State withdraws second loan commitment to Northern Beef Packers
PIERRE — The state Economic Development Finance Authority voted on Jan. 16 to halt its $8 million commitment made to Northern Beef Packers.
The withdrawal was the second in two days by a state government agency. The state Board of Economic Development pulled a $5 million loan commitment on Jan. 14.
The Aberdeen processing plant shut down last year and declared bankruptcy.
The state loan commitments, along with various grants and related financial assistance, were made in 2010 during the final year of the Rounds administration.
The future of the project is unclear. The Daugaard administration appears to be winding up the state involvement in it.
The $5 million commitment was scheduled to automatically expire March 1, but the Board of Economic Development didn’t wait.
“Given the progression of the bankruptcy proceedings and the subsequent sale of the plant in December, (the Governor’s Office of Economic Development) deemed it prudent to bring the matter before the board at this time to consider withdrawing the commitment,” said Tony Venhuizen, a spokesman for Gov. Dennis Daugaard.
The agencies repeatedly granted extensions on the loan commitments.
“The (Board of Economic Development) typically commits loan funds to projects for a 12-month period, but may be more or less time depending on various project factors,” Venhuizen said. “Extensions are not uncommon due to construction delays, as the loans cannot fund until the project is complete and all the conditions in the commitment letter have been satisfied.
“The (board) continued to extend their funding commitment to the project, as the project continued to make progress towards completion each time an extension was requested,” he said.
Two reviews of the Governor’s Office of Economic Development are underway by outside accounting firms and the state Department of Legislative Audit is conducting a financial audit starting with 2009 records. GOED Commissioner Pat Costello asked that they be performed. His action came after a state investigation discovered $550,000 was redirected from a $1 million grant that Gov. Mike Rounds had approved for Northern Beef.