Exhibit 10.7

                                LETTER OF INTENT


Date:             December 16, 2004

Parties:          City of Shenandoah, IA ("City") and Green Plains Renewable
                  Energy, Inc. of Las Vegas, Nevada ("Owner")

Owner is an entity organized to facilitate the development, operation and
management of a locally-owned 50 MGY gas-fired fuel ethanol plant in the
vicinity of Shenandoah, Iowa (the "Facility" or "Project").

The City is a local government entity capable of providing potable water and
effluent (gray) water, to be utilized in the production of Ethanol, and in the
operation of facilities for such ethanol production.

Owner and City agree to use their best efforts in jointly developing this
Project under the following terms:

1. GRAY WATER

         A. Owner agrees that City will provide the Facility with effluent
         (gray) water to be used for cooling during the production of ethanol if
         determined by City to be feasible and in return for adequate
         compensation, which shall be the City's cost of electricity to pump the
         effluent from the City waste water treatment plant to the Facility.
         Should Owner choose to develop or pursue an alternative cooling water
         supply, then Owner shall reimburse City for all expenses incurred in
         connection with the Project based upon City's standard rate schedule
         plus all third party costs incurred from date of this Letter of Intent.
         Such expenses include but are not limited to, labor rates, laboratory
         testing, and reimbursement expenses such as legal charges for document
         review and preparation, reproduction costs, long distance phone calls
         and postage. In the event City's services are terminated by Owner,
         title to the technical data, which may include preliminary engineering
         drawings and layouts and proprietary process related information, shall
         remain with City; however, Owner shall have the limited license to use
         the above described technical data, excluding proprietary process
         related information for construction, operation, repair and maintenance
         of Project.

         B. Owner agrees to provide the Facility with effluent (gray) water to
         be used in the cooling phase of ethanol production in exchange for
         compensation equal to the City's electrical cost of transporting the
         effluent water from the point of production to the Facility. This cost
         shall remain firm by the City to the Owner until December 31, 2005 and
         may be subject to revision by City after such date, and shall not
         increase for as long as this plant shall remain in operation. If the
         electric costs to pump the water to the plant should increase after
         December 31, 2005, Owner's expense shall not increase by a sum greater
         than the City's increased costs.

2. POTABLE WATER

         Owner agrees that City will provide the Facility with potable water to
         be used for the production of ethanol if determined by City to be
         feasible and in return for adequate compensation, which shall be $1.50
         per 100 cubic feet of water. This charge results in an approximate
         savings to Owner of $1.00 per 100 cubic feet.

3. It is the intent of Owner and City that the total cost of all water supplied
by City to the Facility, potable water and effluent (gray) water, shall not
exceed $.631 cents per thousand gallons. This Letter of Intent is based on the
representations of Owner that the ratios of effluent (gray) water used to
potable water used shall be as follows:

         Effluent (Gray) Water Used:         not less  than  2/3 of total  water
                                             used by the Facility

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         Potable Water Used:                 not  more  than  1/3 of  the  total
                                             water used by the Facility

It is the intent of the parties that these rates shall be in effect for a period
of ten years from the date of this Letter of Intent, except as provided in
paragraph 1.B. At least six months prior to the expiration of such ten year
term, the parties shall negotiate, in good faith, any adjustments in the rates
for each type of water delivered by City to Facility, and the term for such new
rates. Any adjustments shall fairly represent the costs to the City to treat and
provide such water to Facility.

4. The parties acknowledge that the terms of this Letter of Intent are subject
to approval by the City Council of the City of Shenandoah, Iowa, at a City
Council meeting.

5. If City intentionally or by gross negligence fails or refuses to comply with
its commitments contained in this Letter of Intent, City shall absorb all of its
own expenses, and Owner shall have the right to terminate the Letter of Intent
immediately upon written notice to City, and Owner shall be released from its
obligations to pay or reimburse City as described above.

6. The Parties agree that this Letter of Intent may be modified only by written
agreement by the Parties.

Green Plains Renewable Energy, Inc.              City of Shenandoah, Iowa

By:  /s/ Barry Ellsworth                         By: /s/ Gregg Connell
     ------------------------------                  ---------------------------
       Barry Ellsworth                                 Gregg Connell

Title: President                                 Title: Mayor

Date December 16, 2004                           Date: December 16, 2004

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