Lawton City Council changing the terms of Westwin incentive agreement

City Council members will meet in special session today to amend their agreement with Westwin Elements, to include providing $3 million in “up front” money to build a pilot plant.

The council session at 2 p.m. is the last of four meetings planned today to consider amendments to the economic incentives agreement with Westwin Elements, which announced plans in early 2023 to build a cobalt/nickel refinery in southwest Lawton. Each of the four entities — the council, Lawton Economic Development Corporation, Comanche County Industrial Development Authority and Lawton Economic Development Authority — plays a role in the agreement, which is why each is meeting today to finalize the new terms.

The existing agreement was approved in February, setting into place a local $24 million incentive package that includes $10 million from the City of Lawton and another $7.5 million worth of infrastructure upgrades. It includes a $2 million loan from the Comanche County Industrial Development Authority plus ownership of 480 acres of land the authority owns on the south side of West Lee Boulevard, west of Goodyear Boulevard. Westwin Elements agreed to specific provisions to secure those incentives, to include launching plant construction by year’s end and providing proof within 180 days of $126 million of investment to fund the project’s $150 million Phase I. Phase I is part of what Westwin Element owners estimated would be a $450 million total investment in a refinery that would bring 2,335 jobs to Lawton within five years.

Interim City Manager John Ratliff said last week that some terms in the agreement had not materialized, and local leaders have been working to finalize the new terms that are being discussed and voted on today. City officials have said none of the changes will affect the amount of local funding promised for the refinery, although for the City of Lawton, the funding source for its $10 million pledge has changed.

While city officials initially planned to take its incentive funds from the Capital Improvements Program and the city’s American Rescue Plan Act funds, new agreement terms specify incentive monies now will come from only the CIP.

Some of the major term changes center on the pilot plant, a scaled-down version of the final refinery and a component of the project that Westwin Elements owners have been discussing for months. Westwin Elements has said the pilot plant will “support the preparation of a bankable feasibility study to allow Redeveloper to provide product samples to customers (Pilot Facility) and prepare for the construction of the full-scale commercial plant….”

That means Westwin Elements wants to immediately lease 40 acres of the 480-acre tract it was promised so it can build and operate a pilot plant for three years. Terms specify that pilot plant construction must begin by Oct. 1 and be completed by March 1, 2024. It will employ 85 full-time employees: 40 in 2024 and another 45 in 2026, with those employees having an average annual compensation of $100,000 or better.

While those 85 employees will be part of the total promised work force, the count on that total work force has been lowered to 735. But Westwin Elements also has increased the projected value of its final project to $732.5 million.

Westwin Elements will pay for the pilot plant with the $3 million in upfront money: $2 million of the CCIDA’s loan and $1 million of the City of Lawton’s economic development incentive pledge. Westwin is responsible for investing “no less than $6 M (million) in capital equipment and machinery at the Pilot Facility,” the new terms specify.

An amendment added Tuesday specified Westwin Elements must apply the upfront assistance toward construction of the pilot facility and “for no other purpose,” the remainder of the local incentive package is restricted toward construction of the main plant. New terms specifically ban using the local incentives or CCIDA’s land as collateral.

Terms also specify that Westwin’s lease on the 40 acres will end if the company does not: complete the pilot facility and place it into operation on or before March 1, 2024; and provide evidence of its $6 million capital investment in the pilot plant and satisfy employment criteria on or before June 1, 2026. Evidence of financing, to include a final approved bankable feasibility study and evidence of non-conditional commitment letters for no less than $126 million, also are required on or before June 1, 2026; failure to do so invalidates the lease.

New terms also highlight the tasks of the entities, including Lawton Economic Development Authority (LEDA) and Lawton Economic Development Corporation (LEDC).

LEDA has been designated by the council to administer and carry out specific aspects of the project plan, to include those associated with designating the plant’s site as a Tax Increment Financing District. That designation will allow Lawton to recover its incentive costs through increased ad valorem taxes that will result from the development of empty land.

In addition, new terms specify that to “support economic development,” Westwin Elements will issue 30 shares of unrestricted common stock in Westwin Elements Inc. (valued at $400,000) to the LEDC.