The Spiritwood Energy Park Association (SEPA) site and operating lease business model delivers an estimated $300,000 annual expense reduction compared to individual site ownership and infrastructure development for comparable services. A conventional loan on 500 acres of land with a loop track would cost more than $1,000,000 per year to finance (15 years at 5%). Because this base cost is shared among tenants, each tenant benefits from access to the rail loop and road improvements at a fraction of the cost and enjoy a $15 to $20 million reduction in its project capital budget. SEPA’s second tenant can budget approximately $700,000 per year, and the cost would decrease in future years as additional tenants are added.
SEPA offers a unique combination of robust energy and transportation infrastructure in a multi-tenant industrial park setting. SEPA has built and will operate the shared infrastructure in order to attract new business and jobs to the area. By taking on the significant investment in a complete rail loop, the industrial park will offer more flexible and cost effective rail transportation than any single business might afford on its own. By reducing the initial capital investment a tenant would have made and sharing the benefits and costs among all tenants, each tenant benefits from reduced future expenses. The operating philosophy for SEPA is “open book”; cover its operating costs with a modest return on equity.