A much-discussed state grant pursuit for a downtown Clinton venture was talked about yet again this week, receiving a new audience this time around.
Wall Street and Main Inc. took its request to the Sampson County Board of Commissioners, requesting submission of an application to the N.C. Rural Center for $160,000 in Building Reuse and Restoration Grant funds to assist in renovations at 101 Wall St. The application and project would support the opening of three new food service businesses at that location, including a bakery, cafe and upscale restaurant.
While no decision has been made, commissioners will discuss the grant application again at its October meeting. Last month, the City Council denied serving as the pass-through for Wall Street and Main Inc.’s state grant application.
Council members praised business proprietor Ruth “Rusty” Jackson for her efforts to bring a quality business downtown, but raised concerns with city time that would have to be involved in managing the grant, which has to be funneled through a local government applicant with the stipulation that Wall Street and Main Inc.’s 20 proposed full-time jobs be maintained for six months.
The Council tabled the request in July and denied it in last month.
“I’m still going to open,” Jackson said last month. “It’s only a matter of when, and hopefully that will be soon.”
She continued that effort earlier this week with the help of the Sampson County Economic Development Commission.
John Swope, executive director of the EDC, is working with Jackson as part of the Rural Center grant application, part of a total $1 million renovation project by Burgess Group Consolidated LLC at its site on the corner of Wall and Main streets in downtown Clinton. The two-story structure, known as the “old Belk” building, was originally built in 1917 and consists of 12,000 square feet.
Swope provided the county board with extensive information, including a summary of the project and the N.C. Rural Center grant program guidelines and documents.
“What we have is a local business that is requesting funds to renovate a building they own,” said Swope, “and part of those funds would come from the Rural Center. The business itself is Wall Street and Main Inc. and they propose to open three new food service businesses in a single location in downtown Clinton.”
Burgess Group plans to lease the building to Jackson, who intends to operate three businesses there: retail bakery “Rusty By the Slice” and a casual 75-seat, full-service restaurant “Main Street Cafe,” both on the first floor, and “Wall Street & Main,” a full-service and banquet restaurant with a capacity of 200 on the second floor. The building was purchased by Burgess Group for $100,000 in September 2009 and there has been $374,700 in building improvements since restoration began in 2010, with another $625,300 proposed.
All totaled, the project with building purchase will come to $1.1 million.
Major concerns at the site, including some engineering, safety and structural support issues, as well as ADA (Americans with Disabilities Act) requirements, have been addressed. While much of the inner supports and the exterior facade of the building has also undergone a major overhaul, there is still some work to do — that is where the grant will prove beneficial.
Among the renovations still necessary are the purchase and installation of electrical and plumbing systems and an elevator-style lift, as well as rehabilitation of the fire suppression system. Additionally, there is still the need for sheet rock and wall finishes, paint and wall treatments, flooring and sub-flooring, to include carpets, hardwood and tile, air conditioning and heating systems and restoration of the original Belk terrazzo staircase.
Should the $160,000 grant be received, that would cut into the $625,300 in proposed renovations still to be completed.
“Burgess Group Consolidated would provide the balance of $457,000,” said Swope. That number is actually closer to $465,000 with a 5 percent match also expected to be provided by the company.
As a stipulation of the grant, the local government applicant must contribute at least 5 percent, or $8,000, cash match of the grant amount. However, the Rural Center does allow for that 5 percent to be offered by other sources, and Wall Street and Main Inc. has agreed to provide the county that local government match, Swope said.
The deadline for the Building Reuse application submission is Oct. 12, with awards to be announced Dec. 5.
The Rural Center grant program would provide $8,000 per full-time job created, with the 20 proposed full-time jobs, at 35 hours per week, required to be created within 18 months of the Dec. 5 grant award date. Those 20 jobs must be maintained by the company for at least six consecutive months. There are an additional 35 part-time jobs anticipated as part of the three-business venture.
The state funds would be granted to the local government applicant, which would be Sampson County should they choose to approve the grant application. The county would lend the funds to the property owner in the form of a deferred, forgivable loan, which will be secured with a loan performance agreement and promissory note signed by the property owner.
“If the award is approved by the Rural Center, (Wall Street and Main) believe they can have construction underway by the middle of December. They estimate three months for construction so they would be completed by the end of March, and open three food service businesses in April,” said Swope. “The requirement for 20 jobs that are being committed to are to be held six months, and that would end in October or November timeframe. If everything goes as plan, by the end of next year, we would be wrapped up with the Rural Center.”
The taxable investment for the project would be $375,000, which has already been put into the building.
The county, in this case EDC, would assist with the application process, reporting requirements, payments, job verification and loan repayment if needed. They would have to call in the loan for repayment by the company, but would not be obligated to pay themselves.
“If job creation requirements are not met, a prorate share of loan funds must be repaid by the property owner through a ‘claw back’ provision in the loan agreement,” Swope noted. The local government will not be required to repay the funds from government funds, but will be required to take any means necessary, including litigation, if required, to recoup the funds from the company. So we’re not on the hook for the repayment of the monies, but we would have to take legal action as far as recouping it.”
Commissioner Albert Kirby asked whether there would be any collateral to secure the county.
“Would there be any collateral that’s attached in securing that $160,000,” said Kirby. “I’m still a little concerned. If, heaven forbid, something goes south, and it doesn’t work out, on the surface it looks as though the only liability the county would have is that we would be required to go after somebody. But if that person didn’t have anything, then what’s there to go after? It always frightens me that with $160,000, and the state being in the condition they’re in, I don’t know whether or not they’d be so forgiving.”
Kirby and other commissioners asked for clarification from the N.C. Rural Center.
“I need to have an understanding that the state is really saying that $160,000 would just kind of go up in the wind if things didn’t work out,” he noted.
County attorney Annette Chancy Starling said unless there was a deed of trust involved or a UCC (Uniform Commercial Code), the county will not have any security.
“At the same time, if it’s not the county’s money, that’s one thing,” said Starling. “If we’re forced to go after the money, where does that end?”
Jackson asked what she could do to satisfy the board. Kirby said clarity was needed from the state.
“I think there ought to be some clarity from them,” he said. “There has to be some parameters as to how far they can make us (pursue the funds). That’s the only thing that concerns me. I think it’s a great idea, obviously when 20 jobs are coming here. I’m for that.”
Swope said he could speak with representatives of the N.C. Rural Center and get some clarification in writing. The issue is expected to be discussed further next month, leading up to the deadline for grant applications.
Chris Berendt can be reached at 910-592-8137 ext. 121 or via email at email@example.com.