Economic Development Authority Meeting   2/15/2022

Campbell.

Notwithstanding any provision in the EDA bylaws to the contrary, as permitted under Virginia code paragraph 2.2-3708-2A3, Albemarle County's continuity of government ordinance and declaration of a local state of emergency,

and the EDA resolution of April 21st, 2020.

We're holding this meeting by real-time electronic means and no authority member physically present at a single central location.

This is because the pandemic's catastrophic nature makes it impractical or unsafe to assemble in a single location.

All authority members are participating electronically

All authority members will identify themselves and state their general physical location during the roll call, which we will hold next.

This meeting is being recorded and will be uploaded to the county's website.

The public has real-time audio-visual access to this meeting over Zoom and real-time audio access over telephone.

Both is provided in the lawfully posted meeting notice.

The public is invited to offer live comment during the public comments period.

Comments are limited three minutes and must be germane to matters on today's agenda.

I'll start with the roll call.

Director Shreve.

Present in Nelson County.

Ashley, I believe Mr. Munson's in the waiting area as an attendee.

J.T., could you let him in?

I don't think I have access.

I'll get back to Mr. Director Munson.

Director McNaughton.

Present, Troy, Virginia.

Director Mottola.

I'm also present in through that.

Present in the vibrant Magisterial Justice District.

I'm sorry.

I am really sorry.

I think I need to have more of my tea.

Thank you, Supervisor.

Thank you, everybody.

The second item on the agenda is matters from the public.

No, Director Ray, we had no one sign up.

I assume everybody got a copy of the minutes.

Everything appeared to be in order.

They're minutes of January 18, 2002.

If the minister is okay, I'll entertain a motion for approval.

All in favor, please signify by saying aye.

Aye.

Any opposed?

There being none, the minister approved the financial report.

Mr. Shreve?

There we go.

Unmuting.

So I didn't receive financials.

Well, I apologize, Director.

I apologize.

Yeah, and I, you know, I'm familiar with most of the elements.

If you'd like, I'll send it to me.

Great.

Okay, I think that's fine.

I do have copies that came with the package.

So we can come back to this item if it's okay with everybody.

Sure.

New business.

Chairman Ray, Vice Chair Ray, please allow me to introduce our Chief Financial Officer, Nelsie Burch.

Nelsie and her guests are here today to request refund bonds.

Fabulous.

Mr. Johnson, I appreciate that.

Hi, everybody.

Nelsie Burch, CFO, as Roger mentioned.

I was here about a year ago.

We had an exciting opportunity a year ago to do some refunding.

And we also added some new money last year.

This year is just a refunding.

I think this is our last opportunity of our existing bonds that we have.

And it's a 2013 EDA bond that we'll be hearing a little bit more about.

And with me today are members of my team, Daniel Green, who is our Chief of Treasury.

So Daniel is the person behind the scenes who makes this all happen, working directly with our bond counsel and our financial advisor, who I will introduce in just a moment.

And I believe Heather Taylor, who is his deputy chief of treasury.

She is new in that role.

So this is her first time going through the bond financing process.

So today we have Chris Culp, who is our bond counsel.

He has been our bond counsel, our esteemed bond counsel for some time.

And he can walk through the structure of this as well as Alex Hawk from Davenport Financial Advisory firm.

and Davenport, as many of you know.

It's typically Courtney Rogers who's here, but Alex is here in his stead and can walk through the plan of finance.

This is Daniel.

I think I just wanted to say, Alex, can you talk now?

Are you plugged in on the dial up?

Yeah, he's dialing in by phone.

Okay.

Can you all hear me okay now?

Yeah.

Perfect.

Sorry, I had some issues with my computer microphone, so I had to dial in my phone.

So I appreciate everyone's patience.

Yes, happy to walk through the refunding.

As Nelson mentioned, this is

The 2013 bond issue, we're looking at refunding about $21.7 million of outstanding debt, which matures by 2033.

We have about 11 years left on the bond issue.

We've been looking at this one together with staff for

About a year and a half now, and we've come to the point where we're within 90 days of the call date on the bonds, so basically what that means is that we're able to go out and refinance these with tax-exempt bonds.

And right now, we've run the refunding with rates as of the end of January, plus a market cushion of about 50 basis points, and we're currently projecting about $1.9 million

in total budgetary savings for the county over the life of the refunded bonds, and that's equivalent to about $175,000 or so per year.

