spending; it’s money that the federal government—currently running a huge deficit (See: US National Debt Clock)—is not receiving. Most of it would be staying in the pockets of Orascom’s lenders. The rest, approximately 25% of it ($84 million,) will be kept by the Egyptian company’s owners. The majority of them belong to the Sawiris Family, the wealthiest family in Egypt.
Figuring out the per-job expense to American Taxpayers
As with all our assumptions, we will be conservative on this. We will take the benefits that Orascom is expected to receive and divide them by the jobs they plan to create. Both sides of the equation will be estimates, conservative ones, giving the benefit of the doubt to Orascom (OCI).
We know from the conservative analysis above that Orascom will save by using the MDA bonds. The savings—determined by two models offered from the Iowa Policy Project and the Iowa Finance Authority—amount to between $85 million and $280 million. A third source noted above expects the savings to be even greater. For our sake, we will assume that Orascom will save $200 million through the MDA bonds.
On top of that, Orascom will be receiving more than $32 million in job credits and a forgivable loan from Iowa. This figure comes from the Public Interest Institute’s “Should Government Pick Winners?“ [*5] That brings Orascom’s bottom-line benefit to $232 million.
Details of economic incentives, like the following, were carefully laid out in the Public Interest Institute’s piece on this issue,
Orascom is taking advantage of every economic development incentive they can wrangle out of the state of Iowa and local governments. This includes $1.6 million in forgivable and low-interest loans from the state, almost $1.2 billion in federal loans through the 2008 flood-relief money, $2 million for road and rail improvements, and various local government incentives. [*6]
The local government incentives are yet to be determined since Lee County officials and Orascom are continuing their negotiations.
On the other side of the equation is what Orasom is bringing, or how the public is benefiting from this project. The only items we know that fit this description are the jobs. Orascom claims that it will create 1,500 to 2,000 temporary construction jobs and 165 full-time jobs at the plant. We have not included future property tax as a benefit because the company and Lee County are currently working on an agreement for tax increment financing on local property taxes. [*7]
If we give Orascom the benefit of the doubt, we would come up with 2,165 jobs that the company is creating. We would not subtract those likely to be filled by current Orascom employees who will move from Texas. Nor would we subtract the number of jobs likely to be filled by residents of Illinois and Missouri, two nearby states (who are strong components of this tri-states region) that will benefit even though they are not offering Orascom any incentives.
We would divide the amount of benefits that Orascom is receiving and divide by what they are giving ($232 million / 2165 jobs). The result is $107,000 per job. Again, that is very conservative. For every job that Orascom is creating, the company is benefiting by $107,000.
If we remove 25 percent of the permanent jobs due to the positions that will be filled by people who are not Iowa residents, the figure become ($232 million / 2124 jobs) $109,000 per job.
If we use the Iowa Finance Authority’s estimate of interest savings for Orascom, the figure becomes ($312 million / 2124 jobs) $146,000 per job.
If we remove the construction jobs since none are permanent and many will be filled by non-Iowa companies with many non-Iowa employees, the figure becomes ($312 million / 124 jobs) $2.5 million per permanent job.
The Worst news of all
On top of all this data, there is some text to deal with. It says that Orascom doesn’t qualify for this bond program.
The bond program was put together by Congress to help companies that suffered from flooding in 2008 while situated in counties that were declared disaster areas. Orascom didn’t have a plant in Iowa in 2008: It could not have suffered from the 2008 floods that hit Lee County. The county was declared a disaster area, but the land where the company wants to build was not flooded in 2008.
The reason that Orascom is getting to take advantage of the bonds is because of a decision by the IRS in 2009 [*8]. That decision allows state governors to choose practically any private project for these bonds. Restrictions Congress originally applied were lifted.
The deadline however still applies. The bond program ends on January 1, 2013. Orascom will have a hard time finding $1.2 billion available to borrow, and likely will get approval from the Iowa Finance Authority for portions as the company finds lenders. Because of the deadline, Congressman Dave Loebsack (D-IA) has asked the House Ways and Means Committee to extend the deadline. He specifically notes Orascom. [*9]. The committee has not taken up his request…yet.
