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Disposing of Cattlegate: How will beef plant story end?

The Mississippi Legislature couldn’t agree on redistricting lines in 2001, tort reform in 2003 or the general budget in 2005, but four years ago, state lawmakers and other officials quickly approved funding for the beef processing plant in Oakland, a small community in Yalobusha County.
That doomed deal and the fallout from it is now often referred to as “Cattlegate.”

Time expired April 15 for the Mississippi Development Authority (MDA) to accept sealed proposals for the 160,000-square-foot plant before Community Bank disposes of the property and calls on its guarantee from the state for $43.5 million, including the original $35 million loan, plus $8.6 million the bank spent at a Feb. 4 foreclosure auction to acquire the plant. Interest of more than $5,000 per day has been accruing since February 7. At press time, a deal had not been announced. The state has until May 15 to close a sale.

“Our two goals remain protecting the taxpayers’ investment and getting people back to work,” said MDA spokesperson Scott Hamilton.

State lawmakers and elected officials have come under intense scrutiny for endorsing an economic development package for Richard Hall Jr., who had little net worth, was involved in previous failed companies, and invested very little money of his own. He shut down the plant November 17, after only three months of operation, and put 400 people out of work. He defaulted on the original $35-million loan awarded to Community Bank when he missed a $325,000 payment, and failed to raise capital to keep the plant open. Several relatives were on the payroll, and Hall’s whereabouts were unknown at press time.

MDA began marketing the plant in late February and has paid Community Bank roughly $200,000 a month while it tries to find a buyer and close a deal. Brochures were sent by mail to several hundred companies listed in a database that might be interested in acquiring the facility, and MDA placed ads in three trade magazines. Information about the cattle processing plant is listed on MDA’s Web site, www.mississippi.org.

Hamilton said at least 10 firms have toured the 142-acre site in Oakland, located approximately 75 miles southeast of Memphis in impoverished Yalobusha County, and part of the Appalachian Regional Commission and the Delta Regional Authority. The property features a spiral freezer and packaging systems, a fully-equipped office and the capability of processing 1,000 head per day. Approximately 400 trained workers living in the vicinity, which has an unemployment rate around 9%, are ready to return to work.

“The clock’s ticking on costs associated with this operation,” said Hamilton. “For example, we’re maintaining utilities. Some of the blast freezers go down to 40 degrees below zero, and the walls have to be adjusted once they get down to that temperature because of contraction. If you turn the electricity off, then walls would buckle and ceilings would have problems. It makes more sense to keep paying utilities. Also, the ammonia in the piping system could not only damage the refrigeration system, but could be very dangerous in the plant. It’s the same with insurance. Without electricity, the automatic fire protections wouldn’t work.”

Wyman Jones, president of the Rankin-Hinds division of Community Bank, said the bank has referred inquiries to MDA and has not attempted to market the property. He said that if MDA does not find a buyer, the bank would probably move quickly to dispose of the property, and that an extension has not been discussed. When asked if other alternatives had been considered, Jones said he “wasn’t privy to any discussions” about the matter.

A task force involving State Auditor Phil Bryant, Attorney General Jim Hood and the FBI is investigating how the Mississippi Land, Water and Timber Resources Board, which approved a $5-million grant for the deal in July 2001, and other involved parties mishandled the case. Former MDA executive director Bob Rohrlack and Mississippi Department of Agriculture and Commerce (MDAC) Commissioner Lester Spell co-chaired the board at the time funds were approved for the beef processing plant.

MDAC spokesperson Patrick Sullivan said the cattle processing and rendering plant is “an excellent facility.”

“We hope to get it up and running soon and get people back to work,” he said.

Contact MBJ contributing writer Lynne W. Jeter at lwjeter@yahoo.com.

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