And the benchmark that we typically use to measure the viability of a refunding is the net present value of the savings as a percentage of the refunded par amount.

and right now those savings are producing net present value savings of about 7.8% of the refunded par amount and the typical benchmark is about 3% so we're more than double that with that 50 basis point cushioned from the market which has been eating up a little bit over the last few

Couple weeks as rates have started to increase in anticipation of the Federal Reserve rate hikes, but that cushion is still there in large part.

So we look forward to a successful refinancing.

No, so the rates will be locked in when we go to sell the bonds, which will be around March the 8th.

So we've got one to about three weeks

Okay, I think that's great.

That's a lot of savings.

Sounds good to me.

Three percent.

We have a resolution that came in our package.

Should we read the heading on this, guys?

Yes.

The resolution of the Economic Development Authority of Albemarle County, Virginia, approving a plan to refund certain prior bonds

through the issuance of a series of revenue refunding bonds in an aggregate principal amount not to exceed $21,500,000.

I'm sure everybody who has joined us today has read this document thoroughly.

OK. We have a motion and a second.

All opposed?

Thank you.

The resolution carries.

And George, for the record, I'm recusing myself.

OK.

Please reflect that.

Whoever's doing minutes.

Mr.

Chair, if I may, I'd just like to recognize Nelsie Burch, Ms. Burch and her team, Daniel and others.

I have the really the privilege of working alongside them on a regular recurring basis.

And this just sort of exemplifies the financial leadership and stewarded and good stewards of the public money.

I don't think I recognize Ms. Taylor and Ms. Taylor as well.

This is the second such refunding that we've had

since Ms. Burch has joined us.

And I could not be more pleased about the diligence that she is doing and her team is doing in saving the county's monies in numerous ways, whether it's a triple AAA financial rating, these refinancings and other savings that she's finding as well.

So just much wanted that to be part of the record as we move forward.

Really good work on the financial front.

Thank you for that.

That was really unexpected and much appreciated by my team and I.

So I really appreciate your words.

And thank you for this passage.

Very exciting.

One more step in the process.

So off to the board of supervisors.

Thank you.

Yes, ready.

Ms. Burch, your team's free to excuse yourself.

You're welcome to stay if you like.

But otherwise, we're going to go about our normal business.

Yeah, so oftentimes when we bring projects before the economic development authority directors, we do so in terms of an individual project and we walk it phase by phase through the process, whether that is a startup, a tier one, tier two business, or maybe even a large business who's looking to expand

And today I just wanted to take a minute and look at this from a systems theory perspective, where we look at the whole of our strategy and see how it's working from cradle to grave.

So I just wanted to talk through some slides in general.

We're not gonna talk, we might mention some businesses along the way, but I just think it's important for the community to know how well our economic development strategy is functioning and how it's supposed to function in terms of a system and the results that's being produced as that.

So if you'd go to the next slide, please J.T.

What you say before you is sort of the front door for startups in our community.

A business has to have a place to start and here's

Three examples of some of our partners that we use, whether it's writing a business plan, applying for funding, creating a website, or being connected to other resources.

They can come through the front door of Venture Central, which is the new incubator startup that the county, city, UVA, and chamber is working on.

The new executive director is Alex Andrew, and he's starting to write the strategic plan and will be helping high-tech, high-growth businesses, those that can be disruptive in nature and have an exit strategy.

Or it could be the Community Investment Collaborative who helps those who have limited access to capital and oftentimes marginalized or difficult time having access to capital.

Or it could be the Central Virginia Small Business Development Center, which you guys have given money to

to help support their initiative to help a lot of Main Street businesses.

So we have numerous front doors in our community.

But the general idea of our strategy is to help businesses come in, provide a proof of concept through these front doors, and then take them through a process of growth and success in our community.

So once they, next slide, please, J.T., once they sort of establish a minimal viable product or a business plan that has the ability to be successful,

We have other, we have other experts to support them through the growth, whether it's CEBO Biohub, who helps life sciences, which this authority also helps, or it's CBIC, who helps high tech growth startups.

which also our Economic Development Office support, or whether it's a catalyst.

A catalyst is an accelerator that's a combination of the city, the county, and UVA working together to accelerate the business.

