County reaches settlement agreement with SHF Industries over unpaid property taxes

Allamakee County Attorney Jill Kistler announced last week that the County has reached a settlement with SHF Industries, LLC, owner of the AgriStar meat processing facility in Postville, regarding unpaid property taxes. Under the terms of the settlement agreement, SHF Industries has paid the County a lump sum of $604,720.73 and all court proceedings related to the matter have been dismissed. The settlement covers the principal amount, but not interest of over $434,000 or legal fees incurred by the County totaling more than $168,000.
The dispute began with SHF Industries' purchase of the Agriprocessors meat packing facility in July of 2009 by “credit bid” in U.S. Bankruptcy Court. After purchasing Agriprocessors' debt of approximately $21 million from its creditors, First Bank and Met Life, for $8.5 million, SHF then bid $21 million on the plant. Essentially, SHF purchased Agriprocessors’ debt for a fraction of its value, then traded the full value of the debt for ownership of the plant.
With regard to property taxes owed by Agriprocessors, SHF Industries argued that it had purchased the property "free and clear of all liens," while the County argued that SHF should have been aware of the taxes owed, as the tax liens would have appeared on any title opinions SHF would have received prior to purchasing the property.
Federal courts have agreed with the County's position. The Federal Bankruptcy court ruled in January of 2012 that the property taxes owed to Allamakee County were not negated by the sale of the property at bankruptcy sale. In July of 2012, Chief Bankruptcy Judge Thad Collins ruled that whether SHF Industries or the bankruptcy trustee would be responsible for paying the taxes was an issue that would need to be settled at trial.
Last week's settlement agreement is roughly the same deal the County offered SHF Industries during mediation May 8 of this year. Following that round of negotiations, Allamakee County Board of Supervisors Chairman Larry Schellhammer said that the County's settlement offer amounted to giving Agristar a three-year interest-free loan of over half a million dollars for three years, but that the offer had been made to avoid further legal fees.