Another state loan commitment withdrawn from Northern Beef
PIERRE — The state Economic Development Finance Authority voted Thursday 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 Tuesday.
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 state government’s 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 state 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.”
Two reviews of the Governor’s Office of Economic Development are under way 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 in November 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 during his final month in office.
Costello gave the EDFA members a brief progress update Thursday.
“We’re fairly far along in the process, at least for two of them,” he said, explaining that two should be wrapped up next week and the third in the following weeks.
He praised the GOED staff for its work during “a difficult couple of months.”