Little Falls ethanol plant troubled

LITTLE FALLS, Minn. (AP) — The future of the troubled Central Minnesota Ethanol Cooperative is uncertain after six mechanic’s liens worth more than $400,000 were filed against the plant.
The liens involve work performed from Aug. 23, 1995, to March 23, 1998.
The 15-million gallon plant in Little Falls was expected to start producing ethanol Oct. 1, 1996, but nearly two years later the plant remains unfinished.
President Bill Blaine and the other six board members of the 700-member cooperative declined to comment.
Mechanic’s liens are filed when a contractor hasn’t been paid or when there is a disagreement involving performance or equipment, said Phil Erickson, general legal counsel for the St. Paul Bank for Cooperatives.
The St. Paul Bank for Cooperatives has helped finance several ethanol plants, but is not involved with the Little Falls project.
Six mechanics’s liens could be a sign of financial trouble, Erickson said, because he doubts there are six major work-quality problems at the Little Falls ethanol plant.
Lien holders — as of last week — were Deutz and Hess Construction, Marshall, $76,038.08; Kleespie Tank and Petroleum, Morris, $32,294.15; A.P.I. of St. Paul, $47,190.17; J & D Construction, Montevideo, $145,317.12, and Swanson FloSystems of Eden Prairie. Swanson FloSystems filed two liens against the cooperative. The first, filed in March, is for $116,581.37. The second, filed in May, is for $17,900.15.
In Minnesota, a mechanic’s lien must be filed within 120 days after the labor or materials are provided for a project, said Neil Franz, a St. Cloud attorney.
If a lien holder wants to enforce a lien — foreclose on the property — the lien holder must start the process within one year after providing the last item described on the lien statement.
If a project is liquidated, lien holders stand in line behind primary lenders, Franz said. Often, the value of the property is less than what the primary lenders are owed, in which case the mechanic’s lien holders receive nothing.
If those holding mechanic’s liens do get paid after a liquidation, whatever money is left over is pooled and divided based on the each lien holder’s percentage of unpaid debts, Franz said.
The ethanol project at Little Falls will probably be completed, Erickson said. He noted the ethanol market is good, and other plants have recovered from rocky construction and financial problems to be profitable.
“That’s unfortunate (about what’s happening in Little Falls),” Erickson said. “Ethanol looks good (financially) right now, and if they turn it around they can be profitable. We’ve had plants that had financial problems during construction, and it turned around after the plants started operating. I don’t know any projects that were all smooth sailing.”