EDA awarded judgment

The Economic Development Authority of Patrick County was granted a judgment of more than $1.7 million after an economic development deal failed to materialize.

The EDA sought $1,774,659.80 in loan repayments and other costs in an alleged breach of contract suit filed in 2017 against defendants listed as Michael J. Devere, Charles Crawford Murphy and CLT USA, LLC, all of North Carolina, according to documents filed in the Patrick County Circuit Court Clerk’s office.

CLT was organized in 2011 by Devere and Murphy to promote, design, engineer, manufacture and sell cross laminated timber products, court documents show.

The three-count suit alleged that Devere and Murphy approached the EDA in 2012, asking the authority to finance CLT’s initial start-up costs, future plants and other expenses.

The EDA initially agreed to loan up to $1 million. In August 2013, the authority agreed to increase the amount to $1,250,000. The loan was made between January 15 and September 12, 2013, according to court documents.

In return, the company agreed to locate in Patrick County, make capital investments of at least $40 million, create at least 50 jobs and meet other benchmarks, according to a performance agreement between the company, the EDA and the Virginia Tobacco Indemnification and Community Revitalization Commission.

The commission put up a portion of the funds — about $625,000 — for the project, according to Glenn Roycroft, who at the time served as chairman of the EDA. The county put up the remainder, he said.

“It was a collaborative effort between the EDA and the Patrick County Board of Supervisors,” Roycroft said.

Patrick County Administrator Tom Rose, who also served as the director of economic development at the time, said “CLT was an awesome project. It was an absolutely perfect fit for this area and it was very promising” not only for growing the tax base but also matching job creation with a skilled, experienced  labor force.

The company was in the woodworking/timber market sector, a segment “we were certainly familiar with,” Roycroft said, and noted Patrick County successfully competed for the project with Halifax County in Virginia and at least two localities in North Carolina.

Rose and Roycroft both said the EDA and county had worked together to bring several successful projects to fruition.

With CLT, “our goal was to get the salaries up” and expand the tax base while creating jobs, Rose said. “But it didn’t work. It did not bring the EDA to its knees, but it hurt us.”

In the end, the company was unable to keep up its end of the agreement “basically because their financing fell apart, and that caused the project to fail,” Roycroft said.

Roycroft said that while he is not proud of the loss, “in hindsight, I can’t find fault. It certainly hurt our average, but given the same set of circumstances, we would strongly go after” a similar project in the future.

“It’s a bitter pill to swallow, to have put that much into a project and then have it not come to be,” Roycroft said. “This is one of the only ones (projects) I remember failing” in his 20-year tenure on the authority. “I certainly view it as a blemish on our, up to that point, really exemplary record.”

Unfortunately, “you’re never going to bat a thousand on economic development,” Roycroft said, noting the field comes with inherent risks, not just in Patrick County, but in other localities as well.

He and Rose both said several other localities have pursued legal remedies to collect incentives for economic development projects that did not come to fruition.

Ensuring those safeguards were in place was important, not just from the inception of this project, but also past and future endeavors, they said.

In this instance as others, “we did our due diligence. We had the mechanisms in place, and there were personal guarantees in place that are being executed as we speak,” Roycroft said Friday. “The only thing left in front of us now with this project is the collection phase.”

The total amount of the judgment includes principal of $1,250,250 plus $206,847.38 accrued interest from September 13, 2013, attorney’s fees of $317,562.50 and $476 in court costs, according to court documents.

After this experience “it would be very easy to draw back into a shell,” Roycroft said, but noted “there are very talented people on both” the EDA and the Patrick County Board of Supervisors, “people who have only the best interests of the community at heart.

“We’re going to have to dust ourselves off from the failure of CLT” and move forward, he said.

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