Bringing new industries to Halifax County was the aim of the Halifax County Industrial Development Authority’s investments that led to a budget shortfall for the upcoming fiscal year.
The IDA board approved an overall budget of $4.88 million for the 2020-2021 fiscal year at its Friday morning meeting. In addition, the board approved a resolution amending the budget to transfer $763,741.55 to the capital improvements income for construction of a “shell building” at Southern Virginia Technology Park and to allocate another $850,387.55 to the shell-building project. Construction on the building, which has a total price tag of $3.6 million, is underway.
Virginia Gov. Ralph Northam late Thursday afternoon officially announced one of the projects in which the IDA has invested — a hemp processing facility in the town of South Boston that is a first for Virginia. Another project in which the IDA invested — a project referred to by county officials by the codename “Project Select” — never came to fruition. The unnamed company had its eye on the shell building site in Halifax County.
“Neither one of these two projects were budgeted at the beginning of this year. These are opportunities that we had to take advantage of,” IDA executive director Brian Brown told the IDA board prior to their approval of the budget for the 2020-2021 fiscal year in a Friday morning meeting. “In order to have the announcement that we had today (the hemp processing facility), that was $370,00 off our reserves money. Those are the reasons why these things are happening, and it’s a good problem to have.”
The IDA spent $370,000 from its reserves to close on the property at 2525 Houghton Drive in South Boston, the site of the future hemp processing facility.
Board member Brandon Scearce also made a comment clarifying the reason for the IDA’s budget shortfall prior to the board’s approval of the budget amendment.
“It’s not that we’ve been upside down or squandered $750,000. It’s a timing issue that it will be an offset,” Scearce said. “We’re building one building. We’re purchasing another one that was just occupied, but those funds have not yet been received. So be aware that it’s not a yearly loss.”
While the IDA is moving forward with construction of the shell building, the unnamed company that had its sights set on the building has retracted its interest in the site. Brown explained that the reason “Project Select” has not panned out is the company had asked that the shell building’s square footage be increased from 50,000 square feet to 150,000 square feet, and the costs of that upfit grew to the point of no longer being economically feasible.
“It was no longer economically viable. In fact, it would’ve been over a 20-year return on investment,” Brown told the board. “We typically want our investments to be five years.”
Brown added, “The things that we (the IDA) are here to do are to generate wealth, generate tax revenue and generate jobs, but they all have to make sense within the framework of all those being successful. You hate to see any project go away, but when you have to look at it from that perspective, you want to make sure the deals we do make with the resources that we have are the proper deals that are able to be successful for our community.”
Scearce noted that the county’s board of supervisors also had committed to invest in Project Select, and the IDA did not want the board of supervisors to allocate any additional funds to the project because it “didn’t make sense for our return on investment.”
More details about Project Select are forthcoming in the near future, Brown said.
In other business at its Friday meeting, the IDA board approved by a unanimous vote the following items: a five-year capital improvements plan, a capital incentives policy, an economic development incentive policy and a draft project participation policy.
Brown explained the economic development incentive policy outlines the criteria for incentives the IDA will offer a company and the levels of incentive, based on the company’s level of investment and number of jobs created.
The related draft participation policy states the IDA will “provide assistance to all existing companies with regard to local, state and federal incentives offered in the 2019 capital incentives for new and current industries” and that new industries will follow guidance of the economic development incentive policy.
As part of that assistance, the policy state the IDA may participate with “capital investment” to help the company, serving as a “property owner, landlord or lender.”