DOVE CREEK The idea seemed so promising on a September day in 2007.
The governor and 200 others turned out in this tiny town near the Utah border to break ground on the San Juan Bioenergy plant, a locally run processing house for sunflowers and safflowers.
Farmers would get new cash crops, a dozen local people would get badly needed jobs, and the plant would crank out clean, American biodiesel. It was a perfect example of what then-Gov. Bill Ritter called the New Energy Economy.
But it was no match for the Great Recession.
Four years later, the plant is shuttered, the company is $4 million in debt and is for sale, and its Durango-based investors have lost everything.
It can be a profitable venture. The business plan still makes sense. We got hammered by the recession, said Jeff Berman, the former chief executive officer and driving force behind San Juan Bioenergy.
The company began operating at the worst possible time, just months into a historic recession. Prices for sunflower oil fell by two-thirds in a matter of weeks leading up to the plants opening.
Managers want to sell the factory to someone who will reopen it. But the company owes $3 million to Community Banks of Colorado, which has troubles of its own.
Were just in a wait-and-see mode with the bank, said Erich Bussian, the current CEO. We know its going to be a short sale type of situation. It will sell for less than the debt, is my guess.
Community Banks of Colorado lost $16 million the first quarter of this year after losing $64 million last year, according to BauerFinancial, a Florida company that tracks the health of banks. BauerFinancial gave Community Banks of Colorado its lowest rating and noted that federal regulators classify the bank as significantly undercapitalized, meaning it risks having too little money on hand to cover its bad loans.
The troubles mean that Dove Creek residents can only wait and hope for a new owner.
Five or six potential buyers have expressed interest, said Dan Fernandez, the Dolores County extension agent and a former SJB board member.
I lost everything
Farmers complained about late payments and low prices, but many farmers were willing to sell to the plant at a slight discount out of a sense of local pride and responsibility, Fernandez said.
All the farmers were paid. Nobody was left hanging on the farm side, Fernandez said.
The 62 investors, though, were wiped out.
Berman is facing bankruptcy after putting up his own money and assuming some of the companys debt.
Personally, I lost everything, Berman said. Its the risks we take when youre an entrepreneur. Im not going to fret over it. Its unfortunate, but thats the risk I took.
Hes now working for a local solar energy company and still doing what he believes in, he said.
San Juan Bioenergy LLC is not in bankruptcy court, but according to filings from Bermans bankruptcy case, the company is $4.3 million in debt to several lenders.
In addition to the loan from Community Banks of Colorado, the company took a $460,000 loan from the Region 9 Economic Development District and a $780,000 loan from the Community Economic Development Company of Colorado, a Denver nonprofit.
We had too much debt, Bussian said. Maybe looking back, you could have said we should have had more equity and less debt.
San Juan Bioenergy received enthusiastic support from the state government.
It got grants for $100,000 and $50,000 from the Colorado Department of Agriculture in 2007 and 2008, and in February 2008 it was among the states first recipients of a $100,000 New Energy Economic Development grant from the Governors Energy Office.
Energy vs. food crops
Even as they opened, managers shifted the plants focus away from biodiesel and onto food-grade sunflower oil.
But they always kept working toward a future in renewable energy, and they used a small pilot plant the Berman still, Fernandez called it to make about 10,000 gallons of biodiesel a year. Bussian used the fuel in his Volkswagen Jetta.
Some local people fault Berman and his management team for focusing too much on renewable energy and not keeping enough money on hand to weather the recession.
They bought high, and the price of oil crashed. The economy crashed. Everything that could go wrong did go wrong, said Matt Carhart, a farmer who served on the companys board.
Carhart harbors no ill will toward the managers.
I dont have anything negative to say, he said. I wish it could have worked.
Dolores County Commissioner Doug Stowe said local residents are disappointed, but they dont hold hard feelings.
We dont have the right to say mismanagement, but all of the things when they come together, its just too many irons in the fire, Stowe said. (But) its always easier to stand on the sidelines and tell the coaches how the games going than it is to actually be playing the game.
Still planting
sunflowers
Abdel Berrada runs Colorado State Universitys Southwestern Colorado Research Center in Yellow Jacket. The center started testing sunflowers in 2005 after Berman began drumming up interest in the bioenergy plant.
They remain a good choice for farmers, he said.
Right now, there is a market out there. There is demand for sunflowers from here, Berrada said.
And farmers know it. Many, including Carhart, are still planting sunflowers this year.
They sell their crops to processing plants in California, Kansas and Eastern Colorado. Carhart sells his to birdseed suppliers.
Bussian said hes proud to have helped bring a profitable crop to Dolores County, which has the states highest unemployment.
Farmers say they could make even more money if they had a local plant that would allow them to avoid trucking costs.
Idea remains viable
The biofuel concept is far from dead in Southwest Colorado. Solix BioSystems has a next-generation plant on the Southern Ute Indian Reservation, where it grows algae for use as biodiesel. The plant is doing well, said Joanna K. Money, the firms vice president of business development.
Full speed ahead, she said.
But thats cold comfort for people who put their money and sweat into San Juan Bioenergy.
Fernandez, the Dolores County extension agent, had high praise for the investors, especially Berman.
He was the Energizer Bunny. He really, really, really tried, Fernandez said. He had his heart and soul into this whole thing. And those guys put their money where their mouths were. They were all heavily invested in this thing.
Reach Joe Hanel at [email protected].
