Funding requests go up in smoke

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By Christopher Brooke, Reporter

Out of nearly $3.3 million in grant requests for local projects submitted to the Virginia Tobacco Commission, the VTC staff has only recommended $27,800 for one tourism partnership between localities in Virginia and North Carolina.

The Blue Ridge Crossroad Economic Development Authority — a regional effort by Galax and Carroll and Grayson counties — had requested tobacco commission money for the regional tourism effort, a project referred to as the Blue Ridge Energy Research Center and a sewer treatment package plant at Exit 19 off Interstate 77 in Carroll.

The New River Regional Water Authority, a partnership between Wytheville and Wythe and Carroll counties, asked the VTC for $2.5 million to fund the “final components” of the system still being built and expected to come online early next year.

The tobacco commission, charged with making payments to farmers to compensate for the decline of tobacco quotas and promoting economic growth and development in tobacco-dependent communities, met Monday in Abingdon to hear more about the competitive grant requests.

Final awards won’t come until a meeting of the 31-member Tobacco Commission on July 31.

Commission staff reports that the state received $18.6 million in “special projects” funding requests from 26 organizations. The VTC had a pool of nearly $10 million.

Also, there were an additional eight proposals totaling about $45 million to create research and development centers, many of which were for alternative fuels, out of a pool of $40 million set aside for that type of project.

The commission also received 31 requests for Southwest Economic Development funds from its pool of $3.97 million.

Local requests and staff recommendations, according to information from the Virginia Tobacco Commission, include:

• $27,800 for the regional tourism initiative between eight localities in Northwest North Carolina and Southwest Virginia — including Galax, Carroll and Grayson counties — to hire “a consultant to oversee the coordination and marketing effortseewhich includes identity packaging, logo development, branding strategy, media press kit, information brochure, tourism guide map, design and develop 15 tourism information kiosks, advertising campaign, tourism academy, tourism business survey, value-added product differentiations and business plan implementation.”

In recommending this award, the VTC staff noted that the $27,800 from the commission “would enable a dollar-for-dollar drawdown” of the full $128,500 grant from the Economic Development Authority.

• under special projects for research and development centers, Blue Ridge Crossroads requested $354,600 for an idea referred to as the Blue Ridge Energy Research Center for facility design and related endeavors.

“The center is an alliance of private businesses (e.g. Red Birch Energy), educational partners (e.g. Virginia Tech and community colleges) and agricultural networks to optimize energy production focusing on liquid fuels research and production with state-of-the-science municipal solid waste, biodiesel production from canola and ‘brown grease,’ and cost effective ethanol production,” staff summaries say. “The center will also house an educational complex, as well as a common laboratory space.”

According to estimates from the applicant, biodiesel production from canola oil and grease would lead to annual revenues of more than $1.1 million and net incomes of $630,000 for a one-million-gallon plant.

A five-million-gallon biodiesel production plant would generate more than $7 million in revenue and $4.5 million in income.

Initial private investment for the smaller plant was estimated at $800,000, and $3.1 million for the larger plant, documents say. Annual labor costs were projected at $426,000 for the one-million-gallon plant and $888,000 for the five-million-gallon one.

“Estimates for ethanol productions using locally available cellulosic fibers show that a proposed facility with a production of 35 million gallons will have expected revenue of $62 million annually with a gross profit of no less than $18.6 million,” the commission’s information said. “Initial private capital investment for a facility producing 20-35 million gallons would be at least $50 million and the facility could support 40 highly skilled technical jobs at full production.”

The total cost for the project would be $446,000. Other agencies involved would include the Carroll Industrial Development Authority for technical and managerial support, the Crossroads Institute, the Blue Ridge Crossroads Economic Development Authority Small Business Development Center.

The state recommendation said that this “project appears more closely poised to result in development of a bio-refinery” than to focus on research and development.

The VTC staff recommended no grant for this proposal.

• the Blue Ridge Crossroads Economic Development Authority applied for $400,000 for Exit 19 sewer service.

The project at Exit 19 is needed to serve a burgeoning commercial and industrial area.

Applicants described a two-phase project to get needed sewer service to the yet-undeveloped interstate exit.

The first would involve the construction of a 40,000-gallon-per-day package plant, including a drain field on the other side of Interstate 77, where the treated effluent would be disposed of on Twin County Airport land, according to commission information.

More gravity lines east of the interstate would be built with private funds.

“Phase II of the project is construction of 8,700 feet of conventional sewer with a pump station, force main and all work west of I-77 that will be connected to existing lines in Woodlawn served by the City of Galax’s treatment plant,” according to the commission report. “The project will serve the Wildwood Commerce Center, which will include commercial/retail serving interstate travelers, as well as a graded, privately-owned 130-acre site and 235 acres the [Blue Ridge Crossroads EDA] is working to put under option for a regional industrial/commerce park.”

Water service is currently available there, but wastewater service is not.

The package plant would come online soon, while connecting to the Woodlawn system would probably take two years or more, the information says.

Total project cost amounts to $3.3 million.

Under other funds, the information lists a pending $2.13 million from Rural Development and a committed $759,200 from private landowners.

Though the applicants believe the Wildwood project will lead to the creation of 525 new jobs — including 174 retail jobs in the short term and eventually several hundred industrial jobs — the tobacco commission’s staff did not recommend the project for funding.

The package plant would cost an estimated $1.1 million and provide a low level of service to allow “immediate development” during the conventional sewer system construction, the staff noted. But the package plant could only serve 40 percent of projected demand at Exit 19, and if additional treatment were added, it would become redundant after the system is connected to the Woodlawn project.

• the New River Regional Water Authority applied for $2.5 million for the water system that will use the river at Austinville as its source.

The water authority requested funding assistance for the 22,000 linear feet of 14-inch water line to Carroll County from Austinville, as well as a tank at Lots Gap to boost storage and pressure on the Wythe County end.

The water line to Carroll County will serve the Exit 19 area and assist with economic development in the area, the commission’s documents state.

The project’s estimate was more than $4.1 million, with the three localities able to provide about $1.65 million.

The VTC staff recommendation noted that Exit 19 is already served by a water system, just as the Progress Park area in Wythe County is.

“It is difficult to build a case that this substantial investment of funds will directly result in additional jobs and investment,” the information says. “Based on assumptions submitted in the application, if this grant funding is not available the authority would have an additional $136,000 or less in annual debt service.

The staff did not recommend this proposal for a grant.