BRISTOL, Va. — The city’s Industrial Development Authority on Friday finalized a state financial incentive for American Merchant.

The IDA board voted 5-0 to accept the $300,000 Commonwealth Development Opportunity Fund grant from Gov. Terry McAuliffe that will be directed to American Merchant once the company is operating. It is the same incentive the City Council approved 4-1 on Tuesday night.

Last month, American Merchant acquired the vacant former Ball Corp. plant, where it intends to establish a luxury towel manufacturing and distribution business. To qualify for the state grant — which comes from the state’s general operating fund — it must invest nearly $20 million in the project and hire 405 employees.

“There are a number of grants they’ve secured, but they all come with performance criteria measurements they have to meet — a nearly $20 million investment and 405 jobs. Just imagine the ripple effect — not just for Bristol but for our entire region,” IDA Chairman Paul Conco said.

The company will also receive a separate $590,000 grant from the Virginia Tobacco Commission — which also requires financial investment and minimum levels of hiring — and a $500,000 grant from the Appalachian Regional Commission. Announced last Friday, that grant is earmarked to construct a water treatment system to pre-treat water used in the manufacturing process before it enters the sewer system.

The IDA wasn’t required to act on the Tobacco Commission grant, and paperwork for the ARC grant hasn’t arrived.

The city’s agreement with American Merchant includes a deed of trust that spells out the building would transfer to the city if the company is unable to fulfill its commitments or ceases operation. That is to protect the city, according to interim Economic Development Director Bart Poe, since the tobacco grant includes clawback provisions.

“The deed of trust protects us [city] in the case of catastrophic meltdown, say the company took the money and walked,” Poe said. “But they [business] won’t get any monies until they meet certain milestones. It’s our job, as financial stewards of that money, to make sure they meet those milestones.”

The city will rely on two different sources to verify employment and investment levels, Poe said.

“It’s very exciting. A lot of due diligence has been done, performance measurements, they’ve done that deed of trust so — if some crisis happens in the future, and they pull out — the building reverts to the city, and it’s a great asset,” Conco said. “There are no guarantees, and any business has a risk to it, but I’ve met with the owner, I’ve met with the directors. I feel they are committed, and they, of course, want to succeed. Our job is to be as supportive as we can because, when they succeed, we’ll succeed as well.”

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