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CL- 2101 New Business   Item #:   A.    
City Council Regular Meeting
Meeting Date: 04/16/2019  
Subject:    Telvista Loan Cancellation
From: Telly D. Tucker

COUNCIL ACTION
Business Meeting:     04/16/2019
SUMMARY


The Office of Economic Development has negotiated a potential sale of the building formerly occupied by Telvista to the PRA Group located in Virginia Beach, VA.  To enable this sale to take place, it will be necessary for the City of Danville to forgive a loan currently outstanding at $911,512.85 to the Industrial Development Authority of Danville so that a lien on the real estate can be released and PRA can get a clear title to the property.  To date, the IDA, through Televista's lease payments, has paid the City about $1.4 million in principal and interest.
BACKGROUND

During the time that the City of Danville was pursuing Telvista to have it establish a call center in Airside Industrial Park, it became necessary for the City to provide a 4% loan of $1.6 million to the company for the purchase of equipment and furnishings.  This loan was originally intended to be obtained from the Virginia Small Business Financing Authority, but for timing reasons, Mr. Jerry Gwaltney, then City Manager of Danville, deemed it advisable to provide the necessary funding from the City through the IDA.  This loan was processed through the Industrial Development Authority of Danville to comply fully with regulatory restrictions regarding such loans.  Telvista did locate its facility in the Airside Industrial Park in Danville, and it operated in that facility for well over a decade.  Telvista deemed it necessary, for business reasons, to close its operation in Danville during calendar year 2018, and it negotiated a deal to abandon its lease with the IDA.  This arrangement included a cash payment to the IDA in the amount of $384,018 plus remaining furnishings, IT infrastructure, power generator, furniture, etc., to be left in place and conveyed to the IDA.  The IDA still owns the property, and it still carries an active mortgage on the real estate.  It was in the best interest of the City to negotiate a sale of the real estate to the PRA Group from Virginia Beach, VA, and that company will purchase the property, invest an estimated $15.1 million in its up fit, furnishings, and equipment, and employ 500 persons in a major debt collection service.  PRA's anticipated weighted average annual wages are just over $38,400 per person.  Staff strongly endorses the incentives necessary to locate this very attractive business in Danville.






 
RECOMMENDATION
Staff recommends that Council approve a resolution forgiving principal and interest for a loan to the Industrial Development Authority of Danville in the amount of $911,512.85.  Further, Council should authorize the City Manager to vacate a recorded lien on the property known as 119 Cane Creek Blvd., Parcel ID 77074, which provides collateral for said loan.

Attachments
Resolution
Telvista Lease
Telvista First Lease Amendment
Telvista Second Lease Amendment
Telvista Loan Background

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