The Special City Council meeting held on Monday, Aug. 4, resulted in two unanimously passed resolutions allowing the mayor to proceed with negotiations on the ProValus contract and purchasing a building.
CFO Luke Feighert said, “It’s important that we get the facts about the grant proposal out to the public as soon as possible. This is the proposed budget you approved for the Mayor to submit to the State of Arkansas.”
Feighert shared the proposed estimated grant budget. The building is listed at $489,000. The quote to remodel is estimated at $1,300,000. This includes heating/air, potentially a new roof, and plumbing. The projected architect and fees are $65,000. The total potential cost is estimated at $1,854,000.
Feighert said, “The next question is always, ‘Where are we getting $1.854 million?’”
“We do have more than $525,000 in our economic development fund. The Community Development Block Grant (CDBG) with the Arkansas Economic Development Commission (AEDC) has already committed to $375,000. The other grant you allowed us to pursue is $500,000. Funds from other sources amount to $454,000, totaling $1,854,000.
Feighert said the “other sources” cash could come from the four pieces of surplus property the city is selling. “We are starting our budget process now. We are committed to moving some money into that economic development fund. We get .25%, which we split with Parks and Rec and economic development. So we will have several hundred thousand dollars to move into that account.
“There are no funds coming out of reserves. We have this money in our budget and from the sale of surplus property,” he said.
The economic impact of these 150 new jobs and the diversified workforce could bring approximately $20 million in salaries. “You roll that over two to three times. That’s what impacts the local economy. The impact on local businesses could be huge. Plus, the impact of other businesses coming to the square. The impact for downtown could be huge, but also for surrounding businesses – the need for housing and more.”
We are pursuing this opportunity because of the 150 jobs and the benefits to the other local businesses.
Feighert said, “ProValus is 100% US-owned and 100% US-staffed. We’ve done our research and due diligence. In everything we have researched, there is nothing that contradicts the information they gave us.”
“The Governor is in support of this project and we feel confident of getting that half-million dollars,” Feighert said.
Harrison will be the second location for ProValis in the state. “We might get ours running before the other one, but they’ve already received all of their funding,” Feighert said.
“This meets the guidelines of what economic development money can be spent on,” Feighert said.
Councilman Wayne Cone asked, “Is the flood plain issue going to affect this grant in any way?”
Feighert said, “There is nothing specific in the application that should have affected it. Also, being part of the Historic District allows us to put more than half the value into the remodeling.”
Cone asked if the flood insurance would be a problem.
“Typically, we have some buildings in the flood zone, and the Municipal League isn’t as worried about that as an insurance agency might be.”
COO Wade Phillips said, “We have sewer pumps, a lift station, soccer fields, a concession stand, and quite a bit in the parks area in the flood plain. We carry the insurance through the Municipal League, and there is really no difference.”
Councilman Reed Petty asked about the impact on parking for an additional 150 people. Freighert explained that ProValus committed not to have their people park on the square. They don’t want to take away from businesses on the square. Phillips identified 150 parking places within a two-block radius that the city owns.
The question was asked about the estimate of the $1.3 million renovation. “They’ve been very accurate on other projects. We don’t want to take away from reserves, but at the same time, if we have to, we will have economic development money as reimbursement.”
Cone asked what the city would do if another company came in and wanted to do the same thing.
“Obviously, we’d try to raise the money and make it work, too.”
“We’ve got the money. After the first of the year, we will have more economic development money without touching our reserves,” Mayor Jerry Jackson said.
Magness asked what happens after five years.
Phillips said, “At the end of the contract, there are three options. They vacate the building and return it to us. Then we have a building to offer for economic development or sale. Second, they can purchase the building and continue their operations, or lease it at fair market value.”
“So we are in a strong position in five years, regardless,” Magness said.
“Yes,” Phillips answered.
Feighert added, “I’m hoping they will want to add another 150 jobs.”
The question was asked if there was a conflict of interest since the Mayor had real estate connections.
Jackson replied, “I haven’t had a real estate license in more than 10 years. There is no conflict.”
Resolution 1328 authorizes the Mayor to negotiate with ProValus, and Resolution 1330 authorizes the Mayor to negotiate to purchase a building on the square.
Jackson told the council that he and his team would negotiate, and everything would be presented to the council.
Jackson said later, “I am very excited the community and City Council understand the value of this opportunity. This is one of the biggest things ever happening to Harrison, especially downtown.”