State rejects proposals to take over Mat-Su slaughterhouse

Mt. McKinley Meat and Sausage plant is up for sale. Again.

On Thursday, the state Board of Agriculture and Conservation declined two proposals to take over operations at Southcentral Alaska's only USDA-certified slaughterhouse.

Instead, the board voted to put out a bid for an "over-the-counter" sale of the facility for $410,000, the Matanuska-Susitna Borough's assessed value of the property.

The board rejected proposals from Mike's Quality Meats and Mt. McKinley Meat Co-Op. In separate motions to decline the proposals, board members found that Mike's Quality Meats' proposal did not meet the minimum proposal requirements, specifically in regard to price. The co-op proposal was declined for lack of financial viability.

It's the third attempt by the state to move the plant into private industry this year. Two previous requests for proposals issued this year allowed interested parties to lease the Palmer facility with an option to buy or to simply purchase the plant outright.

[Related: 2 groups bid to take over beleaguered Mat-Su slaughterhouse]

The attempts come as the plant faces a possible closure next year. Without the facility, livestock farmers won't be allowed to sell meat to restaurants and grocery stores. The plant averages a loss of $100,000 a year, according to state records.

This year, lawmakers approved one more year of funding to operate the plant through June 2017 but have urged private industry to take over or face permanent closure.

The state has attempted to move the plant into the private sector several times since taking over operations in 1986. However, attempts to sell or lease the plant in both 2000 and 2002 were unsuccessful.

Division of Agriculture Director Arthur Keyes said in a phone interview Thursday that the over-the-counter bid process "simplifies" the process of purchasing the facility.

He said RFP requirements can be strict. If the minimum is not met, then a proposal cannot be considered. Keyes said the over-the-counter process allows for more discussion and negotiation about the purchase, similar to how private properties are sold.

"It's trying to keep (the plant) alive," he said.

The division plans to post the notice for the sale early next week. The bid process has no set closure period, according to Amanda Swanson, loan officer for the Alaska Agriculture Revolving Loan Fund. If no requests are received, the board can meet at any time to reconsider another method of moving the plant into private ownership, either through another RFP or even listing it with a real estate agent.

Scott Mugrage, interim board director of Mt. McKinley Meat Co-Op, said he would reconvene with his board members to reconsider next steps and see if they might make another submission for the plant.

[Related: With little funding left, Palmer slaughterhouse faces a new threat]

Greg Giannulis, owner of Mike's Quality Meats, did not immediately return a phone message seeking comment Thursday.

During the board meeting, Keyes said all three managers of the plant had officially tendered their resignation with the state. He said one replacement has already been hired and that they hope to hire four more.

Keyes said he's doing everything within his purview to make sure the facility continues to operate until someone takes over. He added that the board is also trying to be diligent about keeping the red meat industry going in Alaska.

"It's a complex process and the issues are not simple to overcome," Keyes said. "But this group is working at that."