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Shell building advances
Friday, August 1, 2008
By KIM BARTO - Bulletin Staff Writer
Martinsville City Council on Thursday approved plans to build a new 100,000-square-foot shell building in the Patriot Centre at Beaver Creek industrial park, following the Henry County Board of Supervisors' unanimous vote Tuesday endorsing the plan.
The council endorsed the plan in a 4-1 vote, with council member Danny Turner dissenting.
Mark Heath, president and chief executive officer of the Martinsville-Henry County Economic Development Corp., discussed the plan and gave an overview of economic development issues during Thursday's special called city council meeting.
The new shell building, to be built on Tract 10 in the industrial park off Kings Mountain Road, will cost an estimated $3 million and could be expanded to 190,000 square feet, Heath said.
The EDC will pay the carrying costs of $129,000 a year during construction and for one year afterward. The city's estimated investment would be $42,570 a year, or 33 percent of the carrying costs, beginning in year two of the project, which may not be until 2009 or 2010, Heath said.
Henry County will pay the other 67 percent, or $86,430 a year, and the city and county have agreed to share revenues from any company locating there.
Turner said he voted against the measure in part because the shell building is not guaranteed by The Harvest Foundation, unlike the previous shell building in the Patriot Centre that was acquired by RTI International.
Also, he said, the city would not generate money on it for several years. Under the revenue-sharing agreement, Henry County would be able to recoup its expenses before any revenue would be seen.
Generally, Turner said, he has a "philosophy against shell buildings. It's very unlikely you'd find somebody interested in buying the building exactly as-is.
"Maybe there's a good reason there are only two existing (publicly owned) shell buildings in Virginia."�
During the meeting, Heath said he believed the project could be accomplished between the EDC, city and county without asking Harvest for help. The plan does not request involvement from the foundation at this time, according to documents.
"This proposal is not contingent upon Harvest backing this. We believe the risk is manageable," Heath said, adding, "We can always go back to Harvest if needed, but to be clear, this is a deal we have no net under."�
Economic conditions make this an ideal time to start on the shell building, Heath told the council.
"We want to differentiate ourselves from other places," Heath said. "When RTI came to us, we competed with another building in the Richmond area and didn't have a problem winning the day."�
Martinsville and Henry County have "a great track record" with their five previous shell buildings, he added.
Heath also talked about performance agreements and some of the state incentives available to industries.
"Virginia has done a good job making incentives performance-based," he said. "You have to make the jobs. If you can't meet these goals, the money is called back."�
For example, the RTI performance agreement requires the company to invest at least $100 million in facility improvements, machinery and equipment and create at least 150 new jobs over three years.
"RTI is getting about $8 million in an incentive package to give $100 million back. It's a very, very good deal," Heath said.
The incentive package money is allocated by the state and goes through Henry County, he said.
State job creation grants are available to companies in an enterprise zone that create a certain number of new jobs that pay at least 1.75 times the minimum wage.
"The whole effort is to drive wages up. We want people to not only have jobs, but have better-paying jobs," Heath said.
During the meeting, Heath also gave a presentation on Clearview industrial park and the Rives Road industrial site.
The Athena building in the Clearview park is built to Department of Defense security standards, which opens up a new client base, Heath said.
"We're developing a new marketing unit to go after defense contractors," he said. "We're modifying our targets to defense and foreign investment - the dollar situation has created a lot of interest from foreign companies."�
The building has been recommended to prospective clients five times, but "it's a tough sell," Heath said.
"It is really overbuilt," he said of the building, meaning that it would be expensive for a company to refit the building to its particular needs.
The Clearview site has four other parcels of land, three of which are graded. Heath recommended the city not invest any more money in the site.
Rives Road is a similarly tough sell because it is a "long, narrow site" developed in the 1920s, which was a "different style of development," Heath said.
"There are some opportunities here, but not those I would suggest warrant a lot of investment," he said.
The site has been recommended to potential clients six times with no success.
If the city wants to explore possibilities for Clearview and Rives, Heath suggested bringing in an engineering firm to find "that unique niche."�
Also, he encouraged the city to continue exploring revenue-sharing with the county to develop land.
"The cost of developing properties is so astronomical that it's just not feasible for governments to go in alone," Heath said. "Think what message it sends to potential clients if we present ourselves united as "˜southern Virginia.'"