Council recommends loan approval for Allen Harim

$11 million request to be decided by DNREC secretary
July 23, 2015

Delaware's Water Infrastructure Advisory Council unanimously recommended approval of more than $11 million in two loans to Allen Harim Foods LLC to expand and upgrade its Harbeson poultry plant.

If approved, the loans would be the first private-sector loans granted through the state's Clean Water State Revolving Fund.

Allen Harim has requested a loan to finance nearly $8.4 million in expansions and upgrades to its current wastewater treatment plant at its Harbeson facility, as well as a $3.2 million loan to build a wastewater reuse system designed to recycle 50 percent – or 1 million gallons per day – of wastewater generated in poultry processing.

The upgrades would significantly decrease nutrients discharged into the Broadkill River, although Department of Natural Resources and Environmental Control officials say the plant already meets current environmental standards for its effluent discharges.

The reuse and upgrades are expected to decrease total nitrogen loads from 46 milligrams per liter to 4 milligrams per liter and decrease total phosphorous loads from 5 milligrams per liter to 0.3 milligrams per liter per day.

DNREC's Financial Assistance Branch, which recommended the council's approval, is gathering more information before passing the recommendation on to the cabinet secretary. The recommendation to approve will then be forwarded to DNREC Secretary David Small for a final decision, after more information is presented to the council at their next meeting in August.

Council member Hans Medlarz, who is also Milford's city manager, said he moved to recommend approving the request during the council's June meeting because the project goes above and beyond permit requirements.

“I thought that was a voluntary step, which we should try to encourage by providing incentive-type funding,” he said in a phone interview. “This facility is going above and beyond in the treatment of its wastewater.”

The Financial Assistance Branch reviewed Allen Harim's credit history and other factors before reaching a recommendation for loan approval, but more work still needs to be done, said program administrator Terry Deputy.

He said his department is gathering more information about Allen Harim and the loan conditions to present to council at a Tuesday, August 18, meeting so council can cast a new vote without conditions.

“We're doing due diligence to make sure all the council concerns are resolved an our concerns for the loan are resolved as well, making sure we fully understand the company and the commitment we're making,” he said.

One of council's concerns, Medlarz said, was the length of the loan repayment.

The branch and council recommended issuing the loans at a 2-percent interest rate with a 20-year repayment term, which may change during the council's August meeting, Deputy said. Loan conditions will include the state holding the first lien on improved facilities and real estate at the Harbeson poultry plant, as well as a loan guarantee from Allen Harim Foods' parent company, Harim USA LTD, which would be held accountable in case of default.

Medlarz said once the Financial Assistance Branch makes sure approval conditions are met, the secretary could agree or disagree with the recommendation to issue the loans. Medlarz said it is rare that the secretary would not accept the council's recommendation, but it is possible.

Allen Harim Chief Financial Officer Brian Hildreth said after the council's vote that permitting has already started and that this loan will make the upgrades more financially feasible for the company.

“The water reuse is a big factor,” he said. “It keeps the discharge out of the stream, which is good for the environment and the public, and that's what we're aiming for.”

Hildreth said in a previous interview with The Cape Gazette that the project is expected to begin this year and be completed by the end of 2017.