News Column

Loan pace stalls at state development authority

February 21, 2014

By Jared Hunt, Charleston Daily Mail, W.Va.



Feb. 21--Despite a flurry of activity last fall, loan activity at the state Economic Development Authority has stalled out in early 2014.

For the second month in a row, authority board members had no loan applications to consider at their regular monthly meeting, held Thursday morning at the authority's headquarters in the Northgate Business Park.

"We went from a busy September, October and November to no activity the last few months," said David Warner, executive director.

In September and October, the authority's board approved three loan applications at each monthly meeting. One included the $750,000 loan package for the Allevard Sogefi USA plant in Prichard for its planned expansion.

In November, the board approved a $15 million loan package for Carbonyx International USA, which plans to build a new plant in Jackson County.

However, the loan well has run dry in recent months.

Warner said staff members have several potential applications in the works with private companies, but none that have come to fruition yet.

He said he believed the slow down was due more to seasonal factors than anything else. He did not think the recent Freedom Industries chemical spill and subsequent water crisis has affected loan interest.

"I'm not aware of any impact the water situation would have had on our loan activity," Warner said. "I think it's truly more seasonal."

He said he expects loan activity to pick back up in the coming months.

"When the weather gets better people will then start focusing more on adding the buildings, buying more equipment and doing their construction projects," Warner said.

The board did approve the sale of a 15 to 20-acre tract of land in the Three Springs Business Park in Weirton to Italian oil and gas control systems company Pietro Fiorentini.

The company announced last March it would spend $9 million to build its first U.S. manufacturing plant at the Weirton business park. The plant is expected to employ 41 people once it opens.

The authority plans to sell the land to the company at a price of not less than $13,250 an acre.

Warner said the authority must first to hire a surveyor in order to determine the exact acreage of the tract. He said that survey would be done once the snow thaws in the area.

At the $13,250 per acre price, the 15 to 20-acre land sale would be valued between $198,750 and $265,000.

Pietro Fiorentini has not approached the authority for a loan to finance construction or equipment costs. Warner said he expects the company will apply for a loan once it's ready to move forward with construction at the site.

In a separate action, the board approved a resolution modifying bond covenants for the Stonewall Jackson Lake State Park project.

The park's development company, MHLP, Inc., intends to use about 15 acres of land for construction of about five private cottages. The authority had to approve the release of that land first.

The resolution also alters the fee structure underlying the bonds to allow MHLP and subcontractor Benchmark Hospitality to receive delinquent management fee payments.

Company representatives said in December the initial fee structure set when the bonds were sold back in the 1990s was overly optimistic regarding the golf resort's projected revenues, which factor in to those payments.

As a result, the companies had not been receiving the money it had anticipated under the agreement.

MHLP had also asked the authority to approve an extension of its management agreement, which expires later this year, but the board did not approve that request. Warner said that management agreement would be revisited later this year.

Board member Allen Butcher, chief financial officer at Camden Clark Medical Center in Parkersburg, also announced Thursday he plans to resign from the board because he is moving to Georgia.

It will be up to Gov. Earl Ray Tomblin to appoint a replacement once Butcher's resignation becomes effective in the coming months.

Contact writer Jared Hunt at busin...@dailymailwv.com or 304-348-4836.

___

(c)2014 the Charleston Daily Mail (Charleston, W.Va.)

Visit the Charleston Daily Mail (Charleston, W.Va.) at www.dailymail.com

Distributed by MCT Information Services


For more stories on investments and markets, please see HispanicBusiness' Finance Channel



Source: Charleston Daily Mail (WV)


Story Tools