NYCIDA PROJECT COST/BENEFIT ANALYSIS

January 4, 2007

Tri-State Biodiesel, LLC (“Tri-State” or the “Company”), a manufacturer of biodiesel fuel, is seeking approximately $3,960,000 in triple tax-exempt manufacturing facility bonds to (i) construct and equip an approximately 12,906 square foot biodiesel production facility located on an approximately 17,000 square foot leased parcel of land in the Gowanus Industrial Park at the Columbia Street Marine Terminal at 699 Columbia Street in the Red Hook section of Brooklyn to facilitate the conversion of cooking oil into biodiesel fuel (the “Production Facility”) and (ii) construct a tank storage farm for the warehousing and distribution of the end product at said facility (the “Tank Farm”) (collectively, the “Project”).  The Project is located in the Southwest Brooklyn New York State Empire Zone. 

Tri-State, a start-up operation, plans to convert recycled cooking oil into a renewable, non-toxic, bio-sustainable alternative fuel known as biodiesel.  The Company anticipates producing 2.6 million gallons of biodiesel annually with plans to expand to 5 million gallons per year in its third year of operation.  Tri-State projects it will be able to sell this product to fuel distributors, government and private fleets, and others.  The Production Facility will also serve as the Company’s administrative offices.  During the construction phase (estimated to last approximately eight months) Tri-State plans to create 51 construction jobs and upon completion of the facility, 16 full-time jobs.  During the first three years of operation, Tri-State plans on hiring an additional 10 full-time employees, bringing total employment to 26 in Year 3.

Biodiesel runs inside any diesel engine and can be made from several different feed stocks such as soybeans or peanuts.  All of the fuel at Tri-State’s facility will be made from restaurant grease.  Tri-State anticipates the supply will come from over 1500 New York City restaurants, as well as other contracts.  Tri-State has represented that it requires space in order to accommodate its operations.  The Company has represented that locating to its proposed location will allow it to become competitive within the biodiesel industry.  According to Tri-State’s management, absent the issuance of Agency bonds the Project would become costly to finance with pure equity, and could end up forcing the developers to either relocate to less expensive out-of-state real estate or to fold the project altogether.

The total cost of the project is approximately $4,160,587 which includes approximately $1,397,000 in construction costs, approximately $1,900,000 in machinery and equipment purchases, approximately $187,000 in capitalized interest, approximately $396,000 in a debt service reserve fund, and approximately $300,000 in closing costs.  The project is expected to be financed with an approximately $3,960,000 Agency tax-exempt bond issuance and approximately $200,000 in Company equity.  The benefits to be conveyed to the Company include tax-exempt bond financing, a mortgage recording tax waiver, building tax stabilization, land tax abatement, and sales and use tax exemption.

*The exact amount of personal income tax revenue that will be lost as a result of this transaction depends on factors including (but not limited to) the percentage of bonds bought by entities subject to New York City personal income taxes, the interest income generated from the bonds and the tax rate applied to bond purchasers.