Politics from the Palouse to Puget Sound

Thursday, May 15, 2008

"Biofuels firm fails to make lease payments to port"

I wonder if nationwide we're going to see the wheels start to come off the biofuel craze as the starvation that results from burning food spreads.

I normally support any business in Whitman County, but I can't say I'm sad to see this deal fall through.

From yesterday's Moscow-Pullman Daily News:
Plans to construct a $10 million oilseed crushing plant at the Port of Wilma in Whitman County appear to be shelved for now.

Port Properties and Development Manager Debbie Snell said Losonoco, an international biofuels company based in Fort Lauderdale, Fla., is nearly six months delinquent in its biannual lease payments to the port.

Losonoco signed a 10-year lease with the port in 2007, agreeing to pay $24,150 per year to for rights to 10.5 acres, and an additional $2,300 a year for the right of first refusal on an additional 10 acres of land at the site. Losonoco also was expected to pay a 12.48 percent leasehold tax to the state, which basically amounts to a renter's tax.

Snell said the company's most recent lease payment was due in January.

Losonoco's failure to comply with terms of the lease prompted the port commission to have port staff draft a default letter that was sent to the company last week, Snell said.

"We will be pursuing a close out of the lease in some way, shape or form," she said.

Snell said the port is waiting to hear from Losonoco officials before moving forward. It is likely that the two sides will negotiate a lease buyout or transfer to another company that would fit with the port's overall goals and vision.

"The ball's in their court," Snell said. "I am hoping the negotiations can come where it is a win-win for everyone.

"The process doesn't happen quickly," she added. "There's a lot of things to go through."

Losonoco Chief Operating Officer Don Markley declined to comment.

The potential loss of the tenant won't be overly detrimental to the port, although it will mean the county won't benefit from the company's estimated $100 million in expected annual sales.

Whitman County Commissioner Michael Largent said he always is disappointed when development in Whitman County fails, and the county stood to potentially benefit from increased tax revenues.

Largent said the county's budgets won't be affected by the situation.

"Whitman County certainly does not budget on what is expected to come," Largent said. "Certainly one would want to realize those local tax dollars before spending them."

Losonoco expected the plant to be capable of handling 12,000 tons of canola a day in its initial stages and producing 35 million to 40 million gallons of biodiesel per year once it became fully operational.

The company also expected to hire a local staff of about 20 full-time employees, in addition to employing many temporary construction workers to build its facilities.

"It is a disappointment," Snell said. "We lease land to companies like Losonoco to create economic development and jobs in Whitman County. It's unfortunate because what we really want is the increased business."

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