Richmond, Virginia, USA 28 August 2017 -- (From the Richmond Times-Dispatch) -- Tranlin Inc. will repay $5 million to Virginia, as the Chinese company resets its plans to build a paper products mill in Chesterfield County that was expected to bring $2 billion in investment and create 2,000 jobs.
In an exchange of letters with the Virginia Economic Development Partnership in late July, Tranlin's top executive promised to repay the grant from the Commonwealth's Development Opportunity Fund by Oct. 24 in acknowledgement that the company would not meet its investment and job commitments by the end of 2019.
"While we are not fully prepared to move forward with our project in Chesterfield County, we are continuing due diligence and planning to advance the project at a future date," acting CEO Donald Lan said in a letter on July 26 to Stephen Moret, president and CEO of the state partnership.
Moret had requested repayment of the grant in a letter to Lan earlier that day that also promised state financial support when Tranlin, operating as Vastly, is ready to act on a reshaped manufacturing project here.
"When and if the company is prepared to move forward, our intention is to recommit the previously announced incentive package, with incentive payments scheduled to restart after all necessary land is acquired and construction is under way," Moret told the Tranlin executive.
Gov. Terry McAuliffe and a legislative oversight committee agreed to $29.5 million in incentives for the project in 2014, with most of the money to be held until Tranlin met phased targets for jobs and investment. The company used the $5 million grant to help it buy 58 acres of property in the James River Industrial Park, while the remainder of the land needed for the project was held under an option that expired on July 31.
Lan said the company would keep the land it had purchased outright and maintain its offices and staff in Charlottesville, as the company redesigns the project with new technology already used in China to convert agricultural waste into paper products and fertilizer.
"Additionally, our Virginia-based employees are diligently developing U.S. market demand for our fertilizer and paper production in anticipation of U.S. production," he said.
Secretary of Commerce and Trade Todd P. Haymore said Tranlin's decision to return the $5 million grant was a way for the company to keep faith and good standing with the state as it restructures its plans.
"By returning the Commonwealth Opportunity Fund money, because of the delays and their continuing due diligence, this would be a good way for them to restart," he said.
Garrett Hart, director of economic development in Chesterfield, said the decision was not a surprise because Tranlin had been open with officials about the delay in the construction schedule and the reasons for it.
"When you have a project as big as this, you don't want to lose it, so you keep working it," Hart said.
Chesterfield had offered financial incentives to Tranlin through real estate tax rebates and exemptions from machine and tools taxes once the project was complete. "The county is not in any position of having to ask for any money back," he said.
Hart also said he's confident that the owners of the 800 acres that Tranlin previously had under option would work with the company when it returned with a new plan. "The landowner wants to move forward with the company, as we do," he said.
Moret and other Virginia economic development officials had spoken with Lan the day before the exchange of letters, which memorialized the commitments they had made informally.
"Based on that conversation, I understand that Tranlin is not yet prepared to move forward fully with its previously announced project in Chesterfield County, but that the company intends to continue due diligence and planning activities in anticipation of possibly moving forward with the project at a future date," Moret said in the initial letter.
Lan responded with hope but no assurance of returning with a new proposal for a factory in Chesterfield.
"We are encouraged to know VEDP's intention to recommit incentive packages at the appropriate time, as stated in that letter, and we will factor this into our planning and decisions," he told Moret. "We look forward to continuing our partnership with VEDP and the commonwealth as our project moves forward."
Tranlin/Vastly employs 25 people in Virginia, most of them at its headquarters in Charlottesville. Spokeswoman Lisa Randall confirmed that the company had informed state officials last month that it would return the grant because of delays "while we conducted further research and project planning" based on the company's newest manufacturing facility in China.
"We expect significant manufacturing gains to be realized, and it makes good business sense to incorporate this newest technology into our U.S. plans," Randall said.
The McAuliffe administration said it remains optimistic that the company will be back at the table.
"We are still operating under the assumption that they are going to make an investment in Virginia," Haymore said.
So are leading members of the General Assembly.
"My understanding is they are still committed to the project," House Appropriations Chairman S. Chris Jones, R-Suffolk, said Thursday. "It is my understanding there is newer technology that changes the economics of the original agreement."
"This is no surprise," said Jones, who added that Haymore and other administration officials had kept legislative leaders informed of the project's changing status.
Haymore said the company has been "very open and transparent" about the reasons for the delays in the project. Tranlin said in May that it was pushing back construction plans for the project because its parent company in China had developed technology that would affect all of its manufacturing processes.
"I think the way they view this is as a reset," he said.
Haymore said the state hopes the company will complete its review of the project by the end of the year, before McAuliffe leaves office in January. "We're hopeful that we will have a clear indication of what they plan to do by the end of the year," he said.
VEDP and the governor came under intense criticism after the Roanoke Times revealed early last year that the state had awarded a $1.4 million grant from the fund in 2014 to a different Chinese company, Lindenburg Industry, that proved to be illegitimate.
The partnership's previous president, Martin Briley, appointed in 2011 under then-Gov. Bob McDonnell, resigned last year and the Joint Legislative Audit and Review Commission issued a scathing report last fall that led to major legislative reforms of the independent state authority this year.
Tranlin is a much different company, confronting rapid changes in technology and the market for its products, said Haymore, who as secretary of agriculture and forestry visited a company factory in China with McAuliffe three years ago.
"We have seen them in action," he said. "We have seen the paper products being made."