DENCO II gets bond approval from city
DENCO II has authorization to pursue up to $10 million in industrial revenue bonds after the Morris City Council approved "conduit financing for the Morris-based ethanol plant at its meeting Tuesday.
Through the process, DENCO II must receive approval of the city to apply for the financing. In conduit financing projects, the city is not liable for any repayments or losses suffered by the company.
DENCO II resumed operations this month after the original DENCO ethanol company suspended production in January 2009.
The city has processed conduit financing previously for St. Francis Health and WestMor. All liability and costs associated with the industrial revenue bonds are the responsibility of the company seeking them. The city's approval is needed mainly to prevent fraud and assure investors that the particular project exists, said city financial adviser Mark Ruff.
"It's a tool for (DENCO II) to use to get at cheaper financing," said Blaine Hill, Morris City Manager. "It doesn't mean they will do it, but the tool is there if they want to use it."
Mick Miller, DENCO II CEO, said the company can use the Industrial Bond revenue for purchase and capital expenses, and that the plant is seeking ways to upgrade the plant to reduce the amount of water it takes in for production and then sends out to holding ponds. DENCO II also wants to reduce energy use, Miller said.
DENCO II also is working with the Minnesota Pollution Control Agency through a grant program that may allow the company to process storm water run-off for use in ethanol production. Morris water is not high quality and DENCO II spends considerable money treating it before it can be used.
Only three ethanol plants that are located within city limits -- in Morris, Benson and Winnebago -- are eligible for the grant program, Hill said.