Economic Development Authority

INDUSTRIAL DEVELOPMENT AUTHORITY of the CITY OF HAMPTON, VIRGINIA Minutes – Regular Meeting July 20, 2010 – 8:30 A.M. ____ ___ IDA Conference Room CALL Chair Benson called the meeting to order at 8:30 a.m. TO ORDER DIRECTORS William H. Benson, Perry T. Pilgrim, Wallace C. Arnold, Lewis J. Bellinger, PRESENT James R. Joseph, Ben A. Williams, III and Anne W. Shuford. Also present were Secretary-Treasurer James L. Eason and IDA Attorney S. Frear Hawkins, II. STAFF Pete Peterson, Terry O’Neill, Susan Borland, Ellen Templeton, Michael PRESENT Yaskowsky, Bruce Sturk, Daniel Girouard, Jessica Spencer, Angela Freeman, Pam Croom, Brian Marchese and Debbi Brightbill MINUTES Chair Benson stated the Minutes of the June 15, 2010 board meeting were distributed. A motion was made by Mr. Arnold and seconded by Mr. Williams to approve the minutes as submitted. The motion carried. LOAN Mr. Pilgrim reported the Loan Committee did not meet in June. PROGRAM Delinquent Loan Status: Brazilian Bronze - A Loan Committee meeting is scheduled for Monday, July 26 which will include discussions about a repayment plan for the owner of Brazilian Bronze. Mr. Hawkins stated if the owner is able to sell the equipment, she would recover more money because auctioning the property will not bring a good return in today’s market. Mr. Hawkins suggested hearing the owner’s repayment proposal before resorting to auctioning the property because an auctioneer will also charge 20%-25%. The outstanding balance is approximately $149,000. Mr. Hawkins stated Teresa Hudgins is beginning to pursue liquidating the life insurance policies and a CD that were used as collateral. Cawthorns Cut & Fitness Center - Mr. Hawkins reported he received a letter from John Bane, attorney for Ms. Cawthorn, stating she was unable to pay any more than she is already paying. Mr. Hawkins suggested to Mr. Bane that Ms. Cawthorn assign the Deed of Trust on her home and establish a 10-year note for repayment. Mr. Bane has not responded to this suggestion. Due to her age and income status (social security and small retirement income), payments will otherwise be difficult to collect. Mr. Hawkins will also make sure the stocks have been sold. 1 EDL, L.L.C. – This indoor skateboard business moved from a location in Coliseum Central to a new location in Peninsula Town Center. The loan is showing 60 days past due on the report but may not be reflecting the most current payment. Mr. Benson affirmed there was good collateral on this loan. Mr. Arnold reminded the Board of EDL’s request for consideration to reduce its payments during the relocation process to Peninsula Town Center. Mr. Hawkins stated the IDA prepared a Modification Agreement but he was not sure the owners signed it. Overview of Loans – There are 12 loans with outstanding balances totaling approximately $738,000 with the three delinquencies being a little over $270,000. One loan is well collateralized, one has a small balance and one will probably result in a loss. Dr. Bellinger asked if there was a different set of expectations on the payback of loans 10-15 years ago. Has the IDA changed its process? Mr. Benson replied the maximum loan amount had been $50,000 and has been significantly increased through the years. He stated there has been no real change in the process since 1984. This is a revolving loan program and self-sustains itself. Dr. Bellinger asked what lesson has been learned on the loans that have gone bad. Mr. Benson responded the IDA has not incurred any losses over 7 years and, if a business did go bad, the IDA recovered the funds through collateral or repayment. As a last resort lender, the IDA is doing better than any bank in the area. The IDA’s biggest concern now is the Brazilian Bronze loan; however, there is collateral and plans for repayment are being pursued. Dr. Bellinger asked if the real measure of this loan program is to increase the revenue for Hampton. Mr. Benson replied the funds have increased from $2.4 million to $3.2 million in the past 6 years. Although hard to measure, Mr. Williams responded some incidental benefits to the City are jobs being created, goods and services being purchased and people having opportunities to further develop their business. Mr. Pilgrim affirmed the IDA has taken a strong position on loans having collateral, a cash flow and a good history established on the business and the applicant. Dr. Bellinger stated he would like to see some of the success stories on loans. Loans for Hampton Roads Charters, Bobby’s Auto Shop, and Tidewater Express were shared as success stories for previous IDA loans. It was recommended to include a line item on the report indicating the amount of loans made to date and the amount of loans paid back without revealing the details. Mr. Eason stated he would follow-up with Teresa Hudgins regarding this request. 2 ECONOMIC City of Hampton and Langley Air Force Base: Joint Land Use Study (JLUS) DEVELOPMENT Update: Mr. Eason introduced Bruce Sturk who works for Hampton in the City REPORT Manager’s office. Mr. Sturk focuses on Hampton’s relationship with the Federal Government (Air Force, NASA) and made the following presentation to the Board: JLUS is a federally funded program currently under development. It has been designed to help promote cooperation between the Air Force and Hampton, provide a proactive approach to strengthen LAFB’s mission and positive impact on the community and encourage appropriate development in the area. Mr. Sturk , Board members and staff discussed various past and present land use issues throughout the presentation. A timeline has also been developed to appoint an implementation committee by October 2010. HRC North Rezoning - Mr. Eason reported the IDA was the applicant in a rezoning issue at the last Council meeting on land in HRC North (Rob Lang parcel adjacent to the NIA site) and also for the land the City owns where the federal government has the easements for the water rights. Those properties have now been rezoned. As a follow-up to the June meeting, discussions were held about the checklist for the property