The Danville Industrial Development Authority is seeking a $26.5 million loan for its portion of the White Mill project.
The IDA voted 5-0 to make the move during a special called meeting Tuesday morning. Board member David Cumbo was absent and board member Philip Hall abstained due to a conflict of interest.
Tuesday’s vote does not commit either party to a loan, but authorizes the IDA to seek the loan from American National Bank.
“In August, the final documents of the loan itself will come before before the IDA for approval,” IDA attorney Clarke Whitfield clarified to the board.
According to an executive summary provided to the IDA, the summary of proposed loan terms and conditions from American National Bank “is not a commitment letter. The intent is to begin the process so that closing may occur in August.”
Under 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 finance the renovation and re-development of 110,675 square feet of retail and commercial space in the building and 84,773 square feet of parking space.
Danville Economic Director Corrie T. Bobe, the city’s finance director and financial advisors 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 principal and interest payments for the remaining five years, according to a draft of the loan’s terms and conditions.
On June 21, the IDA voted to extend its agreement with The Alexander Company for development of the White Mill building through Dec. 31, 2023.
A delay in finalizing financing for building the commercial portion of the project was the reason for the move.
“This gives us a cushion for the IDA to finalize the construction financing for the commercial space,” Bobe told the Danville Register & Bee during an interview following the June 21 meeting.
Officials hope to close on all the loans in August and begin construction soon thereafter.
The original memorandum of understanding expired in May.
The Alexander Company and the IDA signed that memorandum of understanding during a ceremony in May 2021 at the Danville Family YMCA across the Dan River from the White Mill.
Entering into the partnership — instead of having the company buy the property outright — allows the use of historic tax credits for the project.
The IDA owns the White Mill property, but the authority 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 complete in the second quarter of 2024. Completion was originally anticipated for the end of 2023.
The first phase of the project includes 110,000 square feet of commercial space, lower-level parking and the upper three floors of the western two-third of the building.
Construction still hasn’t started on the project along Memorial Drive, and the anticipated cost of the endeavor has risen twice since May 2021.
The price tag, which was originally $62.5 million, went up up from $68.75 million to about $81 million.
Almost all of that roughly $12 million hike was due to new site development costs, allowance for tenant improvements and the increase in construction costs, Bobe said in April.
Officials had initially hoped for construction to begin by the end of last year, but it was delayed due to inflation, worker shortages and supply chain issues.