After failing to deliver on its promises, a Cedar Rapids company has agreed to pay back--with interest--a $250,000 loan the Iowa Economic Development Authority awarded last year. Solid reporting by a local journalist may have made the difference between this case and the sad story from Webster City, which Bleeding Heartland discussed here.
Rick Smith reported late last week that the Cedar Rapids-based AgSugar International, now known as Vertecra, agreed "to pay back the $250,000 at 5 percent interest over a period of 30 months."
Technology that would allegedly revolutionize cellulosic ethanol production was the promise behind AgSugar International's $600,000 package from the Iowa Economic Development Authority and local tax incentives from the city of Cedar Rapids. The allure of high-tech jobs was powerful, as in the case of Webster City's electric car deal gone bad. That economic development project generated tons of favorable media publicity two years ago, but few tough questions were asked about the company's ability to follow through. Now Webster City is unlikely to recover hundreds of thousands of dollars loaned to firms whose owner recently declared bankruptcy.
I hope Vertecra sticks to the agreed schedule for paying back the AgSugar International loan. I wonder whether this deal would be happening if not for Smith's coverage of AgSugar International in the Cedar Rapids Gazette earlier this year.
In January, Smith reported that the biotechnology machines at the center of AgSugar International's Cedar Rapids project didn't work. Months earlier, AgSugar executives had given up on the "eccentric, charming" inventor of the machines. They switched to a business plan for LED office light production while continuing to seek local and state economic development funding. (It probably didn't hurt that Cedar Rapids Mayor Ron Corbett was an investor in a different small company owned by senior executives at AgSugar/Vertecra. )
About two weeks after the Cedar Rapids Gazette's stories were published, Iowa Economic Development Authority met with Vertecra officials to discuss the project. Ongoing scrutiny prompted the agency to order Vertecra in April "to return a $250,000 state grant and not to use other public aid awarded to it." That demand led to the negotiated settlement approved last week.
I encourage you to click through and read all of Smith's reporting on the AgSugar debacle. We need more journalism like this in Iowa--though I don't know where it's going to come from in the age of endless newsroom budget cuts.