PIERRE, S.D. (KELO) — A Huron-based sunflower seed company could get easier access to U.S. and Mexico customers because of a low-interest loan that the South Dakota Railroad Board approved on Wednesday.

One of the governor’s sons-in-law who now works for a privately owned development company helped arrange and coordinate the application.

The $401,085 loan will help pay for the construction of a new railroad siding where Advanced Sunflower plans to load edible products into boxcars and hopper cars.

The state board made the loan to East Central Regional Railroad Authority. Terms are 2% interest for 20 years, with a balloon payment due in seven years, which have been standard on other rail loans. The siding would be owned by Rapid City, Pierre & Eastern Railroad.

Speaking in support of the loan request Wednesday were Danny Dale, Advanced Sunflower’s chief executive officer, as well as East Central chair Jeff Tschetter and Kyle Peters from A1 Development Solutions, a consultant on the project.

Peters had also spoken on Advanced Sunflower’s behalf during the state board’s August 16 meeting. He is the husband of Governor Kristi Noem’s oldest daughter, Kassidy. The governor appoints the state Railroad Board’s members.

Peters was an agricultural and business banker at Plains Commerce Bank in Mitchell prior to Noem taking office as governor in January 2019. He went to work that month for the Governor’s Office of Economic Development. He and Kassidy Noem married on June 1, 2019, in Custer State Park. After a controversy over the governor’s role in Kassidy Peters getting a higher certification as a real estate appraiser, the couple moved to Watertown, where he started with A1 in June 2021.

A1 Development Solutions was founded in 2017 by Paul Kostbooth of Sioux Falls, who had been a division director in the state Department of Agriculture, and Mark Mickelson, a Sioux Falls businessman and attorney who at that time presided as speaker in the state House of Representatives.

KELOLAND News asked Peters and the governor’s communications director whether Peters’ involvement in the Advanced Sunflowers loan request was a conflict of interest.

“There is no conflict of interest as A1 is a third-party consultant to Advanced Sunflower,” Peters said. “A1 is not receiving any funds from the state of South Dakota nor are we receiving compensation tied to these funds in any way.”

“The governor’s office will not be commenting on this matter,” Ian Fury, the governor’s communications director, said.

According to Tschetter, Peters put together the loan request that the East Central board submitted. Peters said the contract for the project is between Advanced Sunflower and A1.

The loan is only part of the assistance that the sunflower project is getting from state government.

One week ago, the South Dakota Board of Economic Development approved a $401,085 local infrastructure improvement grant to the Greater Huron Development Corporation. The money will be used to also help pay for the siding.

The governor appoints the Board of Economic Development’s members.

Information about the state grant came to light Wednesday in response to a question from a state Railroad Board member about the scope of the siding project.

During the 2023 legislative session, Peters registered as a lobbyist for two clients: Gevo, which plans to build a state-subsidized facility to produce plant-based fuel for aircraft; and Graham Aviation, based at North Sioux City.

Advanced Sunflower comes with a solid reputation. The U.S. Small Business Administration in 2020 honored Advanced Sunflower as the South Dakota small-business exporter of the year.

Dale told the Railroad Board on Wednesday that the siding would be “a huge benefit” so that Advanced Sunflower could load rail cars to reach Mexico and other points throughout the United States.

Tschetter said Advanced Sunflower would be “a good partner” for the East Central authority and spoke highly of Dale. “He’s here to stay and he’s been a very good person in the community involvement,” Tschetter said.

Huron is in Beadle County. Advanced Sunflower is one block east of the South Dakota State Fairgrounds. The loan application included a letter of support from Beadle County Commission chair Doug Ramsell, who also serves on the East Central board.

In response to a state Railroad Board member’s question Wednesday, Dale said Advanced Sunflower had been loading on the BNSF line in Huron since the late 1980s but the track’s condition was “gradually getting worse and worse.” He said BNSF asked Advanced Sunflower to take on a $2 million project to rebuild that part of the line and accept the legal liability for it.

“For a company our size, we couldn’t muster that to keep rail service,” Dale said. In October BNSF took the track out of service, he said, “And that was that.”

In response to another board member’s question, Tschetter said Dale had purchased property that is next to the siding site and had been a building where freight trucks were loaded. The next step, he said, is adding a forklift ramp to reach boxcars

“We intend to load box cars as well as hopper cars,” Dale said, adding that a conveyor system will be set up to fill the hopper cars. There also is a portable dock that has been used, he said. The company previously was trucking sunflowers across the street to the portable dock.

Asked by a third board member about the financing, Dale said spoke about the state grant. State Transportation Secretary Joel Jundt provided further details about it to the board.

Advanced Sunflower also operates a facility at Redfield. Asked by a board member whether sunflowers could be shipped from there, too, Dale said, “If it’s possible, we would like to ship out of Redfield, but at this time, we were told it would be very spotty service.” He added, “We’ve kind of chosen for now to consolidate,” with the Redfield production trucked to Huron.

As for construction of the Huron siding, Dale said, “We’re working hard to try to get it off the ground this fall.” The lease is ready for signatures and the engineering firm has identified contractors, according to Dale. “If we’re able to get this loan, we could start as early as next week,” he said.

Tschetter told the state board that Peters drew up the loan application. Peters said the terms were based on previous loans that the board made. “That is what the request is today from ourself,” Peters said. Tschetter confirmed that 2% over 20 years with a balloon at seven years was what his board voted to seek.

Asked how many loads will go out, Dale said they were on pace last year to do 200 cars before service was interrupted. “We’re going to shoot for 150 to 250 cars per year and hope to build off that,” Dale said.