IMPERIAL — Groundwork is underway on a biomass and biofuel facility about midway between Imperial and Brawley just outside the Mesquite Lake Enterprise Zone off Keystone Road.
California Ethanol + Power’s Sugar Valley Energy project proposed for 136 E. Keystone Road, Brawley, is expected to produce 68 million gallons of low-carbon, fuel-grade ethanol, 40 megawatts of electricity, and 737,000 cubic feet (737 MCF) of biomethane.
The 160-acre project is set to begin construction sometime in mid-2021.
It is also estimated to sustain 1,200 direct and indirect agriculture jobs annually and about 9,000 construction jobs, both directly and indirectly.
“We are now virtually at the goal line and have carefully budgeted every dollar to where it’s best accelerating the remainder of the pre-development phase,” said David Rubenstein, president and chief executive officer of California Ethanol + Power.
The company is planning to engage with local Imperial Valley farmers to secure formal commitments to grow the first 20,000 acres of sugarcane feedstock for Sugar Valley Energy.
“We are very excited to announce the launch of our Sugar Valley Growers program,” Rubenstein said. “Grown, harvested and processed right here in Imperial County, sugarcane production for this project will bring significant and sustainable benefits for our economy and our environment.”
Rubenstein said the program will eventually allow opportunities for up to 60 local farmers to produce an estimated 48,000 acres of sugarcane crop, and growing agreements will be completed in a phased approach during the two- to three-year engineering and construction process for the new campus. The agreements are long-term and provide assurances for stabilized revenues for growers from the Sugar Valley Energy team, he added.
Currently, the only sugarcane crop in the Valley is being grown and managed by the company’s chief agricultural officer, Steve Benson, who is overseeing about 100 acres between two locations, including on his own land south of the Ormat geothermal facility near Brawley.
California Ethanol + Power’s Sugar Valley Energy project it is not without some criticism, however, as the company has had to request five extensions on its 2015 loan from Imperial County.
“It will provide us the needed flexibility while we’re working on bringing the project bonds to the financial market,” Rubenstein told the Imperial County Board of Supervisors on Tuesday, Feb. 2, while discussing the company’s Agricultural Benefit Program loan.
“We have had unforeseen expenses including those related to the site preparation to ensure that we were made eligible for a $75 million federal investment tax credit,” Rubenstein said during the county board’s weekly meeting, where it was being asked to consider the new amendment.
Rubenstein added that the company has currently paid back $30,000 in interest and plans to pay another $5,000 in interest with the extension.
Some members of the Board of Supervisors were hesitant about extending the $625,000 loan again.
“The loan is made to be paid back, and in this case, it was funded well over five years ago, and we still have not seen (the) principal (amount) paid back,” District 1 Supervisor Jesus Escobar said during the Feb. 2 meeting.
“What I would like to see is a real-world presentation on how this county will be paid back,” he said. “I think we need to be very flexible, because we did take some risk in this and the risk has a significant amount of reward.
“In this case, if your project comes to fruition, everybody wins. Obviously, you win from an investors’ perspective, your investors win. You’re able to bring significant economic development and job prosperity to our county, that should be commended,” Escobar continued.
“Having said that, this is a loan. … I think we need to start placing specific vehicles within this loan for us to get paid back, because after five years there has been a lot of talk, there’s been a lot of smoke and mirrors, and at the end of the day, you have made significant progress, but we still don’t see light at the end of the tunnel from a repayment perspective,” he said.
While Escobar recognized that the money is a loan and loans are typically paid back through cash flow, which won’t be there until the project starts operations, he wanted to know how the company will pay back the county.
“It is highly likely, looking at a crystal ball, that you will be back within a six-month period working with us on potentially another extension because these deals don’t happen overnight,” Escobar said, adding that he wanted to see specifics. “Come the next extension, assuming there is another extension and it comes back before this board, that we do get clear, concise documentation on how we will be paid back as a county.”
Supervisor Luis Plancarte was concerned that there is no personal guarantee on the loan being paid back. Without that guarantee, he said he couldn’t support the extension.
Other members of the board, though, thought giving the company the leeway needed to move forward was the right thing to do.
“He’s paying interest. We’re not losing any money,” Chairman of the Board Michael Kelley said. “He’s developing a program that would create a lot of jobs in Imperial County and create a nice tax base for Imperial County.
“We just got through forgiving a lot of money of loans through the Ag Benefit Program,” Kelley added, referencing forgiving COVID-19-related business loans. “And we’re not forgiving his loan. We’re allowing him to go forward with an extension of payment, although he will be paying interest.”
District 5 county Supervisor Ray Castillo motioned to approve the extension with the added caveat that if the project comes back for a sixth extension, officials need to prepare a presentation on how they will pay back the loan. The motion passed with a 4-1 vote, with Plancarte voting against the extension.