Martinsville-Henry County Economic Development Corporation

Deals on land advance

Oct 5, 2007
By BULLETIN STAFF. The Henry County Industrial Development Authority board on Thursday approved final measures that will allow the county to buy two tracts of land for long-term economic development.

The board approved a number of measures that will clear the way for the IDA to take title to the two tracts and for the county to borrow $4 million to buy them. It also approved a revenue-sharing agreement for the tracts with the city of Martinsville.

IDA Chairman Larry McDorman said the county must keep expanding the options it offers industry that might locate here, and purchasing the tracts helps do that.

“It just opens up more opportunities,” he said.

The county will spend $2,174,200 to buy 621 acres near the North Carolina line with rail access and about $2.3 million to buy 1,206 acres near Barrows Mill Road and the existing Patriot Centre industrial park. It will buy the first site from Roma Realty LLC and the second, near the Patriot Centre, from Clayton C. Bryant of Appomattox.

The county took $50,000 options to buy both properties in February. Those option payments will be applied to the purchase prices. According to discussion at the meeting, the county also has set aside $500,000 cash to cover some of the costs not covered by the $4 million financing.

Most of the purchase, however, will be funded through a 10-year, $4 million public improvement bond. Henry County Administrator Benny Summerlin told the IDA board that Carter Bank and Trust has offered the county a “phenomenal” 3.79 percent interest rate on the bond, lower than the 4.65 percent interest rate the county got on a Patriot Centre expansion 10 years ago.

Also, he said, the purchase has been timed so that payments on the bond will start in March, the same time the payments on the Patriot Centre expansion end, so the county will not have an extra payment.

With the IDA approval, the county expects to close on the purchases Oct. 15, Summerlin said.

Although the board discussed several aspects of the purchases in detail, the most controversial was the revenue-sharing agreement with Martinsville. Board members had questions about how the county would benefit from the agreement, which entitles Martinsville to one-third of the revenue from the sites but does not require it to expend any of its own funds to develop them.

Summerlin and other county officials present at the meeting, however, said the agreement essentially is the same as the revenue-sharing agreement reached for the Patriot Centre and does provide several advantages to the county.

“The city is not obligated to put any cash in,” Summerlin said, but he said he expects it will because projects at the sites would benefit the city as well, due to the revenue-sharing agreement. For example, he said, the city contributed hundreds of thousands of dollars to a recent $4 million paving project at the Patriot Centre.

“The city’s got a lot of incentive to participate,” agreed county attorney George Lyle.

Summerlin said the city also has resources to bring to projects that the county does not have, such as its own high-speed telecommunications network.

He also said a partnership makes it easier to get development projects funded and makes it easier to get grants because the projects are viewed as regional efforts.

And, Summerlin told the board, the partnership has saved the county money up front. Because the city has agreed to the revenue-sharing agreement, it will be able to help the county get around a $10 million yearly debt limit on a special kind of tax-exempt financing, which helped the county get the lower interest rate.

Without the city’s willingness to transfer some of its debt limit to the county, the $4 million financing coupled with debt from large school improvement projects approved this year would have made the county ineligible for this type of financing, Summerlin said.

Jimmie Wright, county director of accounting, also told the board the city would not see any revenue from the project until the county recoups its purchase and development costs and the costs of any incentives.

Mark Heath, president and CEO of the Martinsville Henry County Economic Development Corp. (EDC), said the city has helped with the project through a $100,000 contribution to the EDC.

Summerlin said after the closing, the next step will be developing a master plan for both sites, which will take around a year. However, he said, that doesn’t mean the county will turn down the right business if it wants to start a project sooner.

“We’ll master plan around it,” Summerlin said.