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CL-2660 New Business   Item #: B.       
Meeting Date: 11/16/2021  
Subject:    Consideration of Moral Obligation with Virginia Community Capital
From: Corrie Bobe

COUNCIL ACTION
Business Meeting:     11/16/2021
SUMMARY
On October 12, 2021, the Industrial Development Authority of Danville, Virginia (IDA) approved financing terms from Virginia Community Capital for the construction of a shell building in Danville, Virginia. This 30,000 square foot building will be constructed on Lot 10B in the Cyber Park, which totals approximately 10.17 acres. The total cost to construct this building is $2.875 million. Staff has worked with Virginia Community Capital and the Virginia Small Business Financing Authority to finalize the financing for this project. Both VCC and the VSBFA will participate in this loan and has requested a moral obligation from the City.  
BACKGROUND
The Industrial Development Authority of Danville, Virginia and Pittsylvania County’s Industrial Development Authority have entered into an agreement to jointly construct a 30,000 square foot shell building within the Cyber Park, which is owned by the Danville-Pittsylvania Regional Industrial Facility Authority (RIFA). This site totals approximately 10.17 acres, which allows the building to be doubled in size at a future date. RIFA has approved a 30-year ground lease with both entities for this project at a rate of $100.00 per year and with an option to purchase the site after September 1, 2022 for a price of $1,000.00. The total cost to construct this building is $2.875 million and the City of Danville has received a $1 million grant from the Tobacco Commission to go towards this project. This grant will be provided on a reimbursement basis. Danville has a very limited number of suitable buildings for a manufacturing operation, and this shell building would provide some needed inventory to market to prospective industry. Virginia Community Capital (VCC) and the Virginia Small Business Financing Authority will be partnering on the financing of this project, with VCC acting as the administrator. This partnership provides both IDAs with an initial blended interest rate of 3.10%.

The bank is requesting a moral obligation from both the City and County as part of its commitment to lend. 
RECOMMENDATION
Staff recommends that Council approves a moral obligation as prepared by the City Attorney and the attorney representing Virginia Community Capital.

Attachments
Resolution
Attachment 1


    

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