From the 9/16/11 edition of The Charleston Gazette:

Manufacturing-equipment loan rates lowered
State hopes action spurs economic development

By Eric Eyre

CHARLESTON, W.Va. — The West Virginia Economic Development Authority is lowering the interest rate on loans used to purchase manufacturing equipment in hopes of spurring companies to invest in their operations.

The Development Authority agreed Thursday to decrease its 10-year loan interest rate from 4 percent to 2 percent.

For years, the agency typically distributed about 20 loans a year to manufacturers wanting to purchase equipment at plants. More recently, the Development Authority has issued only about a half-dozen such loans a year.

“We’re not seeing a lot of new loan activity,” said David Warner, the development agency’s executive director. “We’d like to generate a little more activity.”

Statewide, West Virginia lost 1,582 manufacturing jobs in 2010, according to a West Virginia University study released earlier this year. Also, between December 2007 and May 2011, manufacturing employment in the state dropped by 14.9 percent — from 57,900 to 49,300 jobs.

Warner said the Development Authority would loan a maximum of $800,000 to each manufacturer. The companies would have to invest 45 percent of the total equipment purchase price.

The agency plans to make $10 million in loans available at the lower interest rate.

“We’re targeting equipment loans [only],” Warner said during Thursday’s board meeting in Charleston. “This would be for manufacturing equipment.”

Warner said the nation’s struggling economy and uncertain business climate probably have more to do with the drop in Development Authority equipment loans than the 4 percent interest rate.

Also Thursday, the Development Authority board:

| Authorized Collins Hardwood of Richwood to issue up to $2.7 million in tax-exempt bonds to expand its sawmill in Nicholas County. The company is upgrading its lumber finishing equipment, and building a new office.

“It will allow them to do more finishing work at their Richwood facility,” Warner said. “The past three years have been challenging for the wood industry.”

| Reviewed a preliminary “draft” audit of the agency. The Development Authority’s net assets increased by $4.31 million during the past fiscal year. Liabilities decreased by $2.27 million.

Board members said the agency received a “clean” audit, however, auditors identified issues that could affect the agency’s finances.

The repayment of a $5.2 million loan for improvements at Stonewall Jackson Lake State Park isn’t certain, according to the audit. Previous audits in recent years also have mentioned the loan.

The Development Authority also had an unexpected $300,000 in expenses after the agency agreed to help pay to demolish the former Reichart Furniture building in downtown Wheeling. The state, which owned a 70 percent stake in the building, plans to sell the lot after demolition is completed.

| Authorized the refinancing of $14 million in bonds the state issued in 1999 and 2001 to pay for a new parking garage at the state Capitol Complex and a government office building in Huntington. The state wants to refund the bonds and issue new bonds because current interest rates are lower.

The amount of the expected savings wasn’t disclosed at Thursday’s meeting.

Reach Eric Eyre at erice…@wvgazette.com or 304-348-4869.