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City, county OK new shell building

Wednesday, January 23, 2013

From Bulletin staff reports

Henry County and Martinsville will help finance construction of a 75,000-square-foot shell building — which could be doubled in size — in the Patriot Centre at Beaver Creek industrial park.

Both the Henry County Board of Supervisors and Martinsville City Council on Tuesday approved participating in the project after hearing a presentation on it by Mark Heath, president and chief executive officer of the Martinsville-Henry County Economic Development Corp. (EDC).

The localities’ participation involves paying interest on a construction loan starting a year after the building is completed if it has not been sold by then.

The county board approved its participation in a unanimous vote. The city council approved its participation in a 4-1 vote.

Councilman Danny Turner was the dissenter. He said the community has a lot of vacant buildings that could help attract industry.

The building is to be on Lot 8 at the Patriot Centre. The estimated construction cost of the 75,000-square-building, at $35 per square foot, is $2,625,000, Heath said. An interest rate of 2.5 percent is estimated.

The Henry County Industrial Development Authority will be the owner/borrower. The EDC will cover architectural/engineering costs during construction and for one year after completion, estimated at $150,000.

The county and city will share interest costs after the first year based on a revenue sharing agreement in which the county will pay two-thirds and the city will pay one-third if the building is not sold.

That cost is estimated at $75,000 annually, Heath said. Of that, the county’s share would be about $50,000 annually, and the city’s share would be about $25,000 annually, he said.

If the shell building is not sold in five years, The Harvest Foundation would be approached about helping cover the cost, but Harvest is not a formal partner, Heath said.

The EDC board approved the recommendation Jan. 17, Heath said.

The timeline calls for the EDC to select an architectural/engineering firm in January; develop plans/bid documents in February and March; meet with local banks in February; and bid the project and select a contractor in April. Construction is to be under way around April or May, and it is to be completed around the end of 2013, Heath said.

“Martinsville-Henry County’s shell building track record is positive,” he said, mentioning Owens Corning, Mehler Inc., Masterbrand Cabinets, RTI International Metals and Commonwealth Laminating as companies that have moved into local shell buildings in the past.

“Shell buildings do not guarantee success, but they do guarantee much improved prospect traffic when combined with a strong marketing strategy. Martinsville-Henry County’s two most recent shell successes, RTI and Commonwealth Laminating, represent a combined tax base investment of $140 million and approximately 90 new higher skill/higher paying jobs to date,” Heath said.

“This is something we have to do to generate traffic,” Heath said.

He noted the EDC’s prospects have declined since September after Commonwealth Laminating bought the shell building on lot 10 at the Patriot Center.

Henry County and Martinsville have constructed two shell buildings under the revenue sharing system that involves the IDA and EDC, according to Henry County Administrator Tim Hall. One building was sold to RTI International Metals before construction was completed, and the last one was on the market for three years before it was sold to Commonwealth Laminating.

The supervisors and most council members were supportive of the plan.

“Build and they will come. If we don’t have a product, we’re not in the game,” said Horsepasture District Supervisor Debra Buchanan.

Heath said the area has to differentiate itself from many other localities in the Southeast. He added that a shell building tends to attract higher quality prospects with higher investment.

Iriswood District Supervisor Milton Kendall said of the proposal, “It seems to be a good idea at this time.”

Ridgeway District Supervisor H.G. Vaughn made the motion for the county move forward with the project contingent on city council taking similar action.

Martinsville Vice Mayor Gene Teague said many companies will not consider locating in communities that do not have a shell building.

“Shell buildings keep us in the game,” he said, and if the city has to pay any interest costs, “it’s not going to break the bank (city finances).”

Councilman Mark Stroud indicated that now is a good time to build a shell building because companies are more willing to consider expanding.

Because the economy has been improving, “companies are letting loose with some resources they’ve been holding,” Stroud said.

According to a Bulletin article, the first shared-revenue shell building was dedicated on Sept. 26, 2007. The 79,480-square-foot building was on lot 5 at the Patriot Center and could be doubled in size to 154,480 square feet.

The second shell building was dedicated on Aug. 31, 2009, according to a Bulletin article. It has more than 100,000 square feet and can be expanded to 195,801 square feet, according to information on the EDC website.

 

 
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