This is a critical moment for many small businesses where they

They were able to produce something in a lab or create a new way of doing anything, but how do you go from a lab to generating a new product and having the capital to do that?

Oftentimes this comes in the form of finding venture capital or the like.

So once a business, next slide please, gets the expert support and they start scaling, it's usually about this time that they need a brick and mortar business.

And this is where oftentimes they first enter into your window of, or view as an authority.

And we oftentimes we provide customized support through matching grants to help them hire local people or matching the Commonwealth Opportunity Fund, which provides funds to them to help them

get into a building or launch their particular program or whether it's an APED grant to help with agribusiness or the upcoming existing building reuse program that this authority plans to adopt.

Or maybe Mr. Mottola may recognize it could be customized support like we had with Perron Robotics, who was looking for an opportunity to demonstrate their technology so they could find investors when we did Project Knight Rider.

This customized support can come in many ways, but the general idea is to help these tier one, tier two businesses now find a home in our community so they can stay and grow here.

Next slide, please.

And once they reach a certain scale, we don't stop working with them.

We help them grow both domestically and internationally.

And we do that in combination with partners through the SBDC, which offers some international services, but primarily through the Virginia Economic Development Partnership.

On the right hand side, you'll see that we help an array of businesses expand.

whether it's green berries for coffee or it's Biomic Sciences for gut health or Champion Brewing for beer or Bonamose for healthy sugars.

You can read these yourself, but all of these have reached a certain stage where they're ready to grow as an organization.

either domestically through the economic gardening program, which we help them determine what their most likely area of expansion should be by doing intelligent business intelligence and or understanding where their competition is so they can grow successfully in the United States.

And then ultimately internationally.

Oftentimes, these business owners, as smart as they are and as scientists,

as successful they are.

You know, the world works differently outside of our boundaries.

So we have to help them understand the excise taxes or how to set up a distribution system in a foreign country or how do they go about making connections to contract manufacturers overseas, just an array of different international services.

So we often connect them through the valet program at the state level so they can stay in our community and grow in our country.

And then lastly, some specific examples of what that looked like you have seen here locally, whether it's Castle Hill Gaming, or Willard Tree, or Afton Scientific, or Bonimos, Rivanna Medical, or even locally, Potter's Craft Lottery.

This is kind of what our strategic plan is intended to do, is to help take an idea, tap in the intellectual capital of our community, and grow them into brick and mortar successful businesses to provide career ladder jobs, import funds in our local economy, which help

improve our quality of life, grow everyone's revenues, help our small businesses survive, and ultimately enhance the economic vitality of our entire community.

And I know that we often talk about economic development projects again one at a time.

But this is how our overall system is working and how it's providing a good, valuable contribution to the economic vitality of our community.

So I know that this is stuff that many of you may have known before, but I just wanted to put it in terms of a system and not necessarily a single economic development project, which we often look at it through that lens.

Roger, just one quick question because I think it is interesting to see the businesses that are also kind of dependent and building on our local ag industry.

Sure.

You may recall that we, during the time the pandemic was having such a negative impact on all industries, we kind of stopped Project Enable, kind of paused this sort of strategy, if you will, and the board approved a business continuity strategy, and we went from helping businesses grow to helping them survive.

One of those was just our normal lift ramp, and certain businesses were able to provide

were provided grants to help them succeed, and those included ag businesses.

One of the things that we determined is the federal government gave PPP loans and EIDL loans, and they helped certain larger businesses.

And then we came in behind and provided lift grants and safe spaces grants to help the most vulnerable businesses survive, which we focused first on minority women and veteran owned businesses, and then we just focused on locally owned businesses.

One of the groups that fell through the cracks during all of that process were the direct to market agricultural businesses.

So we connected with our local cooperative extension services, tried to identify who those are.

And we created an agribusiness grant whereby we gave direct grants to those folks who kind of go farm to table, if you will, or farm to restaurant or farm to winery.

So we were able to help those folks survive

through that particular process.

Now, Director Imhoff, we have an ongoing microloan program that the CIC administers and the agribusinesses are often the benefactor of that particular program.

It provides them access to some small capital, but certainly capital that can help them

continue to expand their operations, whether that's in the form of meeting a tractor or whether that's something you know more grandiose, they have access to the CIC and we refer those folks to them.

