WOODSTOCK – A Virginia agency has enticed Howell Metal Company with state money to expand its facility in Shenandoah County.

The Board of Supervisors recently approved matching grant funds for the company’s performance agreement through the Commonwealth’s Development Opportunity Fund. Director of Tourism and Economic Development Jenna French explained in an email Tuesday that the state gives the $400,000 to the county upfront.

The Shenandoah County Industrial Development Authority plans to put the money into a certificate of deposit and hold the funds until Howell meets the requirements of the performance agreement.

Local governments in recent years have used performance agreements to persuade companies to make investments in existing facilities or to locate new industries in exchange for financial benefits. Mercury Paper and the county entered into a performance agreement in 2011 that committed the county and the state to provide $250,000 each in incentives, French explained.

The agreement required Mercury Paper to invest a certain amount of money and create a specific number of jobs to receive the incentives. The state required the company to repay $69,750 of the $250,000 because the company fell short of the job-creation benchmark, although the firm met its capital investment goal, French said.

The county didn’t pursue repayment because the company reached the spending goal that resulted in additional tax revenue, French explained. This year, Mercury Paper exceeded the 192 new jobs it planned to create under the original agreement, she added.

“All performance metrics have been met on that particular agreement and they have actually surpassed their employment numbers from the agreement,” French states in the email.

The agreement with Howell Metal Company calls for Shenandoah County to spend $400,000 — $100,000 in each of four years — in matching-grant funds to Howell Metal. The county expects to recoup this money when Howell completes the planned expansion of its New Market facility and begins to pay more in local real estate and machinery and tools taxes. The agreement requires that the county pay $100,000 installments to Howell each year through fiscal 2023.

In exchange for the $400,000, Howell Metal agrees to spend approximately $8.04 million for the expansion project — $6.07 million on machinery and tools and $1.97 million to expand and “up-fit” the building. The company also must create and maintain 102 jobs. The facility employed 162 full-time workers as of Feb. 1.

The agreement defines a new job as permanent, full-time employment of indefinite duration at the facility. The company must pay an average annual salary of $37,175 for each of the new jobs created. “Maintain” means the new jobs continue through the agreement period. “Maintain” also applies to jobs left unfilled when the company temporarily reduces employment levels as long as it continues to actively recruit for the positions through strikes or other temporary work stoppages.

The “performance date” is July 31, 2024. The county can ask for an extension date by up to 15 months if the locality, in consultation with the authority and the Virginia Economic Development Partnership, finds that the company has made an effort to meet the targets laid out in the agreement.

The county entered into a performance agreement with Mercury Paper through the Virginia Economic Development Partnership when the plant expanded and planned to increase its workforce. Mercury Paper asked the Board of Supervisors in 2015 for members’ support in seeking an extension of the performance deadline. Then-Director of Community Development Brandon Davis told the board Mercury Paper cited the economic downturn for the plant’s inability to meet the terms of the agreement. Supervisors endorsed the company’s request to extend the deadline.

The additional revenue collected by the county from Howell justifies spending local funds on the private investment, according to the agreement.

“Whereas, the stimulation of the additional tax revenue and economic activity to be generated by the Capital Investment and New Jobs constitutes a valid public purpose for the expenditure of public funds and is the animating purpose for the ... grant,” the agreement states.

Gov. Ralph Northam announced on Aug. 27 that Howell Metal planned to expand its New Market facility and hire at least 100 more employees. County officials and the board also discussed in closed session allocating the local funds as a match required as part of the performance agreement.

– Contact Alex Bridges at abridges@nvdaily.com