After months of trying, Rusty Jackson has been approved to submit a state grant application that, if awarded, would greatly assist in making renovations necessary to open three new food establishments at her Wall Street and Main Inc. venture in downtown Clinton.
Speaking to the issue for the fourth time in as many months, Jackson received approval from the Sampson County Board of Commissioners Monday. Following short discussion continued from September’s meeting, the board signed off on a resolution approving the submission of a grant application to the N.C. Rural Center for $160,000 in Building Reuse and Restoration grant funds.
The funds would help in completing upgrades to a two-story building at 101 Wall St., owned by Burgess Group Consolidated LLC. Jackson has proposed to establish a bakery and cafe on the first floor and an upscale restaurant on the second.
“I would just like to remind you that I’m only asking you to sign so I can apply to the state. I’m not asking the county for any money,” Jackson told commissioners. “Your concerns were if I could pay it back if I failed. (Property owner) Mr. (Vince) Burgess guaranteed a pay-back, a promissory note, a deed of trust and a corporate guarantee. The state has only asked for a promissory note. We have given you much more.”
Commissioners wanted to know that the county had security, and most of the questions raised Monday simply had to do with ensuring safeguards were in place.
“If I fail, I’m guaranteeing the money,” Jackson said, “so I don’t think you have any risk.”
Economic developer John Swope laid out a few options by which the county could be offered additional security. One main step, Swope said he has discussed with Burgess the possibility of an independent banker looking at the finances of the company.
“That might be a path toward assuring more security for the county,” said Swope. “If it’s a thumbs-down for some reason, that tells us not to pursue. If it’s a thumbs-up, that tells us that it would satisfy that requirement.”
Obtaining a deed of trust and an appraisal of the property were offered as additional avenues that would be explored down the road, after the Oct. 12 grant application deadline.
The Rural Center grant program would provide $8,000 per full-time job created, with Wall Street and Main Inc’s 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.
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. Wall Street and Main Inc. has agreed to provide the county that local government match.
The state funds would be granted to the county, which 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 they don’t meet the terms, there is a chance it could cost the county,” said board attorney Annette Chancy Starling. “If we have a deed of trust against the property, that does provide us some security. We’re not responsible for paying that back. We have to make a good faith effort to collect the money and a good faith effort to analyze the company’s financial strength.”
The county, in this case Swope and the Economic Development Commission, 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.
Commissioner Jefferson Strickland noted much of the onus would fall on Swope in monitoring the grant.
“I feel that’s part of what Economic Development does,” said Swope.
The Clinton City Council tabled the same request by Jackson and Burgess in July before ultimately denying to serve as the pass-through for the grant in August, citing concerns with staff time that would be involved.
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. Should the $160,000 grant be received, that would cut into $625,300 in proposed renovations still to be completed. Burgess Consolidated would reportedly put up the balance.
Jackson has estimated three months for construction once funds are received in December, so work could be completed by March and the three businesses opened starting in April. A staggered opening is anticipated, Jackson noted.
“The county would need to make sure that these grant funds are used in making renovations after Oct. 12,” said Starling. “As long as we comply with the requirements of the program, all we would be liable for is trying to recoup the funds in the event of default.”
A prorate share of loan funds must be repaid by the property owner through a “claw back” provision in the loan agreement if jobs are not created as proposed. While the county will not be required to repay the funds from government funds, it will be required to take “any means necessary, including litigation, if required, to recoup the funds from the company.”
Commissioner Albert Kirby said that could prove costly depending on the extent to which the state would expect the county to pursue the funds.
“I’m certainly excited about the prospect of having 20 new jobs come to the local area, but that is something that stands out in my mind, the potential — without assurances — of the possibility of failure,” Kirby said. “It stands out in every commissioner’s mind that the city, which has a vested interest in this, has had a chance to review the applicant like we did. And they said no, apparently for whatever reason. So, the taxpayers that we’re representing, if something were to go not so very well, it would put added pressure on us in not being more vigilant in the way we look at it.”
Strickland said “financials needed to be substantiated, documented and rubber-stamped as being OK.” Kirby agreed.
Swope suggested that a review of Burgess Group’s finances be completed before the submission of the grant application. If that is found satisfactory, attaining a deed of trust and appraisal could be done after Oct. 12. “If neither one of them come in satisfactory, we could pull the application,” said Swope. “If we’re not satisfied, per your direction, we could always pull it.”
Burgess Group agreed, as part of the resolution, to provide forms of security on the loan, to include a deed of trust to provide assurance that the county would be able to recoup funds through foreclosure in the event Wall Street and Main Inc. is not able to meet the employment requirements. In that case, the deed of trust will pay all legal fees up to 15 percent of the total amount owned at the time.
Jackson said she was confident it would not come to that. In the restaurant business for 30 years, Jackson has served all of those years in a management capacity.
“The first restaurant I worked in, I owned,” said Jackson, who has owned establishments in Arizona, Colorado and Nevada, where she is originally from. She most recently operated a bakery in downtown Roseboro and chose to close down that business to establish a new one in downtown Clinton, at the urging of the city, she said.
That was three years ago. As she has made strides to get the new venture going, she has filled countless orders by baking out of her Salemburg home. Throughout the process of locating downtown, Jackson said she has gotten positive feedback from other downtown businesses.
“I will be a benefit to all businesses downtown because I’ll bring foot traffic downtown,” she said. “I think there’s room for me. I don’t think I will hurt anybody’s business. In fact, I think I will improve their business.”
Following the discussion, the board adopted the resolution for grant submission contingent upon three stipulations: that the county secure a deed of trust on the facility, finances be substantiated by a banker prior to the submission of the application and the property be appraised.
“I’d like to see growth in the county, or in the city, or wherever it might be,” said board chairman Billy Lockamy. “We would like to have some guarantee, because we do not want to be held liable.”
The board approved the move unanimously.
Jackson beamed with joy, having finally overcome at least one hurdle in attempting to see a local business come to fruition. “Thank you so much,” she said.
Chris Berendt can be reached at 910-592-8137 ext. 121 or via email at email@example.com.