In terms of a longer strategy, we had begun looking at

I hope I said that right.

I hate to call it a slaughterhouse, but I just call it what it is and partnering with some of our community partners outside of the outside of our area so that there can be some potential way of less expensive way of getting livestock to market at this particular juncture.

It requires a series of

further investigation.

So it's really a nascent idea that we started.

I guess, J.T., if you'll help me, that may have been pre-pandemic, which also got put on pause.

So we have some things in the pipeline to consider, but we're in no way, shape, or form ready to recommend a path forward for those.

We gladly entertain ideas if you have some others to help all of the agribusinesses grow.

It certainly is part of our scope of work.

No, that's correct, Roger.

And I mean, I would say that the county was interested in supporting the supply chain for our meat producers.

I can remember as early as 2015.

I'm sorry, Mr. Vice Chair, if I may, Doug Walker's been around a little longer than I have, and he may have some other thoughts he'd like to share.

You're good?

He says no.

Okay, the next item on the agenda is a closed session with Mr. Newberry.

Yeah, thanks, Mr. Vice Chair.

So this will be a first time for everyone here.

And as far as I know, everyone in the county.

Previously, we've been using a different Zoom room for our closed sessions, but tonight we'll be using Microsoft Teams.

And so the direction and the best practice and the recommendation tonight is to completely log out of this meeting here.

and in your inbox at the very top of your inbox should be an invitation with an email with a link to join the Microsoft Teams closed session.

We'll conduct our closed session and then we'll come back

to this meeting here using the same link that you used to join it.

And I can resend that link out to the group if needed or desired.

But we'll pause the recording here.

The public will still see our presentation in the Zoom room, but we'll be going to Teams.

We'll have our closed session and then we'll come back.

Okay, well then- Actually, yeah, I do, sorry.

I see the email.

Yes.

Do I need to accept this RSVP?

It says RSVP to this event.

Yeah.

Thank you.

I will, I will let everybody, I'll get everybody back in here.

Are there enough of us to vote anyway, even though we've lost Director Munson?

Yeah, as long as there's a quorum.

I think we still have a quorum.

I think.

Okay, I read the closed session motion.

I move that the Albemarle County Economic Development Authority go into closed session meeting as authorized by the Virginia Freedom of Information Act section 2.2-3711A of the Code of Virginia under subsection five and six to discuss and consider

The expansion of existing Almorro County businesses, Project Poma and Project Befriend, where no previous announcement has been made of their interest in locating and expanding its facilities in Almorro County and the investment of public funds to support that location and expansion where bargaining is involved and where, if made public initially, would adversely affect the financial interest of the EDA in Almorro County.

and it says that a voice vote is permitted.

All in favor, please say aye.

Aye.

All right, we're gonna leave this site and come back in closed session.

There will.

I think we're good, J.T.

Okay.

Okay.

With the authorities permission, I will read the closed meeting certification.

I move that today EDA certified by recorded vote that to the best of each director's knowledge, only public business matters lawfully exempted from the open meeting requirements of the genuine Freedom of Information Act

and identified in the motion authorizing the closed meeting were heard, discussed, or considered in the closed meeting.

Director Shreve?

Yes.

Director Imhoff?

Yes.

OK. We're back in open session.

And if I can find my agenda.

As I suspected, there was little material change since the time of our last meeting.

We reported from the beginning of the fiscal year to the end of January, $32,857.74 in operating revenue against $330,379.17

and operating expenses.

Should note that these exclude any interest allocations from December or January, which haven't been recorded yet.

We also have pass-through revenues of $393,021.39, which gives us net revenue for the fiscal year thus far of $62,000

64222.

Added to our net cash position prior to this period, we're left with a net cash position of $852,646.89, which is up from approximately $731,000 at the beginning of the fiscal year.

Thank you, Mr. Shreve.

Any questions?

I move we approve the Treasurer's Report.

Second.

Thank you, sir.

Any opposed?

Okay, the financial report is adopted.

The next item on the agenda is unfinished business.

Mr.

Chair, if I may have the floor, please.

Vice Chair.

Just wanted to provide a brief update on Lewis and Clark Exploratory Center.

We had several members of this respective authority want to meet with the principals of the Lewis and Clark Exploratory Center.

in hopes of finding some common ground and resolution to an outstanding loan they have through our EDA.

