Lee County tax incentives for Mesabi Metallics plant approved by supervisors

Lee County supervisors and Mesabi Metallics have agreed to terms for local tax incentives and community benefits related to the planned $15 billion steel plant.

The signed tax incentive term sheet and the approved county resolution in support of the project “advances state incentives” and moves the project “closer to fruition” according to a news release from Mesabi Metallics. 

During a special session in October, Iowa lawmakers approved up to $1.4 billion in tax incentives for the company to be distributed through the Iowa Economic Development Authority. Lee County’s incentives are tied to the company’s compliance with IEDA requirements. 

According to the news release from Mesabi, the tax incentive term sheet it signed with Lee County would require the company to pay Lee County $50 million over 20 years in lieu of additional property taxes, and guarantee new assessed property value of at least $112 million before the company receives any tax rebate. 

The Lee County Board of Supervisors held a special meeting Nov. 4 with Mesabi leaders and members of the public to present the basic plan surrounding the Mesabi plant and to publicly share the tax incentive terms the two had negotiated. 

Plans call for the $15 billion project to produce steel in partnership with Mesabi’s iron ore operations in Minnesota. The company estimates the project will employ at least 1,750 full-time workers once it is operational, and will create around 6,000 jobs during the construction phase. The company also estimates it will generate $95 billion in total economic output from construction through the first 10 years of operation. 

During the Lee County special meeting, Emily Benjamin, president and CEO of the Lee County Economic Development Group, said that past projects in Lee County have put a “particularly high” demand on county services during construction. 

To help “offset and mitigate” the demand on services like law enforcement, EMS, public health and engineering, Mesabi has agreed to additional payments, called host-community payments, to Lee County of up to $10.5 million. 

Benjamin explained the payments would be broken up as $250,000 when the term sheet is executed, $100,000 per quarter until construction begins, and $375,000 per quarter while construction is underway. 

Benjamin said the terms mean that there is “no debt for the county.” 

The Lee County presentation also said the terms ensure the county will not pay for infrastructure costs, such as damages to roads or bridges, related to the project. 

Mesabi Metallics CEO Joe Broking, in the news release, called the project a “generational investment in Iowa.” 

“Paired with our nearly $3 billion investment in Minnesota, this project creates a fully integrated American steel supply chain—iron ore mined and processed in Minnesota, high-quality steel made in Iowa,” Broking said. “We thank the Lee County Board of Supervisors for bringing us one step closer to thousands of good-paying jobs, a stronger American manufacturing base and a critical new source of domestic steel.” 

At a Tuesday meeting, Lee County supervisors approved the terms of the agreement and a resolution, with unanimous consent, to support the plant.

Supervisor Charles Holmes said in the meeting he was “very comfortable” supporting the terms of the agreement, noting it had been overseen by a law firm in Iowa “dealing with large improvements in the state” that has worked with the county and the company for the past “year and a half” to bring it to a conclusion.

For many Iowans the Mesabi Metallics project was unknown before a Sept. 28 news conference and announcement of the project by President Donald Trump alongside Iowa elected officials.