Sold: State-owned Palmer slaughterhouse finally finds a buyer

Mt. McKinley Meat and Sausage, Southcentral Alaska's only USDA-certified slaughterhouse, has a new owner.

The Alaska Board of Agriculture and Conservation voted unanimously Friday to sell the state-owned plant to Mike's Quality Meats owner Greg Giannulis for $300,000, less than the Matanuska-Susitna Borough's assessed value of the plant.

The state originally proposed selling the Palmer slaughterhouse for $410,000.

In its motion approving the sale, the board said it was justified in reducing the price because of a lack of other viable offers. It also said an immediate sale would result in cost savings to the state.

[Related: State rejects proposals to take over Mat-Su slaughterhouse]

Agriculture board chair Ben VanderWeele said in a phone interview Friday that the state had received one other offer to buy the plant — from Mt. McKinley Meat Co-Op, a group of farmers. He said the board determined the Co-Op did not have the funding necessary to buy the plant.

Co-Op interim board president Scott Mugrage said in a phone interview Friday that he offered to purchase the plant at the full asking price and hoped to secure funding from the state's Agriculture Revolving Loan Fund at below its regular interest rate.

VanderWeele said Giannulis has offered to pay the $300,000 up front.

The state has operated the plant since 1986 after taking over when the original owners defaulted on their loan, but it's lost an average of $100,000 every year. The deficit is paid by the Agriculture Revolving Loan Fund, a fund paid by farmers who borrow against it, not the general fund.

However, with pressure from the Alaska Legislature, the state attempted to move the plant into private ownership for years. Attempts to sell or lease the plant in both 2000 and 2002 were unsuccessful. The plant was set to close in June 2017 unless new ownership could be found.

[Related: Meat industry coalition urges state to move Mat-Su slaughterhouse operations to private sector]

Friday's emergency meeting of the board marks the third attempt by the state to sell the property this year. Two other requests for proposals resulted in bids under which operations could not be sustained or that did not meet minimum requirements.

Giannulis also submitted a proposal to take over the plant in October. That proposal was rejected for not meeting the minimum price requirement for the proposal. The state had proposed selling the plant for $700,000 based on a broker's opinion issued in the fall.

VanderWeele said the board intentionally tried to act quickly on finding new ownership for the slaughterhouse. One manager of the plant, Frank Huffman, left recently and two others will leave Dec. 15. He said the board wants to make sure operations of the plant continue. Without USDA certification, livestock farmers cannot legally sell meat to restaurants and grocers.

"There are several farmers with animals ready to butcher and if they can't get them in the slaughter facility they end up feeding them and it costs them more money," VanderWeele said, "and that weighted pretty heavy on (the board's) decision making."

Giannulis, the winning bidder, did not immediately respond to a request for comment Friday. But fellow bidder Mugrage said he was "ecstatic" on hearing the news of the purchase. He said now he can focus his time on farming while Giannulis works to keep the meat plant open. Mugrage looks forward to private industry running the plant and hopes the days of it constantly being threatened by state shutdown are over.

"The hope is the stability in that plant brings (the livestock industry) growth," he said, "and I believe it will."