NOTE TO READERS: This story has been corrected to reflect that the amount of the bank note remains confidential.
PIERRE, S.D. (KELO) — The South Dakota Public Utilities Commission wound up 70 minutes of discussion about the financial situation at Farmers Cooperative Elevator in Avon on Friday with a 3-0 vote to ask a circuit judge to appoint the commission as receiver.
The immediate goal is to have all grain producers paid. There reportedly are 46 contracts and two cash sales outstanding. A dollar amount wasn’t disclosed.
State law says the payouts must occur no later than Saturday, July 10. Chairman Chris Nelson asked how that can occur without sufficient money available.
“Legally it’s supposed to take place, but it’s not going to,” answered Kristen Edwards, one of the commission’s staff attorneys.
Another of the staff attorneys, Amanda Reiss, said receivership by the commission would give the commission “additional oversight” rather than having someone else in that role.
She said the fuel station, fertilizer plant and feed store were separate businesses and could still operate while the elevator is shut down.
“We view it as a way to ensure decisions made by the cooperative are in everyone’s best interests,” Reiss said. She cautioned that funds otherwise could disappear and producers might not be fully paid.
Elevator manager Kevin Tjeerdsma told the commission Friday the elevator’s bank has called a note to be paid November 15. That led to falling out of short-term compliance with state laws for grain-buyer and warehouse licenses.
The licenses weren’t renewed July 1 because the elevator couldn’t secure the necessary financial bond.
Tjeerdsma said a new bond is being put in place and he is searching for a new lender.
The commission’s grain warehouse manager, Cody Chambliss, said there are other agricultural businesses in the area that might be willing to step in at Avon if a sale turns out to be necessary.
Commissioner Gary Hanson said he is confident in the staff and that the elevator appeared to be a viable business capable of recovery but for the bank note.
He said many homeowners couldn’t come up with the money if their mortgages were called.
“Avon is a beautiful community and I really hate to see them lose the jobs and services for their area,” Hanson said.