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Tobacco Commission Panel Recommends $3 Mil For Projects

Southside Economic Development Committee has recommended the Virginia Tobacco Commission approve a pair of grant awards totaling $3 million — $2 million for a “buildout” of space at Riverstone Technology Park and $1 million for additional start-up funds for the new advanced manufacturing initiative at the Southern Virginia Higher Education Center.

The full tobacco commission is expected to take action on the recommendations at their meeting next week in Wytheville.

High Bay Riverstone Pilot Plant Project

Originally, the Halifax County Industrial Development Authority had sought  $2 million in tobacco funds to develop a shell building at Riverstone Park.

However, the IDA withdrew its original submission and replaced it with the High Bay Riverstone Pilot Plant Project request for $2 million.

According to tobacco commission documents, the funds will be used for “buildout” of the Riverstone high-bay manufacturing space in Building One and for equipment to be leased for seven years to a Fortune 500 prospect that is considering the site to research and develop energy-related polymer filtration products.

The prospective Fortune 500 company will lease a total of approximately 27,000 square feet of manufacturing and office space in Building One for seven years and will create 11 jobs at salaries ranging from $50,000 to $80,000, according to tobacco commission documents.

The proposal also seeks funds for equipment that will be installed in the space and leased to the company. At the end of the lease some portion of the equipment, totaling $1.3 million or more, would be considered building upfit and would continue to be owned by the Halifax County IDA beyond the seven-year lease, the document further states. Process equipment would revert to the company at the lease’s end.

The total cost of the project is estimated at $11,970,000, according to commission documents. The project budget is based on estimates provided by two local building contractors, an architectural/engineering firm and the prospect company.

The IDA states the company is considering Halifax as a permanent production site for these technologies beyond the research and development lease period. It appears a significant portion of the TICR-funded equipment would be permanent improvements to Building One, the construction and financing of which was assisted with TICR grants totaling $10 million, the tobacco commission document adds.

HEF Advanced Manufacturing Innovation Center
Halifax Education Foundation’s request for additional start-up funds for operations at Southern Virginia Higher Education Center’s Advanced Manufacturing Innovation Center was invited by the commission, and $ 1 million to potentially accommodate this request was transferred to the Southside Committee at the July 2009 commission meeting, according to tobacco commission documents.

The center will be housed in the former American Tobacco Warehouse (old bag factory) where renovations are expected to be complete by December 2010 using an FY09 TICR Special Projects grant of $6 million for research centers. The facility is expected to be fully operational by July 21, 2011, the documents further state.

A “Smart Factory” will be created with research-led solutions to manufacturing design and process challenges for utilization by new and existing companies in creating prototypes of new or improved products and components, the document continues.

A December 2008 study identified 37 manufacturing businesses in a five county and one city area to be served by the center.

Grant funds are requested for personal services totaling $734,027 including a full-time director of research, research project manager, administrative assistant, and a part-time machine technician for the first two years of operation and a full-time administrative assistant, receptionist, custodian and a part-time receptionist in the second year; contractural services totaling $88,473 for education and research services to meet industry needs; supplies and materials totaling $42,500 for materials and tooling related to research and development testing and general office and custodial needs; $100,000 for continuous charges for utilities and building maintenance contracts; and $35,000 for equipment such as a new phone system.

Total cost of the project is $3,020,000. Other funds include $720,000 from the Southern Virginia Higher Education Center for operations with $150,000 committed and $570,000 pending with state FY 11-12 biennium budget; private funds of $400,000, $700,000 from a Community Block Development Grant and $200,000 from the United States Department of Agriculture of which $1,300,000 is to be used to purchase advanced manufacturing related equipment, the tobacco commission documents state. The private funds already have been spent, the CDBG has been awarded, and the USDA grant has been submitted and a decision is pending.

The tobacco commission transferred $1 million of unobligated FY2010 surplus funds to the Southside Economic Committee specifically for Halifax Education Center to provide start-up operating funds for the Advanced Manufacturing Innovation Center.

According to commission documents, this money would supplement $375,000 of operational funding approved from the TICR Research and Development Fund in July.
The program was initiated in the past two years using funds budgeted under a portion of an education committee grant.

The wood industry incubator being developed as the primary initial focus for the center will allow entrepreneurs and small business to utilize CAD/CAM software, machining technology, and services offered through center partners such as Virginia Tech to enhance their potential for success, the tobacco commission documents state.

The staff recommends awarding $1 million as the fee and grant-based business model has been identified as the approach that the Center will use to achieve sustainability, the commission documents conclude.

The full tobacco commission is expected to vote on the two award recommendations when it convenes Wednesday and Thursday in Wytheville.