Port Authority OKs lease for new refinery

1/27/2012

EDITOR'S NOTE: This version corrects the title of Terry Glazer, chief executive officer of United North, and clarifies his statement.

A refinery that could make diesel fuel from such organic matter as rice hulls, wooden demolition debris, or even treated sewage sludge moved a step closer toward construction Thursday when the Toledo-Lucas County Port Authority approved a 40-year lease for an East Toledo industrial site.

Synterra Energy, Inc., a joint venture of locally based Red Lion Bio-Energy LLC and Pacific Renewable Fuels and Chemicals of California, still must obtain several permits from the city of Toledo and state of Ohio before it can build the plant on nine acres of the former Toledo Coke property on Front Street.

Paul Toth, the port authority's president, called Synterra's refining technology a "game changer" that has been proved at a test facility on the University of Toledo's Health Science campus. Using a thermo-chemical conversion, its process can make diesel fuel out of any organic matter, he said.

"That's some of the most exciting technology out there," he said.

Bernard "Pete" Culp, a port authority director, said the process is very low in emissions, so obtaining permits should not be a problem. "The air quality shouldn't change. If you see a bunch of smoke, [there's a problem]," Mr. Culp said.

A port-authority staff report said Synterra expects to obtain its permits by April 15 and to start construction shortly thereafter.

The lease commences once the project receives an air-quality permit and terminates six months later if Synterra has not started building by then. The rate is $5,500 per acre, per year.

Alex Johnson, chairman of the company's board, said Thursday that the port authority's 9-0 vote approving the lease allows Synterra to "get on the next level" of project development.

A sign identifying the site, which the port authority bought from Beazer Corp. in 2004, as Synterra's home has been posted for months: "We've been working on this one for awhile," Mr. Johnson said.

The board approved, also by 9-0 with four directors absent, the port authority's part of a deal to buy One Maritime Plaza, but members warned that they will not accept a community development corporation's demand for a higher price the corporation believes it was guaranteed under a federal loan program.

"We pay for the building only what the net value is," board member James Tuschman said before the vote. "I won't stand for a penny more than fair-market value after our costs."

One Maritime Plaza -- owned by an affiliate of the American Maritime Officers union's pension fund and the home of union offices, the port authority's headquarters, and the local offices of U.S. Rep. Marcy Kaptur (D., Toledo) -- has been appraised at $900,000 if in good repair.

But port officials say the seven-story building on downtown Toledo's waterfront near the Martin Luther King, Jr., Bridge needs repairs estimated at $756,528 that are essential to retaining tenants.

The deal with the Maritime Building Realty Holding Trust and the city of Toledo, which holds a mortgage on the property to secure a $2.5 million federal Urban Development Action Grant loan that financed the building's 1982 construction, calls for the port authority to pay $143,472 in cash for the building and then perform the needed repairs.

That deal does not sit well with Terry Glazer, chief executive officer of United North, a community development corporation. He said the deal comes nowhere close to satisfying the amount owed to his organization under the federal loan program. Mr. Glazer said the organization was supposed to pay United North's predecessor, North River Development Corp., $2.3 million in rental proceeds from the building but never paid anything. He also maintains the building appraisal is far too low.

William Carroll, the port board's president, said Thursday that the port authority is responsible to be "good stewards of the public money," and that includes not overpaying for One Maritime Plaza. Properly maintained, he said, the building could be "a good asset for the future" of downtown Toledo even if the port authority were to move its offices elsewhere.

The port authority's current annual rent for its offices on the building's seventh floor is $125,000, although John Szuch, chairman of the board's finance committee, said the agency has withheld rent for several months because of the unperformed repairs. Its lease expires in 2017.

The agency expects to pay cash to buy One Maritime Plaza and finance renovations with bonds.

On the 50-acre former Toledo Coke site where Synterra will be built, the port authority has spent $2.68 million in federal and state grants to clean up pollution and then build roads and install utilities. The authority paid Beazer $900,000 for the site.

The port authority staff report said the integrated biorefinery should create about 60 jobs and estimated the value of Synterra's construction at $140 million, but Mr. Johnson said the latter number includes several phases. He declined to say how much the company expects to spend on its initial project or how it will be financed.

The difference between biodiesel and synthetic diesel, Mr. Johnson explained, is that the former uses crops such as soybeans as a feedstock, while the latter consumes "nonfood-based material." If sewage sludge were to be used, he added, it would be in a contained area to control odors.

Synterra's test facility, built next door to the steam plant at the former Medical College of Ohio, supplied a vaporized fuel to the university, but the company now is able to create a liquid product.

Chuck Lehnert, who as the university's vice president of administration oversees its facilities and fleet operations, said he looks forward to the day when UT vehicles can use synthetic diesel instead of the traditional kind made from petroleum.

"I think it's a wonderful thing for Toledo," Mr. Lehnert said. "They're really onto something big."

Contact David Patch at: dpatch@theblade.com or 419-724-6094.