EDA pauses legal action to negotiate

BY ROGER SMITH
MOUNTAIN CITIZEN

INEZ — Boxvana escaped eviction and will continue manufacturing tiny homes and LitePan panels at its Honey Branch facility for the time being.

Martin County Economic Development Authority in a meeting April 5 paused its plans to file legal action against Boxvana. The EDA agreed to discuss a possible lease amendment for the spec building that Boxvana occupies in the Honey Branch Industrial Park.

EDA Chairman James Ayers opened the meeting reiterating the timeline of the current EDA board’s negotiations with Boxvana, beginning with the EDA’s letter of noncompliance to the company in November 2021. The EDA sent a “final notice of noncompliance” Feb. 3 giving Boxvana until March 5 to meet five demands: Pay past due rent for January ($5,729.17) and February ($11,458.33), file and pay occupational tax, provide proof of insurance policy, pay $68,749.98 in tier 1 penalty rent and $68,749.98 in tier 2 penalty rent for having an insufficient number of employees, and provide a letter of credit of $137,500.

Boxvana requested and received an extension to March 31.

On March 31, EDA attorney Brian Cumbo received a letter from Boxvana’s attorney Gary Barr with a counterproposal.

Barr says in his letter that Boxvana had indicated it had significant orders and business prospects for the year ahead, and anticipated an SBA loan in the next several weeks.

“However, it presently does not have the funds necessary to pay all sums due and to become due under the lease and continue its business operations,” Barr says. “Further, the current rental rate, the scheduled tier 2 penality, and the requested letter of credit will create a tremendous burden on Boxvana’s ability to continue to conduct its business going forward.”

Boxvana proposes to pay the EDA $97,395.81 to cover the tier 1 and 2 penalty rents and monthly rent for January, February and March. The company also agrees to file and pay occupational taxes for all quarters since the inception of the lease. Boxvana asks the EDA to waive late fees and forego tier 2 penalties and future penalties related to the number of employees.

“Hopefully, everyone now realizes that the number of employees contemplated by the lease is simply not realistic, especially on a site which I have been told has less than 30 parking spaces,” Barr states.

Boxvana asks the EDA to accept its current insurance policy, waive the letter of credit, “the sole purpose of which was to secure the tier 1 and tier 2 penalties which will have been addressed,” and amend the monthly rental rate going forward from $11,458.33 to $5,729.17.

“You have been very clear from the beginning that MCEDA would like to see Boxvana survive and prosper in Martin County in order to provide the greatest number of jobs for the county that is possible,” writes Barr. “Boxvana shares that desire and is working very hard to accomplish that goal.”

Martin County Judge/Executive Colby Kirk read a letter addressed to the EDA from Martin County Area Technology Center principal Chad Williams, who was out of town.

“I am writing to express my support for Boxvana based upon the strong partnership we have formed with them this year,” Williams says in his letter. “This year our carpentry program was added back and we started the tiny house project. Boxvana has provided materials, labor, time and the use of their facilities, blueprints and expertise to our ATC students to help make our project a success. I cannot thank them enough for the time and effort they have given to our students.”

Williams says Boxvana has also been an active member of the ATC advisory committee, helped judge Skills USA competitions, and has provided feedback to students on how to improve their skills.

“Most of the Boxvana employees are from and live in Martin County and are involved in the community in a number of ways,” writes Williams. “We currently have students in our classes and schools whose parents work for Boxvana, and we would love to keep them in our community. We hope to continue our partnership with Boxvana for many years to come. Hopefully, our partnership will lead to students gaining knowledge and skills to eventually start their own businesses and bring additional jobs to Martin County. Our students and staff at the ATC would like to express our gratitude for all the support they have given us this year, and hope they are able to remain in Martin County.”

Boxvana chief operating officer Nathan Rupright thanked Kirk for sharing Williams’ letter.

“That was very touching,” Rupright said. “I’ve been here with Boxvana since Jan. 10. I’ve worked with a handful of companies in my career and with countless employees, and I would put this team at the top of the top for commitment. I think everyone knows that. There have been a lot of tough times in the last year and we still have a strong team that has stuck it out with Boxvana. That’s the first thing. Then also just the sense of community. That’s part of the reason that I came to Boxvana.

Rupright stated he lived in Pennsylvania and could have chosen to work in many different places, but picked Boxvana because he believes in their product, people and where the company is going.

“As the chief operating officer, I am committed to ensuring that we continue to stay focused on the priorities that are going to drive the organization forward,” said Rupright. “I would just ask you to look forward with us. Obviously, we have some things that we are responsible for, and that’s the reason we are here. I would ask that once we resolve that, we work together to take this company and grow it into something that is amazing.”

Martin County District 2 Magistrate Roger Preece asked if the EDA had other rental prospects for the building.

“Under one administration, the board paid for years,” Preece said. “People told me that they wanted to rent that building, but no. If I heard right, the EDA was out $200,000-and-some on that building just to keep it empty.

“Say you want to put Boxvana out,” continued Preece. “What would happen? Who is going to move into that building? Where are these 14 people going to work? These are Martin County people. You boys are Martin County people. I think that we should give them every chance in the world that we can give them.”

Ayers said the specific issues with the lease date back almost 14 months.

