The Danville Industrial Development Authority is seeking a $26.5 million loan for its portion of the White Mill project.
IDA voted 5-0 to make the move at a special meeting convened on Tuesday morning. Council member David Cumbo was absent and council member Philip Hall abstained due to a conflict of interest.
Tuesday’s vote does not commit either party to a loan, but authorizes IDA to apply for the loan from the American National Bank.
“In August, the final documents for the loan itself will be submitted for IDA approval,” IDA lawyer Clarke Whitfield told the board.
According to an executive summary provided to IDA, the summary of loan terms proposed by the American National Bank “is not a letter of commitment. The intention is to begin the process so that closing can take place in august”.
As part of the loan, the bank would partner with Virginia Community Capital, which would provide $6.5 million of the loan.
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The $26.5 million would fund the renovation and redevelopment of 110,675 square feet of retail and commercial space in the building and 84,773 square feet of parking space.
Danville’s chief economics officer, Corrie T. Bobe, the city’s chief financial officer and financial advisers favor a loan option that would have a fixed interest rate of 5.5% over its eight-year term. Interest payments would be due during the construction period of up to 36 months, followed by regular monthly payments of principal and interest for the remaining five years, according to draft loan terms and conditions.
On June 21, IDA voted to extend its agreement with The Alexander Company for the development of the White Mill building until December 31, 2023.
A delay in finalizing the financing for the construction of the commercial part of the project was the reason for the move.
“It gives us a cushion for IDA to finalize funding for the construction of the retail space,” Bobe told the Danville Register & Bee in an interview after the June 21 meeting.
Officials hope to close all loans in August and begin construction shortly thereafter.
The initial memorandum of understanding expired in May.
The Alexander Company and IDA signed this Memorandum of Understanding in a ceremony in May 2021 at the Danville Family YMCA across the River Dan from the White Mill.
Entering into the partnership – instead of having the company buy the property – allows historical tax credits to be used for the project.
The IDA owns the White Mill property, but the authority has agreed to admit the Alexander company into the ownership structure as part of the memorandum of understanding.
Construction of the first phase of the project is expected to be completed in the second quarter of 2024. Completion was originally scheduled for the end of 2023.
The first phase of the project includes 110,000 square feet of retail space, lower-level parking, and the upper three floors of the western two-thirds of the building.
Construction has yet to begin on the project along Memorial Drive, and the projected cost of the effort has increased twice since May 2021.
The price, which was originally $62.5 million, has gone from $68.75 million to around $81 million.
Almost all of that increase of about $12 million was due to new site development costs, allowance for tenant improvements and increased construction costs, Bobe said in April.
Officials had originally hoped construction would begin by the end of last year, but it was delayed due to inflation, labor shortages and supply chain issues.