This is a disappointing development.
Today, Gibbs International (the parent company of White Mill Development LLC) released the following statement on their White Mill Development blog…
White Mill Development, LLC went into this transaction with the YMCA with high hopes and a willingness to work together with the YMCA and the Danville Regional Foundation to accomplish the goal of bringing the YMCA to the heart of the downtown Danville area, as a significant benefit to current and future members of the YMCA and the citizens of Danville and Pittsylvania County, and as one of the major components of economic development and growth in the downtown Danville area. We believe statistics will show that a vibrant YMCA in an easily accessible downtown area draws current and future members to the YMCA who in turn make maximum use of the facility and the programs offered at the facility, and is essential for development and revitalization in a downtown area. In fact, we had visions of a buzz of activity at the new downtown YMCA from early morning until the late evening, which would lead to a need for new commercial, retail and housing being developed around the White Mill and YMCA projects.
When we were approached by the YMCA site selection committee back in June 2009, we were not actively trying to market or sell any of the White Mill property. However, the idea of having the YMCA on the 4 acre White Mill site was intriguing and was a win/win/win/win situation for the YMCA itself, current and future members of the YMCA, all the citizens of Danville and Pittsylvania County and White Mill Development, LLC. As such, we entered into good faith negotiations with the YMCA for the 4 acre White Mill site, and we signed a binding purchase and sale contract in late November 2009 with a refundable deposit from the YMCA that also included a 120 day due diligence period. Thereafter, we were in attendance at the announcement of the new YMCA site in early December 2009. As information, the 120 day due diligence period was structured in such a way to allow the YMCA to jump start its fund raising effort based on a very desirable site having been selected. At that time, there was significant momentum associated with the YMCA project and a very high degree of excitement because we believe most everyone understood how much of a benefit it was for all parties involved to have the YMCA on this site, for maximum utilization of the facility and programs offered by the YMCA to current and future members of the YMCA, and as a catalyst for development and the revitalization of the downtown Danville area. We believe it is the perfect site for the YMCA and the perfect site for the City of Danville and Pittsylvania County. As previously mentioned, we were not actively marketing the 4 acre White Mill site, but we quickly realized that as a location for the new YMCA, a better site could not be found for the YMCA, itself, for current and future members of the YMCA, and for the City of Danville and Pittsylvania County. The 4 acre White Mill site sits on the latest extension of the River Walk Trail, providing access to a major recreational gem to the citizens of the area, but more importantly, the 4 acre White Mill site sits at the end of the MLK Bridge, right at the gateway and entrance to the downtown district of the City of Danville. We realized that the YMCA locating on a portion of the White Mill property would be a major catalyst to development in downtown Danville by drawing people to the area (current and future members of the YMCA), who would then need to eat and shop downtown, much like what has happened in Greenville, SC, Austin, TX and other cities and towns where downtown economic development and revitalization has really taken root. While downtown economic development and revitalization in the City of Danville is not an obligation of the YMCA nor a direct benefit to White Mill Development, LLC, we as a corporate citizen of the City of Danville and Pittsylvania County realized the tremendous opportunity for the City of Danville and Pittsylvania County, and we worked diligently to help make that a reality for the YMCA and for current and future members of the YMCA, as well as all of the citizens of Danville and Pittsylvania County.
Unfortunately for all of us, and unbeknownst to most of us including our White Mill Development team, there were several members of the YMCA board that were not in favor of this transaction to build a new and updated YMCA on the 4 acre White Mill site, despite the tremendous public support that was demonstrated leading up to the December 2009 announcement, and afterwards. Since the December 2009 announcement, to my knowledge, the YMCA has continued its fund raising efforts to build the new YMCA on the 4 acre White Mill site, but has found it slow going due to the current economic conditions. Despite the current economic conditions, though, we understand that there have been several significant pledges made to this project, and we hope that the 4 acre White Mill site, being the site that had been selected, helped in that fund raising effort. Since the announcement in December 2009, it is also my understanding that the naysayers on the YMCA board have continued their nay saying. In late March 2010, prior to the expiration of the 120 day due diligence period, we received word from the YMCA board that they were having a difficult time raising the necessary funds for the land acquisition of the 4 acre White Mill site under the terms and conditions of our purchase and sale contract, but the Danville Regional Foundation was willing to work with the YMCA board to enable the process to continue to move forward, provided an interim fund raising goal would be met by the YMCA (we believe the interim fund raising goal was $2.7 million, of which $2.0 million has been pledged to date), at which point sufficient funds would be advanced to the YMCA by the Danville Regional Foundation to acquire the 4 acre White Mill site, with fund raising by the YMCA to continue. At this point, we need to be sure to clarify that the purchase price for the 4 acre White Mill site is not $2.7 million. Rather this was the interim fundraising goal that the Danville Regional Foundation had set for the YMCA, that would need to be achieved in terms of pledges, before funds would be advanced to purchase the 4 acre White Mill site. Accordingly, we agreed to amend our purchase and sale contract with the YMCA to extend the due diligence period for an additional 60 days through June 1, 2010, provided the YMCA board was willing to have their refundable deposit become non-refundable over that 60 day extended time period such that on June 1, 2010, the deposit would be fully non-refundable. We felt that it was important at this late stage in the process that the YMCA demonstrate a financial commitment to this project, so there was some “skin in the game” so to speak, especially given the fact that $2.0 million in pledges had already been received against the $2.7 million interim goal set by the Danville Regional Foundation. The YMCA board agreed to this stipulation related to its deposit, and an amendment to our purchase and sale contract was drafted and executed by all parties that still allowed the YMCA to terminate the purchase and sale contract and receive a full refund of its deposit prior to the close of business on April 9, 2010. After April 9, 2010, the deposit would begin to become non-refundable on an incremental basis.
