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Halifax County supes approve $550,000 loan to IDA for Daystom building upfit / June 10, 2021

Over the vociferous objections of ED-6 supervisor Stanley Brandon, the Halifax County Board of Supervisors agreed Monday night to lend $550,000 to the Halifax County Industrial Development Authority to pay for an upfit of the old Daystrom building so it can be leased for storage.

Supervisors voted 6-1 to approve the loan, with Brandon casting the lone “no” vote and Board Chair Hubert Pannell of ED-3 abstaining. Putting the money into the building, which has been sat mostly dormant since Daystrom shut down decades ago, would enable the IDA to rent it to nearby RTP for storage.

The IDA is seeking the money to install a wall that would create two office sections in the front portion of the facility and ten dock doors for the loading areas — five now and five in the future. RTP will be leasing the space for $138,250 annually, with a ten-year contract.

By lending the $550,000 to the IDA rather than forcing the authority to pursue bank financing, the county will generate $63,000 in interest income from the loan. “From a finance standpoint, it is a good idea,” said County Administrator Scott Simpson.

Added ED-2 supervisor Jeff Francisco, “I do believe it is a good project. They [IDA staff] stated if we didn’t approve the loan they would go to the bank. This gives us the opportunity to make money from the interest.”

Brandon pushed back at the idea, noting that the building — which has been renovated at a cost of millions of dollars and repurposed as the Southern Virginia Advanced Manufacturing Center, so far to little effect — is plagued by questions of whether it will even be usable in the future. A number of environmental issues have been identified there — including a persistent seepage of chemical substances through the concrete floor in a portion of the building — and environmental testing is ongoing.

“I indeed understand the approach the IDA is taking to promote and sustain local business [by offering the facility as storage for a nearby industry], but the building they are looking to improve has been looked at several times and noted to have problems that are unidentifiable issues,” said Brandon.

“We are not certain of the extent of the problems. The county has spent money on this particular building and we were told it was usable, but it was not. You would have expected some things to be done, if it had been through such renovations in the past by the IDA, and those tasks have not been cleared up.

“I think it is a bad project,” Brandon said.

ED-1 supervisor Ricky Short said “I agree with Brandon, it is a sore subject,” but countered, “We are stuck with this building. Maybe this will be one of the chains to put on the tractor to pull it out.

“Nothing can be done in the building without this wall being constructed,” Short added.

At an IDA meeting last month, interim director Mike Davidson noted that RTP is now warehousing items at the old D-Scan building on Bill Tuck Highway near Presto. The Daystrom building, by contrast, is conveniently next door to RTP on Greens Folly Road.

ED-7 supervisor Garland Ricketts took note of that point — the Daystrom upfit would free up marketable industrial space at the D-Scan facility — as he offered his support for the loan.

“I think it’s a good project to help two local existing businesses. One to expand storage and two, it frees up storage to be leased by another local business. I think the project has been looked at prudently and will be a good use of some auxiliary funds,” said Ricketts.

Simpson said the IDA will be paying $122,678.54 annually to the county to cover the 5-year loan and promissory note. The IDA will make roughly $15,000 the first five years under the terms of the lease agreement with RTP, allowing it to plow the income into other projects to attract new businesses. The lease proceeds could also be used to pay for the up-fit of other buildings, freeing up warehouse space for other local businesses.

The renovations will be made to the 79,000 square foot portion of the building that has been leased to RTP. Last month, J. E. Burton Construction was awarded a $522,432 contract to complete the renovations.

Brandon called the loan “a gamble” and suggested the county could be on the hook if the building is found to be unsuitable for any use.

“If the whole thing goes south and the building is no good, what is that going to cost and we haven’t made a thing. We don’t want to keep going deeper in the hole,” he said.

Pannell did not offer a reason for abstaining from the vote but said he found it “disturbing” that the county was being asked “to magically help the IDA.”

Pannell raised the subject of the IDA’s refusal to consider a lease agreement for the building with Nathalie physician Dr. Brenda Waller, who approached the IDA about opening a hemp processing facility at the advanced manufacturing center.

While Pannell stressed he was reluctant to rehash the issue, he said the situation warranted further clarification about the offer made by Dr. Waller and the response by the IDA.

“We could not sell the building with the environmental issues [there] and Dr. Waller wanted to purchase the building for one-third or one-fifth of what we owed on the property,” said Francisco, chair of the board’s finance committee. A substantial portion of that money must be paid back to the Virginia Tobacco Commission. “That was not a good fit,” said Francisco of the offer by Waller.

Due to environmental concerns, the entire building cannot be sold and the IDA could only lease the front portion after it was cleared by the Department of Environment Quality (DEQ). Simpson said Waller was offered the front portion which is approximately 14,000 square feet and a portion of the 79,000 square foot middle section, but she decided to go in a different direction.

With the agreement by RTP to lease the 79,000 square feet, the IDA now has a taker for the building.

“The IDA has a prospect and middle portion has been cleared by DEQ,” said Simpson.

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