This week Hewlett-Packard execs will be acquainting themselves with Conway and central Arkansas, president/CEO of both Conway Development Corp. and the Conway Chamber of Commerce Brad Lacy said. In coming weeks, efforts will turn to preparing the building site, located in CDC's 181-acre The Meadows Office and Technology Park.
"We'll be working on some human resources-related stuff," Lacy explained, "like where HP goes to recruit workers, interaction with higher education throughout the state, how to partner with schools here and working on real estate issues with HP's real estate team their team that will be working with us to develop plans for the building, as well."
As per the agreement reached in a whirlwind four-month negotiation, CDC will build HP's building to suit and then lease it to them. About $28 million is the figure being circulated for the cost of the build, and Lacy said several decisions remain to be made about what money will be used to build what.
As the constructor, CDC will pay for the bulk of the build. Gov. Mike Beebe's $10 million contribution from the Governor's Quick Action Closing Fund could be used to help offset CDC's costs, Lacy said, but to what extent remains unknown this early in the process.
As for the $28 million, Lacy said this number "is going to move."
"I would assume that in value it (the building) will be valued at more than $28 million, but probably our investment is going to be less than that."
A 501 (c)(6) nonprofit organization, CDC does not have a "war chest," so to speak, containing cash to be used for such projects. The only cash on hand, Lacy said, is "amount of money that I can't share publicly" used to cover operating expenses. Primarily, CDC is funded through land sales, earnings from investments and land leases, he said.
In constructing HP's building, CDC will be acting as any other developer, he continued. Money will be borrowed for the build and money generated by HP's leasing the property will service CDC's debt.
The terms of the lease are among the many issues yet to be ironed out. Lacy said CDC would be "very competitive" in setting the lease, but HP will not get the building for a song.
"We have to be made whole on the deal," he said.
The city of Conway has also dedicated money to improve the HP site and surrounding roads.
The Conway City Council voted in a special meeting Thursday morning to dedicate up to $5.2 million for street improvements at and around the future HP site.
The city's economic development fund balance of about $750,000 will be drained to improve the site itself, Mayor Tab Townsell said.
An ordinance passed by the council identifies the excess from a 1 percent franchise fee on gross Conway Corp. electricity sales as one source to fund site improvements. The franchise fee is largely dedicated to debt service for economic development and public infrastructure bonds issued in 2005, but has historically generated about $200,000 over debt service annually. It is this overage that has generated the $750,000 economic development fund balance.
The ordinance states that after these two identified sources of funding are depleted, money for further improvements to the site "will be made through financing arrangements to be determined at a later date and approved by future action of the city council."
City Engineer Ronnie Hall said using $1 million directly from the economic development and public infrastructure bonds for HP-related site and street improvements has been proposed also, and that the city's quarter-cent sales tax could also be used for HP-related street improvements.
This quarter-cent sales tax also generates funding earmarked for the construction of two Conway Fire Department stations and the extension of Salem Road. Townsell said the tax has generated enough money to provide "cash in hand" to build a fire station, the Salem Road extension and, if needed, streets to serve the technology park.
The council also approved CDC's donation of the HP site, valued at about $1.25 million, to the city so these city-funded improvements can be made.
Once city funds have been expended on the property, it cannot, by law, be donated back to CDC, Townsell said.
(Staff writer Joe Lamb can be reached by e-mail at joe.lamb@thecabin.net or by phone at 505-1238. Send us your news at www.thecabin.net/submit)
