Borough passes tax exemption code, targeting Nutrien plant

The borough administration and assembly are dangling a tax exemption carrot in front of fertilizer company Nutrien as an incentive to reopen the shuttered Nikiski plant.

Nutrien, a new company formed when Agrium and PotashCorp completed their merger in January, is the largest single producer of potash, nitrogen and phosphate products for agricultural and industrial operations in the world. Based in Calgary, it operates plants in 14 countries with just under 20,000 employees with an apporximately $30 billion market cap. The Nikiski plant, which was originally operated by Unocal and then by Agrium, closed in 2007.

Since then, Kenai Peninsula officials have been talking about how to encourage the company to reopen it. In September 2016, Gov. Bill Walker signed House Bill 100 into law, which extended a corporate tax credit offer to the ammonia and urea producers — which includes the Nikiski plant — equal to the company’s gas supplier’s royalty payment to the state, making it budget neutral.

At its April 3 meeting, the Kenai Peninsula Borough Assembly approved a code change that would allow the assembly to approve a tax exemption for economic development properties like the Nutrien plant. The code change allows the assembly to approve a property tax exemption for companies for up to 50 percent of the assessed value of the property for up to five years. The ordinance can also be repealed by voters through a referendum.

Assembly member Kelly Cooper said at the April 3 meeting she would like to have the borough staff provide information for the assembly to make the decision on whether the application for the exemption meets the requirements of the borough and state laws.

Borough Mayor Charlie Pierce said at the assembly meeting Tuesday that his administration had met with representatives from Nutrien and the company planned to apply for the exemption.

“They felt it was a very favorable offering from the Kenai Peninsula in support of startup costs,” he said. “…Obviously, it’s going to be a major workover of the plant. And the big issue in the room was gas supply, and we’re still working on that.”

At its height, Agrium paid about $2 million annually in property taxes to the borough and employed some of the highest-paid workers on the peninsula. The plan also consumes a large amount of natural gas, so an affordable and reliable source of natural gas for production has presented an issue for the plant reopening.

The company has estimated in past interviews that refitting the plant to open would cost about $275 million.

If Nutrien does apply for the exemption, the application would go back to the Kenai Peninsula Borough Assembly for final approval.

Reach Elizabeth Earl at eearl@peninsulaclarion.com.

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