A controversial Postville meatpacking plant might have been forced out of business if U.S. Sen. Tom Harkin hadn’t stepped in four years ago to give it a multimillion-dollar boost with federal tax money.
The money, nearly $8 million, came from an environmental program from which Agriprocessors normally would have been disqualified. The grant and loan were used to build a sewage-treatment plant that serves only the meatpacker.
The environmental program, run by the U.S. Department of Agriculture, is designed to help small towns improve their sewage systems. The new sewage-treatment plant is technically owned by Postville, but it doesn’t serve the town’s residents. Department administrators say that fact usually would have prevented it from receiving money from the program. But Harkin, an Iowa Democrat, used his influence to exempt the project from those rules in 2004.
But now it’s the city that’s in deep doo-doo as the plant has gone bankrupt:
The USDA money included a $3.3 million grant and a $4.5 million, 20-year loan. The loan was made to the city, which agreed to stand as the plant’s owner so the project could qualify for the federal program. In return, Agriprocessors agreed to make $25,000 monthly payments on the loan.
A bankruptcy trustee who is temporarily running Agriprocessors said any new owner would be obligated to make the monthly payments toward the $4 million still owed on the federal loan. If the company goes out of business, however, the city would be on the hook for that amount.
Postville Mayor Robert Penrod said he’s worried about the drag the loan would present to the city. “It would be kind of disastrous,” he said.