acquisition procedures. Mr. Joseph contributed due diligence and closing checklists he uses and they are being reviewed. LeCam, LLC – Downtown and Phoebus Retail Incentive Program – Susan Borland reported staff has been working with Mr. Hawkins to draft a grant agreement for LeCam, LLC. It is closing on the building purchase today, July 20, 2010. Staff is currently assisting five other applicants with their grant submissions. Four applications are for businesses in Downtown and one is in Phoebus. Update on NIA – Mike Yaskowsky reported the project design team is working on conceptual drawings and they are 15%-20% complete. Staff had participated in a design charette to focus on the inside uses of the building. A target date of December 31, 2011 has been established. Mike distributed a picture of a rendering of the building. Construction is scheduled to begin in January 2011 and staff will plan a groundbreaking ceremony for this event. Within 60-90 days, the civil and design documents will go before the State review board. Work on the drawings for utilities, etc. continue. Mr. Hawkins stated a revised contract was delivered for review last Monday and items still need to be resolved. One problem is a state agency cannot be bound by restrictions and covenants. The proposed draft states, in the event of a sale or lease to a non-state entity, the covenants could then be re-attached. The other problems are technical and can easily be resolved. The attorney assigned to oversee this contract has recently retired so the transition to a new attorney is in process. 3 Assignment of Declarant rights to the Hampton Roads Center Owners Association – Dan Girouard has requested information from contractors for cost estimates on the improvements the Owners Association has requested. Funds will need to be approved by City Council to make those improvements. Dan is also working with the City Attorney’s office to see if the City can grant the maintenance of the median to the IDA. Mr. Eason stated progress is being made to eventually turn over the maintenance of this area to the Owners Association. Modifications to Loan Application – Ellen Templeton explained the loan program needed to be updated to increase its effectiveness and usage. The following revisions were presented to the Loan Committee on May 24: - Application information is now in an outline format. - The goal of “To stimulate the redevelopment of underutilized and deteriorated commercial and industrial properties in Hampton” was added. - Under qualifying criteria, the term “small business” was clearly defined. - The Technology Zone was eliminated due to the expiration of the program. - CC Spaulding Drive was eliminated because the program has served its purpose and is no longer needed. - Performance bond was added in response to the focus on small and minority- owned businesses by the City Council and PPOC - Under loan conditions, a business may still apply even if it has the ability to obtain financing from a lending institution. - The maximum amount for business loans was increased from $200,000 to $250,000. - Performance bonds for small and minority-owned businesses will have a minimum loan amount of $3,000 and the maximum of $200,000. - Under loan terms, modifications were made to allow changes to include deferment of interest and principal payments and other terms acceptable to the IDA. - The equity ratio for minority-owned businesses was adjusted so that maximum loan-to-project costs will not exceed 90%. - The approval process includes a change to permit loan payments to be automatically withdrawn from an account designated by Borrower and the loan servicing process requires the Authority to report loans that are 90 days in arrears to the Equifax credit reporting agency. Another issue to be discussed with the Loan Committee is the non-profit component. Once completed, the document will go to Mr. Hawkins for review then be presented for IDA approval before being presented to City Council. 4  Magruder Boulevard Corridor Video Presentation – Mr. Eason presented a new marketing video for this area. This video is used for meetings and marketing presentations that feature the Magruder Boulevard Corridor. OTHER ITEMS Wetlands Delineation Clearance - Mr. Joseph asked for a status on the wetlands delineation clearance letter for the former Rob Lang parcel located in Hampton Roads Center North Campus. Mr. Girouard stated the Army Corps of Engineers has reviewed the site and the wetlands delineation will progress without changes. An application to the Virginia Department of Environmental Quality will be made to permit the disturbance of the wetlands. E-Commerce Grant Status - Mr. Joseph asked for a status on the E-Commerce Grant Program. Mr. Eason replied in a year and a half 24 grants have been awarded and there are 23 providers. There is approximately $62,000 still available. Mr. Joseph asked for a list of the websites that have been created. Mr. Eason replied he would provide this information. Incubator Committee - Ms. Shuford stated the committee has planned visits to other city and county incubators in Virginia and have visited the city of Franklin. All visits will be concluded by the end of July and a summary report will be presented in August or September. Revisions to Hampton’s existing incubator program, as well as funding requirements, will be developed by the committee. EXCEPTIONS Mr. Hawkins referred to the resolution adopted last month allowing the IDA to REVISION TO grant exceptions to the HRC North covenants. Mr. Hawkins had included, “ HRC NORTH Client reserves the right to grant exceptions to any of the provisions of the COVENANTS declaration.” Mr. Hawkins felt it should state, “…to any or all…”. He asked the Board to ratify this change to the resolution. A motion was made and seconded to ratify this change. A roll call vote was taken which resulted as follows: Ayes: Arnold, Bellinger, Joseph, Shuford, Williams, Pilgrim and Benson Nays: None ADJOURNMENT There being no further business, the meeting was adjourned at 9:40 a.m. Respectfully Submitted, James L. Eason Secretary-Treasurer JLE/dhb 5