- By GREGORY MYERS nceeditor@centurylink.net
Should Newton County extend a deal with Select Milk Producers (Fair Oaks Farms) for two years in hopes the proposed cheese plant can come to fruition?
That was the question posed to the Newton County Commissioners, Newton County Council, and some members of the Regional Water and Sewer District at a joint meeting on Oct. 23.
“This agreement dates back several years, and there have been several amendments to the agreement,” said Chris Janak, attorney for the Newton County Regional Water and Sewer District. “Select came to us saying they wanted to build a cheese and whey facility but needed a water and sewer plant and they wanted us to build it.”
From that first meeting more than 5 years ago, an agreement was worked out with the county that called for the major infrastructure work (a new water and sewer plant) that was paid for by the selling of $23 million of bonds and then an additional $6 million in grants. The lender for the project was the State’s Revolving Fund (SRF), however, that loan came with milestones that had to be made, which included a completion date of the cheese plant by April 2021.
Select could not reach that milestone so more than a year ago the three county boards (commissioners, council, and water and sewer district), agreed to push it back two years to have the new completion date for Select Milk Producers’ proposed cheese and whey manufacturing plant be at the end of 2022.
Now that goal seems impossible and Select Milk is asking the county to push back the agreement another two years.
“The first milestone was Oct. 15 of this year with the engineering of the project needing to be done, and Select could not reach that milestone,” said Janak.
Janak also pointed out that Select is still holding up its deal for the bond payments, paying more than $200,000 a month which covers the plant’s operational costs as well as the payments for the “A” bonds, even though Select is only using about $15,000 a month in water and sewer.
“Select is saying they are financially stable but they just need a couple more years to get some development out there,” said Janak. “If they don’t, they say they will pay off the bonds.”
The concern from several county officials is that if at any point Select goes bankrupt, then the county’s tipping fees would be the backup for paying off the bonds. “If Select is unable to pay off the loan or defaults on the agreement, the loan is secured with landfill tipping fees, followed by a property tax rate that would go into effect,” stated Janak. “But a lot would have to happen for that to be the case. If the two-year extension is approved, Select will walk away from the ownership clause for the plant if they had to pay it off in exchange for a new clause,” added Janak. “If the county hooks up more people to the water and sewer plant then the minimum monthly payment Select has to pay would go down.”
That clause is brought up just a few weeks after the council voted down a request by the regional water and sewer district and Commissioner Tim Drenth to spend $9 million to expand water and sewer utilities up to Lincoln Township.
Janak added that right now if the loan is recalled the county’s exposure would be $18.4 million if Select goes bankrupt and cannot pay it.
