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Published June 17 2012

Unpaid bills mounting at new beef-processing plant in SD

ABERDEEN, S.D. – Unpaid bills and contractor complaints are piling up at a $110 million beef-processing plant in northeastern South Dakota that is scheduled to open this year.

Brown County records show that contractors have filed liens for more than $1.3 million against Northern Beef Packers since Jan. 1, about $1.2 million of which has not been paid. Documents show the plant owes more than $10 million from previous years.

David Palmer, Northern Beef Packers CEO and president, says the plant does not have enough money to pay its bills because it has not sold all of its tax increment financing bonds and hasn’t secured financing from other sources.

“We have a limited amount of money, and we are paying contractors doing work for us now, so we can get the plant open,” Palmer said. “It is a choice we have made. The best way to get all the creditors paid is to get the plant open.”

Palmer estimates that the amount from previous liens before this year to be about $6.7 million.

SBI General and Mechanical, a welding company in Waterbury, Neb., filed a lien against Northern Beef Packers on March 2. Company spokesman Eddie Seneviratne said he was told the plant didn’t have the money and SBI was asked to become investors by buying TIF bonds.

“We did not want TIF bonds,” Seneviratne said. “We wanted payment.”

The 420,000-square foot facility plans to process about 200 cattle a day, eventually ramping up to 1,500 head per day from the Dakotas, Nebraska, Iowa and Minnesota. The plant currently has about 200 employees, but the crew is expected reach 650 at full operation.

Land for the plant was secured in 2006, but financial issues, lawsuits, local opposition, delinquent property taxes, flooding, an economic downturn and millions of dollars in liens have repeatedly pushed back its opening date.

Scott Olson, whose Huron, S.D., company excavated the basement for the plant and hauled in clay, sand and gravel to build up the site, is seeking to recover $2.1 million through a lawsuit.

“They have treated me like other lien holders,” Olson said. “They ignore us and use what money they have to keep building on the plant and let everyone else suffer.”

Palmer said the plan is to pay lien holders as quickly as possible.

“Until there is enough cash, I am going to have unhappy creditors,” he said.