Detailed Cliff Notes:
[*2] http://www.brownwinick.com/downloads/MDA_Bonds_-_2-24-2010_-_FINAL.ppt, screens 31-33
[*6] Reprinted by permission from INSTITUTE BRIEF, a publication of Public Interest Institute.” The views expressed in this publication are those of the author and not necessarily those of Public Interest Institute. They are brought to you in the interest of a better-informed citizenry.
Note: Throughout this story, and our investigation into it, we found and used sources from both the left and right sides of the political aisle to show this story isn’t about a party, it’s about the common sense differences of understanding what is right and what is truly wrong.
H/T James R., Andrea, and the many others for your continued help in investigating the many threads to this story.
Wealthiest Egyptian Company Using Millions of Taxpayer Money to Build Fertilizer Plant in Iowa Mississippi River Flood Zone
The good, bad, ugly & downright dirty details of a foreign investment that could go bad, very bad:
Good: Lee County and Iowa are working hard to bring 165 jobs to Wever, Iowa, a small community near the Mississippi River.
Bad: The jobs will be with a nitrogen and ammonia fertilizer plant below the river level and protected by levees that gave way in the Mississippi River flood of 1993. If you have so quickly forgotten about this record flood, here is a case study providing many of the ugly details of the flood of 1993 and contributing factors to the historic flood.
Ugly: Taxpayer money will be used to fund the project through tax credits and tax exempt bonds, costing more than $200,000 per job.
The Downright Dirty: Proposing the project is Egyptian-based Orascom Construction Industries (“OCI”), owned by the Sawiris family (the wealthiest family in Egypt), but is proposing to invest only approximately 8% of the funding for the project due to “high risk”, which will leave the rest of the funding on U.S. taxpayers’ backs.
Questions that will soon be answered in a series of articles soon to come which will expose everything about this breaking story:
- What is the name of the company being planned for construction in the Mississippi River flood plain? We have that answer!
- Where is the money for this project coming from? As you can imagine, we do have the answers.
- Why are both Republicans and Democrat officials supporting this project? This is a puzzle within itself.
- This project will create a couple thousand temporary construction jobs (many shipped in by the construction company from other areas), but will only create about 160 permanent jobs; how does over $1 Billion U.S. taxpayer dollars (your money) justify the creation of only about 160 permanent jobs? This is a question that makes absolutely no sense to most common sense individuals.
- How many jobs will be lost from other local American fertilizer plants due to the unfair advantages given by the government to OCI through taxpayer-funded subsidies and tax credits using more of your taxpayer dollars? Will the creation of 160 permanent jobs be worth losing countless more? NEVER
- Who exactly is the Sawiris family? What are their connections? Do we ever have the answers for this question with expectations of more to soon be uncovered.
- Who exactly will benefit from the taxpayer subsidies? Will the money stay in the U.S. and help the U.S. and Iowa economies? You can draw your own conclusions to this question. However, we will try to lay this out in the coming days.
- Illinois and Texas are also competing for the project – why? What are those state governments proposing to OCI to move the project into their states? How will those states benefit from the project? We have some of these answers and are uncovering more each day.
- Was the current OCI-Beaumont Fertilizer Plant built with post-Hurricane Ike disaster funds? What do you think?
- How much will it cost to repair the Iowa plant when the Mississippi river floods again? Who will pay for those repairs? OCI or taxpayers? Do we have to guess?
- What would be the environmental costs – damages and clean-up costs – when the Mississippi floods again (as it often does)?
- How are the EPA’s ethanol standards involved? There are some interesting answers to this question.
- How high in the government does this go? We have some of this already mapped out with high expectations of more to be uncovered.
- In a historically controlled union area of Iowa, why is it your taxpayer dollars have to be used to develop business when the reason for high unemployment can be found by a looking into a common cause?
Environment: Ignoring both Congress and the voters, the Environmental Protection Agency starts the new year governing by decree with job-killing regulations. Take a deep breath, but if you exhale you’re a polluter. Cap-and-trade is dead, long live cap-and-trade in the form of regulations promulgated in the coming year by what George Orwell might call the Ministry of Environment. It claims that the Clean Air Act and a Supreme Court ruling in 2007
Read more: EPA Rules Will Trump Your Rights