Company chooses Grand Forks as site for ‘historic’ agribusiness project
‘Largest private capital investment in region’s history’ expected to break ground this spring.
City and economic leaders have revealed a budding business deal they say is among the largest projects ever in Grand Forks — one expected to result in a large new factory on the city’s north end, hundreds of new jobs, opportunities for the region’s ag producers and infrastructure improvements that will benefit other potential businesses in years to come.
They say the deal has enormous consequences for Grand Forks. Though officials close to the deal did not disclose the value of the company’s likely investment, they said it is “historic.”
“It’s the largest single private capital investment in the region’s history,” said Keith Lund, who heads the local Economic Development Corporation.
The deal was revealed this week in a meeting with the Herald. They say the plant will be a “wet corn milling” facility, owned by Fufeng Group Limited, and could consume as much as 25 million bushels of corn once it’s running at full capacity, sometime around 2024 or 2025. Fufeng Group has not described the facility’s product line yet, but the company reportedly produces starch sweetener, corn oil, amino acids, xanthan gum and a range of other additives.
City leaders say the company’s products are used in the food and beverage industry, in pharmaceuticals, the oil and gas sector and beyond. The bulk of Fufeng Group’s operations are based in mainland China. The Grand Forks location would be the company’s first North American production facility, city leaders said.
The company expects to construct on a 370-acre site on the north side of town, in the existing agribusiness park.
“We don’t have details yet on the square footage of the actual facility, but we know there will be a lot of rail improvements and a lot of infrastructure improvements needed to serve the project,” Mayor Brandon Bochenski said.
In the near term, Grand Forks is expected to see a burst of economic activity to build the facility. Work is set to begin in early 2022.
“Adding value to our corn and other raw commodities is critical to North Dakota’s long-term economic success, and this value-added project represents a huge opportunity for producers and workers in the Grand Forks area and our entire state,” Gov. Doug Burgum said. “We’re grateful for the leadership by Mayor Bochenski, city and county officials and the Grand Forks Region EDC in moving this important project closer to fruition.”
EDC Director of Business Development Brandon Baumbach said it’s a “game-changing” development for area farmers.
“I frame this as a regional project because of that,” he said. “The basis for corn has been historically lower in Grand Forks due to the extended expense related to the logistics of getting it to market. But a value-added project like this will immediately raise that price up and demand more acreage as well.”
EDC President Keith Lund called it “very much a regional project” and said “the benefit to the agriculture community and farmers will be significant.”
The new development could be a significant reversal of fortune for Grand Forks, which has grown during the last 10 years, but nowhere near as quickly as its peer cities, including Fargo, Minot and Bismarck. In 2019, UND economist David Flynn had said the community was “ running to stand still .”
The plant itself likely will bring 233 jobs to Grand Forks and indirectly create at least 500 more, Lund said.
The news was disclosed this week to the Herald at an editorial board meeting held in downtown Grand Forks, but has a behind-the-scenes history that Bochenski said dates to June 2020. The 16 months of work saw Fufeng Group slowly narrow a field of dozens of potential cities for its facility before selecting Grand Forks.
Besides Bochenski, Lund and Baumbach, the meeting with the Herald also was attended by City Administrator Todd Feland. They said a draft agreement with the company was not yet publicly available, but would be disclosed in coming weeks. They declined to name any of the other cities that were in the running to land the Fufeng factory.
“We are extremely excited to make Grand Forks our North American home,” Eric Chutorash, COO of Fufeng Group’s American operations, said in a statement. “From the very beginning, we felt that Grand Forks was a great place to be located. It was evident early on that there was strong collaboration between the local and state government as well as with non-governmental partners and this became even more apparent as our evaluation process went on. They all really stepped up to make sure our project’s needs were met and the manufacturing site would be successful now and for the long-term.”
During the meeting with the Herald, Bochenski, Feland, Lund and Baumbach discussed a host of direct economic benefits that could accompany the new business, as well as potential side benefits. For instance, they noted the expected increase in property taxes collected by the city and the boost that could come to the local school district with additional workers, and their children, moving to town. They also discussed what they expect to be an economic boost for retailers, restaurants, hotels and apartments, starting with the groundbreaking and construction phase.
“It’s exciting when you put so much work in and land something like this. As far as economically, outside of the jobs and property tax and the population increase, all of those are factors that will boost the community,” Bochenski said. “(Also) it’s a new agribusiness that’s joining not only North Dakota but also here in Grand Forks. It could possibly open the door for even more business opportunities. I think it puts the city on the map in a big way."
Wooing the company
The fierce competition for Fufeng Group’s business led the city to woo the company with incentives, such as temporary breaks on property taxes. Local leaders also are expected to push water projects and road construction that will link it to the city’s infrastructure grid.
Bochenski said there is a tentative agreement to give the new facility a 90% property tax break for its first 10 years of existence, followed by a 75% tax break for its next 10 years, before reverting to normal property tax rates. Typically known as a TIF — tax increment financing — it’s similar to deals the city has offered to other developers in recent years.
Grand Forks also will have to accommodate the plant’s need for boosted infrastructure, such as water input from the Red River, boosted wastewater capacity, road access and the like. Feland said those costs could reach between $80 million and $100 million over the next several years. He said prior to this deal, $44 million already was set to be spent over the coming 10 years — though that timeline will now be accelerated.
Those costs include the millions of dollars that both city and county leaders have already allocated toward wastewater improvements, Feland said.
COVID relief funds, city cash reserves, money from creditors and state and federal support all will be important revenue sources pursued for those projects. Notably, city leaders’ public announcement comes just days before state legislators are set to meet in Bismarck to spend hundreds of millions of dollars in federal COVID relief funds.
“We don’t expect any increases in rates for average residential users in wastewater and water,” Bochenski said. “We don’t expect taxes to rise at all. Projects like these, in the end, should grow the economic pie and the property tax base. So this should help property taxes go the other direction -- go down.”
Bochenski said that although the plan to bring Fufeng Group to the city depends on those expenses and tax deals — which are subject to review by local elected officials — he’s confident the community will support the agreement to bring Fufeng Group to the city.
“We’re working really hard to bring business into town,” he said. “If you don’t have business growth, you aren’t going to have wage growth. This is a great opportunity for Grand Forks to grow the economy and hopefully it (benefits) everybody. It’s a piece of more to come and it’s a sign that the plan is working.”
Bochenski and other leaders also stressed that they see the expenditures as an investment — one that will eventually bear significant city revenue in the form of property taxes, water use fees and the like. He said some of the city’s expenses will be “reimbursed through rates and some of it through special assessments as well.”
And he defended the proposed tax incentives for similar reasons.
“In the environment we’re in, you’re going to have to offer these kinds of assessments to get (a deal),” he said, pointing out that if the city doesn’t offer incentives, there’s no new revenue at all. “A hundred percent of zero is nothing.”
Bochenski added that he will be in Bismarck this coming week to testify for legislators on the need for more natural gas availability. State leaders are currently considering
“It’s a big piece of the puzzle as well,” Bochenski said.
Company representatives are expected to visit Grand Forks later this month, when further negotiations will take place.
Upon announcing the project, Feland credited Bochenski, who he said “has brought energy and drive” to economic development.
“We understand this is going to be significant in the amount of work we need to do in the next few years on top of what we’re already doing,” Feland said.
But, he said, “we know we are in historic times.”