Construction on a shell building at the Southern Virginia Technology Park is underway. Upfront costs of the project led to a budget shortfall for the Halifax County Industrial Development Authority.

The Halifax County Industrial Development Authority is facing a budget shortfall heading into the next fiscal year starting in July.

Upfront costs of an ongoing construction project led to the approximate $708,000 shortage.

“We’re going to have to take $700,000 more from our reserves to finish the (shell building) construction project,” IDA executive director Brian Brown told the board at a Friday morning budget work session in the IDA conference room.

The IDA broke ground on a shell building at Southern Virginia Technology Park on March 6, and construction on the building is underway. The shell building’s total cost is $3.6 million. That amount increased by $200,000 from the original estimate because of additional design work, Brown shared. The purpose of the shell building is to attract prospective businesses and industries to Halifax County. The Greensboro, North Carolina-based Samet Corporation is the contractor.

The IDA moved ahead with construction of the building to take advantage of grant funding from the Virginia Tobacco Region Revitalization Commission, Brown explained. He said half of the original cost of the building was funded by the commission grant, with the remaining costs incurred locally.

Brown explained the IDA receives the grant on a reimbursement basis, and the IDA had expended more than $800,000 on the shell building in the current fiscal year. He said the IDA expects to receive half of those funds back from the tobacco commission. In the meantime, Brown discussed with the board using a revolving line of credit to cover the additional cost of construction of the shell building.

“As a result of the quick drains of invoicing, we will experience funding gaps for operations,” Brown said. “After construction is complete permanent financing will be put in place.”

The budget shortfall led the IDA to make cuts in other areas, including operating and maintenance expense to the building at Southern Virginia Technology Park.

“Our budget is tight. It’s extremely tight,” Brown told the board. “We need to get lean and mean with what’s going on.”

Board member Mattie Cowan asked the board, “What do you all think? Is there anywhere we could do any more cutting?”

Cowan also said she would look into other financing options for some of the IDA’s loans prior to the board’s next meeting, when they plan to vote on adopting the budget for the next fiscal year.

In addition to the construction of the shell building, the IDA also is incurring expenses related to another major project known as “Project Phoenix.” The project is a proposed hemp processing facility in J. Aubrey Houghton Industrial Park in South Boston. Brown shared with the board that the IDA had signed a six-month lease on the building at 2525 Houghton Drive on Thursday.

The IDA executive director told the board that more money would have to be spent on Project Phoenix upfront and eventually would be reimbursed by the state. The projected amount of expenditure for Project Phoenix in the 2020-21 budget is $99,875. The cost of the building and modifications is estimated at $2.6 million. American National Bank & Trust Company has agreed to loan the IDA up to $2.6 million for the project.

Project Phoenix is expected to purchase $50 million in hemp from Virginia’s farmers in just three years, with 41 direct employees and hundreds of ancillary jobs, according to a grant application the IDA submitted to the tobacco commission for the project. By the end of the year, 23 full-time employees are expected to be hired, and 432,000 pounds of hemp are expected to be purchased for production, the grant application states.

The IDA’s proposed budget for next year also takes into account a loss of income from renting space to Mid-Atlantic Broadband Communities Corporation, which is moving its operations to the SOVA Innovation Hub in downtown South Boston by the end of the calendar year. MBC’s budgeted rent payments for fiscal year 2019-20 were $174,780, versus a projected $96,054 for the 2020-2021 fiscal year.

Brown also presented the board with capital incentives for new and current industries. Specifically, he shared a draft of a policy on leasing and building construction for potential adoption by the board. He cautioned the board that the IDA must take measures to limit financial exposure and risk in order to maintain the sustainability of the organization.

The equipment clause in the proposed lease and building construction policy, for instance, states that the IDA may finance equipment as part of a lease term; however, partnerships with other financial institutions such as local banks and loan programs should be encouraged, and the IDA should be “the financial institution of last resort.”

“Because we are in a unique situation of not being funded by the county, there is no other IDA that has one of these (policies),” Brown told the board. “This is the first of its type.”

Brown explained that most IDA’s either receive an annual allotment of funds from the county or are under the county’s economic development budget. Instead, he said Halifax County has set aside funding for project deals, and the money can only be used if a project is brought forward. That puts the Halifax IDA in a position of needing to be self-sufficient financially.

The board members voiced their approval of Brown’s proposed lease and building construction policy and agreed to review the policy further at the next board meeting. Cowan said she liked the policy because it would show companies that they all are receiving equal treatment from the IDA. Board member Rick Harrell agreed.

Miranda Baines is a staff writer for The Gazette-Virginian. Contact her at

Miranda Baines is a staff writer for The Gazette-Virginian. Contact her at