Due to technological issues, they were unable to get into party discussions on how to resolve this particular issue.

As a reminder, we have invited those principals from Lewis and Clark to come to our March agenda in hopes of sorting out

this particular issue in the interim.

Ashley Perry from the Economic Development Office is working with a couple of the members of this respective board in hopes of scheduling another meeting at a mutually convenient time for all to see if they can make progress on sorting out how we may move forward with this outstanding loan balance.

Oh, Ashley, correct me if I'm wrong, but I think we have that meeting set.

Is that correct?

We do.

The only thing I would add to what Roger noted was that before the technical problems short-circuited our meeting, we discussed a couple of things, but then we also noticed a few things too.

And I know Roger,

You were one of the first to point this out that it was pretty obvious when we started sharing documents with them that nowhere in any of their budgets have they introduced any repayment schedule for the loan.

So it's one of the things we're going to have to address is is their perception going into this, which it appears to be that they are still seeking forgiveness of the loan.

and our position is that we're not, that's a non-starter.

So we're gonna have to get past that very quickly with them.

The other thing that I noticed when I reviewed their documents was that they haven't really changed anything in a material way as far as trying to be creative about either getting new revenues or cutting costs.

So we appear to be at the status quo ante

Just a quick refresher.

That loan was actually taken out, what year was it?

2013.

2013.

And interestingly enough, I look back at those early documents that Ashley provided from that period.

Their revenue projections were,

Our friend Rosie Senario was in the room at the time.

And I don't see where they've really adjusted plans in the wake of a pretty abrupt reversal in their fortunes.

And this has nothing to do with the pandemic.

This happened almost immediately, 2014, 2015.

after the loan was received.

And they haven't appeared to have made any notable adjustments one way or the other since that time.

What's the loan balance?

$260,000.

I believe it's closer to 125, isn't it?

Excuse me, I was citing the total for the city and the county together.

Right.

Yeah, we have half of that.

I don't believe it is quite that much.

OK.

They requested 130.

I guess we delivered something less than that.

No, it isn't.

What are our options to collect the money if they just... You know, the original construction that occupied so much of their business early on and what they were putting together there came from a VDOT grant, $800,000.

And so that's

Almost all of their assets at any point in their history are tied to public money, not just the loan that we've delivered or the city delivered on top of that.

And I haven't discussed that any further.

Good.

Thank you.

The only glimmer of hope that I see for repayment, and it would be a modest repayment, so it wouldn't happen overnight,

And by the way, the other thing I noticed in the early documents was they were anticipating a three year repayment schedule.

But sort of promised that they thought they could do it on a more ambitious, faster timetable than that and going back to 2013.

So, yeah, this this has really come a long way.

But the only glimmer of hope I see is that about oh, let's see, it's probably

Close to 35, 40 percent of their budget is going to health insurance for the principal officer.

I did a quick back of the envelope calculation and determined that if they sought instead an ACA subsidy for health insurance and got off the out of the exclusively private market at which they're buying the policy now, they would save about twenty

five to twenty eight thousand dollars.

So and obtain the same kind of coverage.

I'm a little surprised that they didn't consider something like that so far.

Dave, I think that's a wonderful recommendation to make to them.

It is a very small shop.

So there's not a lot of ways you can save.

I think coming out of the pandemic, there may be some facility rental opportunities for them.

But yeah, I think it's, you know, if they can somehow right this ship and let's say,

They say, oh, yeah, great idea.

We'll save the twenty five grand and we'll start paying back the loan with that savings, which they're in deficit.

So it wouldn't all go toward that.

But a substantial amount could.

I still don't think that they'll ever make their budget with with rentals and fees and that sort of thing.

They're going to have to to get grants and donations.

Yeah, they are a nonprofit.

It's a different business model.

Okay, I'm going to suggest that you guys go ahead and have your next meeting with them and bring this item back for a closed session at our March 15th meeting.

Does that sound okay with everybody?

Okay.

Anything else on that item?

Okay.

Agenda item number seven, other matters.

Okay.

Our next meeting is March 15th, 2022.

And I'll entertain a motion for us to adjourn.

It's the Ides of March.

All right.

All in favor of adjournment.

I don't expect many no's.

Thank you.