Development Authority OKs loan for Fairmont Tool
CHARLESTON, W.Va. -- Members of the West Virginia Economic Development Authority decided Thursday to continue helping Fairmont Tool's expansion.
The authority gave preliminary approval for a 10-year, $900,000 loan to Fairmont Tool. In October, the authority approved a $3 million loan to the company for the purchase of land, financing construction of a new building and new equipment.
Thursday's loan is to buy more equipment, said WVEDA Executive Director David Warner.
Fairmont Tool performs machine pipe repairs, tests industrial pipes and threads pipes. Warner is confident in the companies' continued expansion.
"All of the [natural gas] drilling requires any pipe going into the ground be tested and they [Fairmont Tool] have become a preferred supplier of many drilling companies," Warner said.
The company employs 67 people, and will look to employ 98 workers after one year and 118 workers after three years.
Members also decided to postpone voting on a resolution for developments at Stonewall Jackson Lake State Park. Warner said it had three purposes.
"The resolution would release roughly 15 acres so the additional cabins could be financed," Warner said.
Warner said the trust indentures that govern bonds issued by the WVEDA for $2 million needs to be amended before private companies could develop the property.
"That's the big part of what the resolution is intended to solve," Warner said.
The hope is to build five cottages.
It would also allow for a renegotiation between the state Division of Natural Resources and the development company, MHLP. The current agreement expires in 2014.
Lastly, the fee structure associated with the new development agreement would change. Under the current agreements, developer MHLP and its subcontractor Benchmark Hospitality are entitled to receive a certain amount of fees monthly.
"From what we understand, both of those entities, because of the financial performance of the resort over its first 10 years of operation, have not been able to fully be paid for their work," Warner said. "The goal would be to try under the new development agreement to structure it in a way where they can get full payment of their management fees that they are owed. That's my understanding."
The fee structure change was the main cause for reservation, Warner said. Board members will be able to ask further questions about the tabled resolution before voting on it in January.
Warner added the DNR, Army Corps of Engineers and bondholders must all agree on the new terms before moving further with the project.
Members passed a resolution changing the interest rate on a loan approved to Italian car company Allevard Sogefi.
Last month the authority approved to borrow and finance $750,000 from the Infrastructure Council and WVEDA would then buy and lease the equipment to Sogefi.
The authority authorized the project at a maximum interest rate of 3 percent, whereas the Infrastructure Council approved a 3.25 percent interest rate.
"We just wrote the authorizing language wrong here at this board," Warner said.
The resolution changes the authority's interest rate to match the Infrastructure Council's interest rate.
Also on Thursday, members provide final approval for a 10-year, $15 million loan to Carbonyx International. A 10-year, $1.5 million loan to Multicoat Products also received final approval.
Warner also informed board members that the authority did not use all of the tax-exempt bonds for the year. Only certain projects qualify for tax-exempt status.
"The last three years the majority of what we could allocate has been unallocated at the end of the year and by statue is then made available to the Housing Development Fund," Warner said.
Reach Caitlin Cook at email@example.com or 304-348-5113.