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CL-2876 New Business   Item #: C.       
Meeting Date: 11/15/2022  
Subject:    Consideration of Moral Obligation with Virginia Community Capital
From: Corrie Bobe

COUNCIL ACTION
Business Meeting:     11/15/2022
SUMMARY
On March 8, 2022, the Industrial Development Authority of Danville, Virginia (IDA) approved financing terms from Virginia Community Capital for the purchase and renovation of an industrial building in Danville, Virginia. This 20,164 square foot building is located at 1 Ecomnets Way in Airside Industrial Park, which totals approximately 5 acres. City Council approved a Moral Obligation for this loan at its April 5th meeting. Since this time, construction costs have increased resulting in the need to update the Commitment Letter and request an approval of a new Moral Obligation reflecting this increase. The total cost to purchase and renovate this building is now $3,325,000. 
BACKGROUND
The IDA self-funded the purchase of the building on July 15, 2021 for $925,000. The loan includes the purchase and the tenant improvement costs, which is estimated to total $2,400,000. The loan will be amortized over a 20-year period with an 11-year term. VCC will allow interest-only payments during the 12-month construction phase and the interest rate will be fixed at 5%. After the first year, there will be a 5-year ARM with an initial rate and floor of 5%. The bank is requesting a moral obligation from the City as part of its commitment to lend.
RECOMMENDATION
Staff recommends that Council approves a moral obligation for this loan with Virginia Community Capital.

Attachments
Resolution
Moral Obligation
Commitment Letter


    

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