Millions raised for cleanup at Pueblo steel mill can't be diverted to Russia, officials say
Tens of millions of dollars that were raised to help EVRAZ clean up environmental pollution around the long-rail mill in Pueblo cannot be diverted by the steel company's Russian stakeholders to fund the war in Ukraine, the head of an organization leading the cleanup project has said.
"The money is going to actual physical improvements on their site in the city of Pueblo that our civil engineers and our staff certify that those improvements have been made before we issue them a reimbursement or check to pay their contractors," Jerry Pacheco, the executive director of the Pueblo Urban Renewal Authority, told The Chieftain.
Concerns had been raised by readers, who worried that, because of the company's ties to Russia, the money might be diverted to support the Russian invasion of Ukraine.
EVRAZ North America, which is a wholly-owned subsidiary of EVRAZ plc, is listed on the London Stock Exchange. Roman Abramovich and other Russian businessmen own 66% of shares in the company but have no operational standing in EVRAZ.
More on EVRAZ: Here's what majority Russian ownership means for Pueblo's steel mill amid the Ukraine invasion
Pueblo Urban Renewal Authority last year raised $91.2 million for the clean-up project through a bond sale.
PURA chair David Abeyta confirmed the funds can't be diverted. The funding is to be used explicitly for environmental cleanup and all projects are strictly monitored to ensure that is the case before they are financed, he said.
"The bonds were for a public purpose, which was to clean up the site, improve the environment, water quality, protect the groundwater, things like that. Because that site has been under heavy industrial use since the 1880s," Pacheco explained.
The Urban Renewal Authority has an agreement to reimburse up to $100 million worth of public improvements at the site, he said, and the bond issuance raised around $62 million.
The difference between the amount raised by the bond sale and the $100 million will come from property tax increment growth over the 25 years that the debt will be serviced, or repaid.
"So, let’s say hypothetically that the bond debt service payment for the bonds is $5 million, but there’s $6 million in property tax increment," Pacheco explained, simplifying the numbers involved.
"We take the first $5 million for the bonds and the next $1 million, we apply to pay down the difference" between what was raised by the bond issuance and the total loan amount that was agreed to. In the case of the EVRAZ clean-up, that's a difference of around $38 million.
"It’s all dependent on EVRAZ completing the project," Pacheco explained. "They have to complete the project to pay their tax bills because when they pay their taxes, the tax increment goes to service all this debt."
EVRAZ has already "made significant improvements to the grounds and the foundations," Pacheco added.
When the bond sale was completed last year, it was hailed as huge news for Pueblo, as it would keep EVRAZ in town and ensure at least 1,000 full-time jobs, including 200 new highly skilled labor jobs, for the next seven years.
“This project will provide a critical, long-term boost to our local economy,” Abeyta said at the time. “It will be one of the largest economic development projects the Pueblo community has seen in 30 years.”
EVRAZ has assured PURA officials that everything is still on track and the conflict in Ukraine has had no immediate impact on the mill, which has had a particularly successful year in business.
"They're going to be producing long-rail in 2023, they're on schedule," PURA treasurer Ralph Williams said.
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Contact Chieftain reporter Lacey Latch at llatch@gannett.com or on social media @laceylatch. Karin Zeitvogel can be contacted at kzeitvogel@chieftain.com.
This article originally appeared on The Pueblo Chieftain: Money raised for Pueblo steel mill cleanup can't be diverted to Russia
