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Northern Beef Packers Missed Dirt Needs by Factor of 3

Before Mike Rounds adopted Northern Beef Packers as his legacy-building EB-5 visa investment project, NBP's organizers were already using EB-5 style magic math to guide their business planning. We already know NBP was wildly off on their job creation projections. Now this week's $2.1 million lien trail in Aberdeen reveals NBP was built on bad math, quite literally, from the ground up:

The man hired to oversee construction of the Northern Beef Packers plant testified in federal bankruptcy court Thursday he didn’t know how much fill was needed for the Aberdeen project site.

Bob Breukelman of Huron said he took the fill estimate developed by three Aberdeen earth-moving contractors who were recruited but weren’t hired. He then used it to recruit another contractor from Huron in 2006 who was hired and now claims to be underpaid by $2 million.

...Breukelman said the Aberdeen contractors estimated the fill needed at 200,000 cubic yards total of clay, gravel and sand. Olson’s invoices show 596,000 cubic yards of materials [Bob Mercer, "Northern Beef Lien Trial: Project Began with a Bad Guess on Dirt," Aberdeen American News, 2014.05.30].

Off by a factor of three?

Breukelman testified Thursday that he made his own determination of the fill needed and his estimate came within “a few thousand” cubic yards of the Aberdeen contractors.

“It grew somewhat as the project slightly changed,” Breukelman said.

The site configuration changed, the parking lot’s size was expanded and the one-story plant’s elevation was increased twice, so that its 320,000 square feet of main floor rested nine feet higher than the local terrain [Mercer, 2014.05.30].

Boy, and I thought Marty Jackley was having trouble counting when he said several means two. In NBP-Land, few means 396 and slightly means off by 198%. That's worse than the fuzzy math USCIS uses to evaluate EB-5 projects, in which one job is really 2.66 jobs.

Rep. Stace Nelson disapproves of the EB-5 visa investment program and other projects of the Governor's Office of Economic Development in part because they are government programs picking winners and losers in the marketplace. Such programs aren't so bad if government is actually good at picking winners.

But Nelson's primary opponent Mike Rounds was much better at picking losers. Northern Beef Packers couldn't even calculate its opening earthwork costs correctly. Yet Mike Rounds rewarded NBP's bad math by obliviously shoveling $4.3 million of state funding and $95 million in EB-5 money towards what now stands bankrupt and idle on a bigger-than-expected pile of dirt. Such is the judgment of the former governor who now wants to bring his bad math to Washington.

19 Comments

  1. Bob Mercer 2014.05.31

    Not that he needs defending (and this blog could become REALLY interesting if he starts commenting here), but the attorney general isn't wrong in his definition of several.

    There are several definitions of several.

    One definition is more than two but not many. Another definition is separate or distinct.

  2. caheidelberger Post author | 2014.05.31

    Does Jackley or Breukelman have a relevant definition of few or slightly?

  3. Bob Klein 2014.05.31

    Context is important. I can't see how several. in the context Jackley is being criticized for using it, could mean separate or distinct.

  4. Deb Geelsdottir 2014.05.31

    The level of Rounds' corruption grows day by day. I wonder if he's worse than Janklow?

  5. Troy 2014.06.01

    With no intent to defend NBP, there is nothing unusual with this type of change between preliminary design and final design. The extra cost of fill is less than .5% of the total plant. It is also less than an extra cubic yard per square feet of the plant.

  6. caheidelberger Post author | 2014.06.01

    Changes happen, Troy. But calling those changes "slight", ending up off by a factor of three on your dirt work, and apparently trying to pay your dirt work guy for just the first third of that dirt work all suggest bad business.

  7. caheidelberger Post author | 2014.06.01

    Deb, Janklow was at least more interesting to listen to.

  8. caheidelberger Post author | 2014.06.01

    (Mike, useful definition! That legal version of several does not just estimate an amount; it emphasizes the separate, severable liability of parties or clauses in an agreement. That usage appears not to fit Jackley's use of it in describing candidates under investigation. Does anyone here know anyone who uses several when they are thinking two? If Jackley had two suspects in mind but wanted to be vague about his investigations, he could have just said "candidates", plural, with no quantifier. He could have said "more than one." He could have said "multiple." All of those terms would have been more accurate.)

  9. 96 Tears 2014.06.01

    Numerous. One is a number. So is six. Jackley has zero credibility. He abuses his office as a huckster playing a shell game to what he thinks is an audience of complete rubes.

  10. David Newquist 2014.06.01

    The bankruptcy trial is producing a record of bumbling incompetence and connivance that characterized this scheme from its inception. Part of change in amount of dirt needed came about because flooding which put a large portion of the site under water. However, that, too, is something that would be considered in the most rudimentary planning because the history of flooding along the adjacent creek bed is well known. This is typical of the posturing and playing out of juvenile notions of what business is in South D

  11. David Newquist 2014.06.01

    South Dakota. State government endorsed an alleged enterprise carried out by a bunch of planless and clueless incompetents playing business big shots.

  12. 96 Tears 2014.06.01

    Jackley is a major holdover of the Rounds administration. Rounds hand-picked him to replace Larry Long as Rounds' Attorney General. Think of all the garbage he's had to sweep under the rug and keep it hidden between the Rounds/Daugaard administration and now the Daugaard/Michels administration.

    Marty Jackley is the hot button to flush the den of crooks out of Pierre.

  13. mike from iowa 2014.06.01

    From what I've read(somewhere) the human eye counts to three w/o actually having to count. Which is why we say two or three. Maybe Jackley just wanted to use a 25 cent legal word to impress those who haven't been impressed by his tenure as AG.

  14. mike from iowa 2014.06.01

    Slightly OT-when I visit themudflats.com(my favorite Alaska Liberal Blog) Rounds and Daugaard political ads show up there.

  15. Roger Cornelius 2014.06.01

    Troy views the .5% additional dirt work cost as insignificant given the total cost of the project because changes do happen in actual construction, but ignores the $2,000,000 loss to a South Dakota business.
    As is typical with South Dakota Republicans, the upper tier players; consultants, lawyers, planners, and politicians, skimmed money off the top of the project and the people that did the actual labor got stiffed.

  16. Troy 2014.06.01

    Cory,

    The difference in dirt used raises the grade 3 feet. This isn't a big matter and is normal if there are design changes, flood plain issues if discovered after the soil boring are done, etc.

    There may have been big problems but as a person who has been involved in dozens of construction projects, this is not abnormal and you are making an issue of normal.

  17. Les 2014.06.01

    I think things like this happen all the time, Troy. I don't call many of the cost overruns normal. I see it in commercial and home building. It is an easy way to scam dollars out of unsuspecting consumers on homes and simply very easy with boards of directors spending other peoples money on large commercial.
    .
    The problem I have. White Oak running away with the assets before discovery has happened in an obviously mishandled situation.

  18. Troy 2014.06.02

    Cost overruns are when the cost of the project costs more than budgeted after final design. As I read what occurred here is changes between preliminary design and final design.

    Project costs go up and down during this process as actual amenities and capacities are decided.

    Based on experience, grade is adjusted for a lot of reasons. Flood plain or the need to move water are a reason that comes to mind. A packing house uses millions of gallons of water. Raising it a few feet could have significant operating cost savings because gravity can be used vs. pumps. Or since Aberdeen has a notoriously high water table, there could have been groundwater regs or just needed to protect the plant from flooding.

    In any case, three feet of grade change is not material even for building a house, much less a large plant.

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