On April 9, 2010, we received a termination notice from Hunter Byrnes with the Danville law firm of Clement & Wheatley (President of the YMCA board) on behalf of Sarah Folmar (CEO of the YMCA) notifying us that the YMCA had decided not to purchase the 4 acre White Mill site and to terminate the purchase and sale contract due to “unresolved issues”. Other than that notice of termination, and a brief conversation that I had with Mr. Byrnes after the fact, we have had only very limited discussions with respect to this project as to what happened, why it happened or how we can work together with the YMCA and the Danville Regional Foundation to try to get this transaction back on track and bring it to fruition. Yet, at the same time, while we have been inundated with inquires, I have had absolutely no negotiations of any sort, with anyone involved with the process, much to my chagrin. Subsequent to the termination notice, we have learned through third parties that the naysayers on the YMCA board had succeeded in convincing a majority of the YMCA board to terminate the purchase and sale contract, under the pretext of the YMCA board exercising its fiduciary responsibility and doing what the YMCA board perceived to be in the best interest of its members, because there was an aversion to having any of the deposit put at risk. It is my understanding that there was also disagreement on some of the terms and conditions that the Danville Regional Foundation put on the funds that would be advanced for the purchase of the 4 acre White Mill site, in the event the fund raising effort was not ultimately successful in the long run. In other words, it appears that the YMCA board, under the pretext of exercising its fiduciary responsibility and doing what the YMCA board perceived to be in the best interest of its members, did not want to take any financial risk on this project and decided to terminate the transaction, rather than risk any of the deposit that was in place when the purchase and sale contract was executed, or face any financial consequences in the future if the fund raising effort was not ultimately successful. This position leads us to think that now, the focus of a majority of the YMCA board is more of avoiding the consequences if the fund raising process is not successful, rather than focusing on what has to be done to insure that the fund raising process is successful; approaching the issue from a negative perspective rather than from a positive perspective. In fact, it is our understanding that several alternate locations are now being reconsidered in lieu of the 4 acre White Mill site, including the Langston site and a portion of the Long Mill site, neither of which will put the YMCA in the strategic center of the downtown Danville area, but both of which can provide an opportunity and a location for a new YMCA. Additionally, we have heard many rumors and innuendoes regarding some of the parties to this transaction, none of which we believe are accurate or helpful to the process, but that do call in to question the character, integrity and business ethics of some of the parties involved, which is a travesty to all, in our opinion. We don’t believe any progress can be made by the YMCA for the benefit of its current and future members, without risks being taken, when stones are being thrown, when there are egos involved or when personal agendas get in the way of progress for the benefit of all. Up until today, we had held out hope that this project could be brought back on track, that cooler heads would prevail. Unfortunately, as of today, it is our understanding that this project has died on the vine, a slow death.
From our perspective, we are very disappointed as to the outcome of this process, having gone into the transaction in good faith, only to have the transaction terminated at the 11th hour because of an aversion on the part of the YMCA board to taking a financial risk, and I think a vast number of current and future YMCA members and other citizens of Danville and Pittsylvania County should, and will, be equally disappointed. It appears that the naysayers finally found an opportunity to stop the process and had been reconsidering alternate sites prior to the termination of the purchase and sale agreement, despite the validity of the purchase and sale agreement that was in place prior to its termination, and despite the fact that these alternate sites were previously considered prior to the purchase and sale agreement having been negotiated and executed. We don’t agree with this course of action on the part of the YMCA board, for obvious reasons, but then again, we are not part of the YMCA site selection decision making process, although we did feel that we were part of the YMCA team at the onset of this process.
To be sure, no progress is ever made without financial risks being taken by the parties involved, and I don’t think this transaction will be any different. An example of this is when the City of Danville took the risk and a leap of faith to install the Mid Atlantic Broadband Fiber Optic service through the center of Danville. The City of Danville made the commitment and spent the money, and there were no known customers of this service at that time. Now, the Mid Atlantic Broadband Fiber Optic service is a catalyst for development in the downtown Danville area. It is the primary reason for the White Mill project. Despite these recent actions on the part of the YMCA board, we will continue as a good corporate citizen in Danville.
Wow. The tone of that press release says it all.
There was almost no chance that the community would have let this YMCA initiative fail. They were looking at very little risk versus one giant reward. It’s a shame that a few people on a 20+ member board of directors use scare tactics and influenced the others to make this opportunity go away.