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041215 Mississippi Officials Urged Hall To Run Beef Plant

December 5, 2004

Oakland, MS - Mississippi officials wooed Richard Hall from Tennessee to operate a beef processing facility, state lawmakers say, and backed his initially sketchy plan with millions of dollars.

Now the $43.5 million Mississippi Beef Processors facility in Oakland is closed after three months of operation and is facing an uncertain future and a lawsuit.

Hall, the company president, has said it could remain shuttered until early 2005, when the rendering plant is repaired and he finds money to begin buying cattle.

Rep. Bo Eaton, D-Taylorsville, recalls the trip to Nashville in spring 2000 with other officials to talk with Hall and learn why he and his family, who had operated cattle slaughter facilities from about 1964 until 1998, had left the state.

"We were just trying to figure out what went wrong with Hernando (Boneless Beef Co.)," Eaton said. "We were trying to fix up something to where he might be able to come back to Mississippi. They were definitely interested."

Agriculture Commissioner Lester Spell said he also went on the trip, along with Rep. Leonard Morris, D-Batesville, and former Department of Agriculture employee Chris Sparkman. Morris, then vice chairman of the Ways and Means Committee, filled in for House Speaker Billy McCoy, then Ways and Means chairman.

Spell said off-and-on- discussions with Hall led to a meeting between Hall and the Land, Water and Timber Resource Board. Spell co-chairs the board, which was established in 2000.

Hall's program application for money to fund the project, received May 23, 2001, contained little information.

Under company information, Hall wrote "Mississippi Beef Processors, corporation or LLC, to be formed, Mississippi, USA."

On the address line, name of county and municipality where the plant is to be built, Hall wrote, "to be determined."

The application contained a five-paragraph description of how the project would benefit the state.

Nevertheless, after he made a presentation to the board on July 30, 2001, the board voted to approve Hall for a $5 million grant toward construction of the facility. The plant, estimated in a January 2001 study by Mississippi State University to cost $21.7 million, eventually cost $43.5 million.

In his application, Hall listed a proposed cost of $32 million to $34 million, the total of which would come from $15 million to $16 million in bond issue funds, the same amount in a "combination of state and local grants," and $2 million in equity.

Former Sen. Joseph Stogner of Sandy Hook, a nonvoting board member at the time, said he expressed concern over the fact Hall was expecting to put no personal money toward the facility.

The Land, Water and Timber Board was told early on it would have to put up $5 million to match federal money that would be available to build the plant, said Stogner. But when it came down to business, it learned no federal funds were available, he said.

"Then (Hall) had to put up some money, I think $1.5 million. Commissioner Spell and Rep. McCoy, they pretty much made the deal," Stogner said. "I questioned some of the things that were done, just as a member. As a matter of fact, Speaker of the House McCoy got all over me any time I raised a question. I didn't think it was good business the way it was being done."

Eventually, the board approved a state-backed loan of $21 million to build the facility. That loan amount grew to $35 million.

Eaton said he fell out of favor with the project after seeing the financial arrangements.

The cost overruns at Mississippi Beef Processors have to be accepted for what they were because of the complexity of operating such a facility under tight federal rules, McCoy said.

When problems arose, the state hired The Facility Group of Georgia, at $3.5 million, to step in and see it through completion.

Cost overruns have become commonplace, as was the case with the renovation of the Woolfolk Building, McCoy said.

Changes during renovation or construction of four state-owned buildings in downtown Jackson, including the Woolfolk Building, added $10.8 million to the cost, largely because of improper management by the state's fiscal agency, the Legislature's Performance Evaluation and Expenditure Review Committee cited in 2003.

McCoy said there hasn't been a new beef-processing plant built "anywhere close for a long time."

Although he said he does not recall the details of the negotiations to get a plant here, he remembers lawmakers believed a cull-cow processor would do well in certain areas because NAFTA the North American Free Trade Agreement had done away with many factory jobs, leaving scores of unskilled workers unemployed.

Morris recalled multifaceted conversations during the Nashville trip that included seeking Hall's advice on environmental issues related to a cull-cow processing plant. A cull cow can no longer produce offspring or graze.

"The commissioner of agriculture and others thought there was a need for a cull- cow processing facility," Morris said.

Spell said the intent was strictly to create avenues for economic wealth, which create sustainable jobs in rural areas where high-technology opportunities are scarce.

But now the beef processing plant is closed. Also, Anco-Eaglin of North Carolina has filed a lawsuit against the plant, alleging it is owed $170,000 on its $1.7 million contract for building the rendering plant.

Hall has not spoken about the lawsuit or returned calls for comment. Last week, he issued a statement blaming Anco-Eaglin and The Facility Group.

"We still have great confidence in the concept," McCoy said. "We have great confidence that it will make a difference for the producers in our state." Similar incentives have been offered to many companies, including Nissan North America, he said.

McCoy said he was probably the lead author on the Nissan funding and worried about "what if something goes wrong."

"We've had to step out of the box several times," McCoy said. "For the last 15 years or more, we've stepped out of the box several times. The citizens of Mississippi have to be able to compete."

Rep. Tommy Reynolds, D-Charleston, another lawmaker involved in developing the beef-processing plant, said he is used to criticisms from those who lack the vision lawmakers have when they do things differently.

"I remember a year ago today. I remember our prison in Tallahatchie County. I remember the cartoons that were put in the paper and how 'nobody was going to be working there,' and how there is now 300 people working there," Reynolds said. "I would say that progress is never easy, and things never work easy in an area where you're trying to get some economic development."

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