County’s Loan To Gas District Will Retire Long Overdue Debt
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One reason cited for financial problems for the Oakland Yalobusha Natural Gas District is the demand for natural gas is less than initially expected when the gas line served Mississippi Beef Processors, LLC, in Oakland. The beef plant (above) only operated for four months before closing. While the failed plant was a black eye for the state, the site became the location for Windsor Foods and later Ajinomoto Foods, which has grown to the county’s second largest employer. There have been five expansions since the plant reopened in 2007, with millions of dollars invested by Ajinomoto to increase production. The latest expansion was announced in January and is expected to push the job tally to 450. – File photo by David Howell
OAKLAND – Yalobusha County has acquired the Oakland Yalobusha Natural Gas District following a vote by supervisors last month to loan the gas district $350,000 for payment on an outstanding debt.
The $350,000 payment is less than a fourth of the $1.6 million owed for a U.S.D.A.-backed loan, money initially loaned to the district almost two decades ago to construct the gas line that extends 11 miles from Coffeeville to Oakland along County Road 211 and serve a portion of western Yalobusha County including Ajinomoto Foods. The construction of the gas district was funded with a pair of USDA loans – one for $1.2 million and a second, smaller $565,000 loan.
The acquisition followed more than two years of discussion after supervisors first proposed a $300,000 offer in 2020 from the county and $100,000 from the gas district as a settlement payment if USDA would forgive the remaining balance on the $1.6 million debt that had long been in arrears.
Following a legal snag, House Bill 1433 was passed by state lawmakers during the 2021 Legislative Session. The local and private bill authorized the Board of Supervisors of Yalobusha County to loan the district up to $350,000. The loan to the gas district will be repaid over a 10-year period with an interest rate of 1.61 percent. The first payment is due this month.
The county’s payment comes almost two decades after the funding for the gas district was part of a $55 million project to build a beef processing plant in Oakland. Although the beef plant only operated for four months in late 2004, the 140,000 square-foot facility in Oakland was ultimately purchased in 2007 by Windsor Foods, a frozen food manufacturer. Windsor’s initial $20 million investment was followed by five major expansions as the company was purchased by Ajinomoto Foods in 2014 and has grown to the county’s second largest employer.
The latest expansion was in January, 2020, after Ajinomoto announced a $27.3 million corporate investment that will increase capacity on a rice line and boost the number of employees to 450.
The problem that has plagued the gas district for at least a decade is that gas usage has been lower than initially anticipated to serve the beef processing plant. Oakland Mayor Riley Swearengen first approached supervisors in 2009, explaining that the gas district was in arrears with one of two U.S.D.A. loans that financed the construction.
Swearengen, who serves as the chairman of the district, reported that the gas district did not have the gas usage originally anticipated when the beef plant was operating and the number of residential customers on the line was also lower than initially expected.
