Warsaw was awarded a $468,700 Industrial Revitalization Fund grant to provide a loan to Andy Beale to help redevelop the Old Rappahannock Building Facility into a brewery, restaurant and retail and office spaces.
“This is time of generational change for our community,” said Mayor Randy Phelps. “This will benefit the community both in the quality of life from a vibrant downtown and a town government that will have inflows coming in to reinvest.”
Phelps said Warsaw has been chasing this grant for two years, and explained that an IRF grant is meant to provide money that would not be obtainable or that would be only be obtainable at a high commercial rate that might make a project unfeasible.
Warsaw sets the loan terms
Phelps said he had a bank run some models of what a loan of this nature could look like.
And based on that, he proposed charging Beale a 1 percent interest rate, which will cover the administrative costs and provide “a little extra profit for the town.”
He also proposed that the loan be issued as a 10-year balloon note with a 30-year amortization. That’ll make the monthly payments approximately $1,500 - $1,600, bringing in about $18,000 annually.
Under those terms, the full loan must be repaid at the 10-year mark or Beale must either refinance it with the town or an outside source.
Phelps said there were some suggestions that the amortization should be made shorter so the town would get higher monthly payments. “But that takes more money out of Beale’s pocket and puts more stress on the project,” said Phelps.
He added that while a shorter amortization would bring more money to the town, the town’s goal wasn’t to make money, per se. Warsaw’s goal is to have a revitalized complex that will increase the retail options and tax generation.
Further, for people who may question why all of the money is going to one person for one project, Phelps stressed that the town was awarded this money specifically for the Old Rappahannock redevelopment project. “It has to go to them. There’s no other choice,” he said.
“I think this is indeed the best way to disperse money and get money back into the town. We are not in this to make money,” said Councilwoman Rebecca Hubert “We’re not trying to gouge [Andy Beale]. This is fair, equitable, and would be a standard offer.”
Councilman Johnathan English said it’s important for the public to understand that when the town is repaid the collected money can be used to provide revolving loans for other businesses in the community. “So, it’s a win-win.”
And the loan doesn’t have to be fully repaid before the town starts making other loans, town manager Joseph Quesenberry added. The funds that are repaid can be lent out in any amount in any month, he said.
“It’s a great opportunity for a town our size to accumulate some funds so we can use it to help small businesses… It gives us the opportunity to do things that a loan institution or bank can’t do to support a small business. I think it’s going to be a great thing for the town and to help other small businesses develop and grow,” said Ogle Forrest.
The council members voted unanimously in favor of the terms Phelps proposed.