By Matt de Simone
The Botetourt County Board of Supervisors approved three Industrial Revitalization Fund grant agreements during last week’s meeting.
Director of Economic Development Ken McFadyen presented the project and agreements for the board’s consideration noting that Commonwealth of Virginia and the Department of Housing & Community Development (DHCD) awarded Botetourt County a $450,000 grant from the Industrial Revitalization Fund (IRF) program.
The grant award is proposed to serve as the principal for a loan to Factory Flats, LLC, the development company working to renovate the former Groendyk manufacturing buildings in Buchanan. Factory Flats, LLC has planned for the 3,381-square-foot building that has received the DHCD funding support to be repurposed as a commercial brewery and brewpub. To make the loan to Factory Flats for this project, the Economic Development Authority is authorized by the Code of Virginia to administer loans for the purposes of economic development in the county.
The IRF project budget to repurpose the subject building is $913,276.50, including IRF loan funds of $450,000 ($433,402 for construction and $16,598 for clearance and demolition) and $463,276.50 in matching funds for construction from Factory Flats. To get under contract with DHCD, there are three agreements for the Board of Supervisors to consider for approval: 1. The Grant Agreement, 2. Restriction Agreement, and 3. Performance Agreement.
The Grant Agreement obligates the IRF grant funds to this project and outlines the general and special conditions applied to this grant funding. The Restriction Agreement outlines that a deed restriction will be placed on the property by the Economic Development Authority for a period of 10 years from the date of loan closing that requires the subject building to be used only for an IRF-eligible purpose. The Performance Agreement outlines the goals for the project and outlines what is required to happen should a change of ownership or use of the subject building occur during the first 10 years following the loan closing.
County Attorney Mike Lockaby and the economic development staff reviewed the current versions of these agreements with DHCD. Deputy County Administrator David Moorman stated that this isn’t a grant to the company, but a loan. Zero county dollars are involved in the ongoing project in Buchanan.
Additionally, the board approved text amendments Chapter 6 Buildings & Building Regulations of the Botetourt County Code to add “Article IV. Commercial Property Assessed Clean Energy (C-PACE) Financing Program.” According to the agenda , the developer intends “to make substantial investments in the Town of Buchanan” and made the request.
In this program, a private bank makes a loan to a private person. No county money is lent or put at risk. The county has two roles to play. First, it ensures that the financed construction will meet goals for energy efficiency, resiliency, stormwater management, or similar benefits. It then verifies the benefits at the conclusion of construction. Second, if the loan becomes delinquent, it is collectible in the same manner as a tax lien. Therefore, the county treasurer collects the funds. In order to defray the county’s costs, the borrower pays the county an upfront origination fee to do due diligence and then an annual administrative fee.
This program is common in other states, and approximately a dozen localities in Virginia have adopted this program in one form or another.