By Debbie Adams
At its meeting on October 18, Vinton Town Council approved two requests from Town Manager Pete Peters that will allow the Gish Mill Redevelopment Project to move forward. The first request was for council authorization to execute an Amended Performance Agreement between the town, the Roanoke County Economic Development Authority and Gish Mill Davii, LLC, the developers who signed a contract of sale with the town on April 8, 2020.
The second request was for council authorization to execute a Construction Loan and an IRF Loan between the town, the Roanoke County EDA, and Gish Mill Davii, LLC.
Peters’s presentation included a brief timeline of the history of the project. In October 2015, the Town of Vinton purchased the Gish Mill property on Gus Nicks Boulevard for $126,000 with two objectives in mind: to rehabilitate and preserve the town’s founding structure (the mill appears on the Town Seal) and to create a leasable space for employment and new revenue generation.
The years 2016-2018 were spent in various planning exercises and environmental assessments using grant programs.
In 2019, the town issued a Request for Proposal to which Gish Mish Davii, LLC, responded with a project that would convert the historic property into mixed use development. (The property will accommodate a restaurant, along with retail and lodging uses.) The contract of sale was subsequently signed on April 8, 2020.
In Fall 2020 the town was awarded grant funds in the amount of $250,000 from the Department of Historic Resources (DHR) and the Emergency Supplemental Historic Preservation Fund for repair and stabilization work and $468,750 from the Department of Housing and Community Development (DHCD) and the Industrial Revitalization Fund (IRF) in the form of a loan. The property has been designated on both the Virginia and National Historic Registers.
In June 2021, the town approved a Performance Agreement providing financial incentives with developers Gish Mill Davii, LLC, also approved by the Roanoke County EDA.
Since January 2022, the project has utilized $250,000 of the DHR resources to stabilize the creek bank, solidify and shore up the foundation, and repaint much of the visible historic brick. The town was required to maintain ownership of the structure until the preservation grant was concluded.
During this time, the developers were finalizing construction level design documents and pricing the plans with construction contractors.
“The recent inflationary market, materials, labor costs, and interest rate hikes resulted in a funding gap that was previously accounted for when the original Performance Agreement was authorized in the spring of 2021,” Peters said.
However, in July 2022, with skyrocketing costs in the construction industry worldwide, the developers approached the town to discuss filling the funding gap necessary to move the project forward. Town staff and Gish Mill Davii, LLC, came up with updated terms in an Amended Performance Agreement with closing anticipated this month.
“Rather than allow the project to dissolve, town staff and the developers went back to work to find a means for the project to move forward,” Peters said.
Those efforts resulted in the Amended Performance Agreement and Loan Agreement presented to council on October 18. As part of the amended financial agreement, the town has agreed to provide a Development Incentive Grant in the amount of $398,750 for site work, gateway enhancements, and façade improvements to the structure as well as reimbursement of Utility Connection Fees and various permitting fees.
“The town will also utilize a Construction Loan as the vehicle to provide an additional $1 million in five equal installments at various stages of construction, with the final payment being made when the property receives an Occupancy Permit,” Peters continued.
The loan is designed to be forgiven by one-tenth each year, as long as each of the performance targets are substantially met, including generating a minimum of $48,000 in meals tax annually, maintaining 24 full-time employees, and achieving an investment of $3.6 million in the property. If targets are not substantially met within any of the 10 years, the loan must be paid back in full for that given year.
The IRF loan from the DHCD remains intact and will be repaid to the town at a rate of 2.5% interest.
The renovated property is expected to generate in excess of $165,000 in new taxes annually, which will pay back the public investment made to assist with the property.
“While it is the town’s intent to provide upfront assistance to move the project forward, the project will return these funds back to the town by way of various future taxes generated on the property,” Peters added.
He noted that the project’s total cost is approximately $3.9 million. The developer has secured $2 million in private lending resulting in just over half of the total investment being held by Gish Mill Davii, LLC— 51% private funding, 49% public funding.
“This is a true public/private partnership,” Peters said. “The town has employed this method of using public incentives in working to encourage the redevelopment of underperforming property in the past with such projects as the former library/Macado’s, the Roland E. Cook Lofts, the Billy Byrd Apartments, and Vinyard Station.
“The elevated public investment is required due to the age and location of the building,” Peters said. “Without public assistance, it’s unlikely that a private investor would be motivated to rehab, as they’d likely build elsewhere for less money. The public dollars help buy down the private investment needed to make the project feasible. As the property generates new revenues, it easily pays back the use of public incentives. In the current inflationary market, the current funding structure provides the bulk of the incentive as a loan so the money can be given up front for construction. The money is paid back through meals, lodging, and real estate taxes.”
Peters said that the town is essentially funding the loan from cash reserves that are comprised of remaining ARPA funds and proceeds from the sale of the Utility System. The town is not taking out a loan and then re-lending it to the developers.
“This is an example of leveraging a positive fiscal position and available grant funding to encourage additional private investment, all while saving a neglected, but historic property that otherwise could not be replaced,” he said.
Vinton Assistant Planning and Zoning Director Nathan McClung was set to present the two agreements approved by council to the Roanoke County EDA for authorization on October 19. Vinton Town Attorney Jeremy Carroll said there are still moving parts to the agreement that may need to be tweaked.
Developers David Hill and David Trinkle make up Gish Mill Davii, LLC. Hill was present at the council meeting to answer any questions from council. He has played a significant role in previous successful redevelopment projects in the town.
“This new project has been more difficult than all the others, but when it is finished, it will be the best of all,” Hill said.
He thanked Town Council and the town staff for their efforts in ensuring that the redevelopment project continues.
Council members thanked Hill for sharing the town’s vision and making the investment in Vinton.
In other council news, Peters updated members on the upcoming preventive maintenance to Garthright Bridge which is set to begin on November 7. This will involve some lane closures which the town will announce closer to date.