LOVELL — The Byron Town Council unanimously voted to approve a $5 million Private Activity Bond Tuesday, Dec. 8, which will allow Inductance Energy – a Wyoming based energy company that says it has created a magnetic energy generator that is a major breakthrough in science – to build a facility within the city limits.
The company states that it will bring 15 to 20 jobs to the Byron area and hundreds within the state of Wyoming.
According to Richard Hawley, who manages equity and investments for Inductance Energy, the federal government requires that the bond be passed by a governmental entity, but Byron will only be used as a pass-through. Byron will take on no financial responsibility, nor will it spend any taxpayer money nor suffer any repercussions in case of default.
“A private business can ask a town to be the issuer of a Private Activity Bond. A Private Activity Bond does not fall on the town if private industry actually does it,” Hawley said. “That’s the way the federal law is set up. We get the money, and we have to pay it back. The town is not liable for anything.”
According to Hawley, the bond is the first of its type to be passed in Wyoming since 2004.
Joey Darrah, who serves as legal counsel for Byron, said that after studying the bond proposal, he can confirm that passing the bond does not bring any financial risk to the town.
“Unlike general obligation bond issues where the public has to vote, (this bond) the public does not have to vote for,” Darrah said. “For lack of a better term, the town will be sponsor, a passthrough, a conduit.
“There will be an agreement for the loan and other documents that have to be approved. It’s really very clear the town has no risk, in my opinion.”
Byron resident Karma Sanders told the council that the possibility of losing town funds in the deal is her largest concern.
“My biggest concern is that the town cannot handle any default on anything,” Sanders said. “It should have no financial obligation for this. It’s a very interesting company. It’s an exciting company if you look at it, but we’re just a little town.”
The bond is being granted to a business called Quantum Energy, which Hawley said is directly overseen by Inductance Energy.
“We are in a joint venture with Quantum Energy. We control their board, we don’t own them outright,” Hawley said. “They are a publicly traded company. Quantum is the one who is taking out the loan.”
The $5 million bond is tax exempt and will allow for Inductance Energy to borrow for up to 30 years. All $5 million of the funds will have to be spent within Byron, due to the bond being tax exempt.
“We’ll build the building, buy a whole bunch of equipment and we’ll have a tiny small bit of office space” Hawley said. “Only 25 percent of the entire facility will be office space. The other 75 percent has to be manufacturing by IRS rules.”
According to Alan Bair, Inductance Energy is in negotiations with him to buy 12 acres of land within town limits.
“We’ve come to an agreement of sorts,” Bair said.
Darrah said he’s talked to many municipal attorneys and very few have heard of Private Activity Bonds. He praised Inductance Energy for its cleverness in putting the bond together.
“The issue I’ve had researching this is that it’s very rare. It’s not utilized and that’s unfortunate, because I think it’s a clever way for economic development to occur across the state,” Darrah said. “The way these guys have structured it, they’ve done a really good job.”
Darrah concluded that accepting the bond has no conceivable downside for the Town of Byron.
“I don’t see a downside here. I believe these guys are the real deal and not just some flash in the pan,” Darrah said. “To me, it’s a no brainer legally and economically for this community. It’s kind of a gift that Richard is here.”
Inductance Energy is looking to manufacture a device it calls Earth Engines, which it says creates a new kind of energy out of imbalancing a magnet, with no need for combustion or even oxygen.
The magnets, which will be composed of 70 percent iron and 30 percent rare earths, will be manufactured in Park County, Hawley said. Byron’s role will be refining the rare earth, Hawley said.
Inductance Energy will be using a new technology developed by the University of Kentucky and the University of West Virginia to pull rare earth components out of coal and coal waste.
“What we’re going to do is we’re just going to take the coal, actually process it and drop the metals out. You’re still left with coal when you’re done,” Hawley said. “We’re going to refine those metals and turn it into magnets. The magnet manufacturing will be done (in Park County), but we can actually bring all that stuff here to Byron and actually refine it.”
Hawley said any rare earths not used in the magnet making process will be sold to the public.
“Byron could potentially be the largest rare earth producer in the United States, because we have so much coal in Wyoming, and most of it has a lot of rare earth,” Hawley said. “Byron could be the Mecca of rare earth.”
The 15-20 employees hired by the facility will receive 28 weeks of training, according to the company, with pay ranging between $40,000 and $80,000.
Mayor Pam Hopkinson said she believes that component is the most exciting part of what the company offers.
“That’s one of the things that excites me, the opportunity it gives to the new area,” Hopkinson said. “This is pretty exciting for high school graduates that aren’t right for college. It’s going to give them great opportunities.”