“Our intention is that they come into compliance with the lease,” said Ayers. “Thirteen or 14 people have jobs. We don’t want to see those leave, absolutely. At the same time, this board has an obligation to protect the asset that’s up there of the building, and we have an obligation to abide by the lease that we’ve got.

Ayers said there is a current shortage of buildings throughout the state, and last year was a record number statewide for investments.

“People are now looking for buildings, so there’s that end to it as far as to answer your question,” said Ayers. “But all this is about, and all this has ever been about, is Boxvana complying with the lease.”

Ayers noted that Boxvana owner Harrison Langley was not present at the meeting.

“That would tell me something as well,” said Ayers.

Boxvana foreman Jesse Reed spoke next.

“Mr. Langley had all intentions of being here today, which I would like to discuss but not in a public manner,” Reed told Ayers. “I can’t outdo what Mr. Williams said in his letter. It was a touching letter and all the truth about what we as a team with Boxvana have done in the community.”

Reed informed Ayers that Ed Jolley of Boxvana was also present.

“We, as a team, are stepping up, coming together and making it work,” said Reed. “We want to work with you just as much as you want to work with us.”

Reed asked the EDA to look at the situation “realistically.”

“I know we’re requesting that you drop the rent down, but realistically, as the letter stated, we can’t accommodate 60 employees, let alone 120,” Reed said. “And I know the lease says that, and the lease was signed by the person who runs and owns the company. I understand that just as much as everybody else. And we’ve got to abide by the lease.”

Reed said 120 employees inside the building “would be standing on top of each other.”

“That’s the truth; even with 60, it is,” he said.

“I don’t think that you want to put us out. I really don’t. And I understand that you want to take care of Martin County, but a win-win, if we continue to be in compliance and we are paying rent, is you’re keeping employees here.”

Reed said 74 percent of Boxvana employees are from within Martin County.

Inez resident Joe Ed Maynard stood up for Boxvana, saying the COVID situation, regulations, production and shipment delays worldwide made it difficult for Boxvana to get necessary materials.

“Mr. Crum sitting up there, he had been waiting on a headstone for my brother for I don’t know how long and just got it in,” Maynard said. “But about the situation there, if you don’t have the product, it’s hard to put out. . . . It would be fair to give these guys at least the rest of the year and maybe reassess the rent situation.”

Maynard added that Martin County currently has its own situation with the water.

“We’ve left 40 people behind on Trace Ridge that need water,” he said. “That’s a situation that I think we need to take the opportunity to try to correct. I don’t know how long it’s been; it’s been years. And this situation is no different in that these are our county people.”

Martin County District 4 Magistrate Junior said his son and “four or five boys that live down the road” had worked for Reed at Boxvana.

“Let’s give these guys a chance,” Hunt said.

Martin County District 1 Magistrate Jared Goforth said Martin County should help Boxvana for the sake of employees who might be forced to move out of the county and take their kids out of the schools.

“They deserve a fighting chance,” Goforth said. “We need to do everything we can to help them.”

Martin County District 3 Magistrate Derrick Stepp agreed with the other three magistrates.

“As the other magistrates said, we’re all behind the employees,” Stepp said. “We’ve got to keep these guys at work. We want to look at all different avenues. I know Boxvana has been like a thorn in the side, but if there is a possibility to keep them where they’re at, we should.”

Following an hourlong executive session, Ayers announced the EDA had “a productive conversation” with Rupright, Reed and Jolley.

“The last meeting, or two meetings ago, at the conclusion of that meeting, the motion was for Cumbo at the expiration of the established timeframe to file a legal action in Martin Circuit and District courts in order to enforce the terms of the lease,” stated Ayers. “Do we have at this time a motion for Brian Cumbo not to file legal action, meaning that we will not be filing legal action at this time against Boxvana?”

After two motions and a unanimous vote, Ayers said the EDA would not be filing any legal action against Boxvana “at this time.” He added that modifying the lease would take time.

A spec building working group made up of Ayers, board members Brad Pack and Ashley Endicott, Judge Kirk and Cumbo will meet and negotiate a modified lease. Ayers said the board hopes to complete negotiations by the next meeting April 20.

“In the meantime, Boxvana is to operate as they are,” he said. “There is no legal action coming out of this meeting.”

Under the terms of Boxvana’s lease, Boxvana’s rent was $5,729.17 a month for the period beginning Feb. 1, 2021, and ending Jan. 31, 2022. From Feb. 1, 2022, through July 31, 2025, the monthly rent is $11,458.33.

In addition, Boxvana agreed to create and retain 60 new full-time jobs on or before Feb. 1, 2021 (tier 1 jobs) and 110 new full-time jobs on or before Feb. 1, 2022 (tier 2 jobs). If Boxvana failed to meet the tier 1 benchmark, Boxvana would pay an additional $68,749.98 in six equal monthly installments beginning March 1, 2021. If Boxvana failed to meet the tier 2 benchmark, Boxvana would pay $68,749.98 in additional rent in six equal monthly installments beginning March 1, 2022.

If the number of people employed in new full-time jobs falls below 110 as of Dec. 31 of any year following Feb. 1, 2022, Boxvana’s rent automatically increases by 75 cents per square foot.