RICHMOND, Virginia (From news reports) -- Virginia is preparing for legal action to recover the remainder of a $5 million grant to Tranlin Inc. for a once-promising plan to build a $2 billion paper mill in Chesterfield County.

The board of directors at the Virginia Economic Development Partnership voted this week to take title of a 58-acre property the Chinese company purchased with a portion of the grant from the Commonwealth Opportunity Fund in 2014 and ask the Attorney General's Office to seek repayment of the remaining money for a project that stalled last year.

Tranlin, operating as Vastly with offices in Charlottesville, had promised in October to repay the loan, but missed its installments in December and January, said Stephen Moret, president and CEO of the partnership.

"Despite being late on its repayment obligations, Tranlin remains in regular contact with VEDP officials, and the company continues to commit to repay its debt," Moret said in an email . "Nevertheless, it has only repaid $150,000 of the $5 million so far."

"They still have a presence in Virginia," he said Friday. "They still have a long-term interest in Virginia, but they're still two years behind schedule."

Tranlin spokeswoman Lisa Randall said Friday: "We're working closely with state officials concerning our repayment of the Governor's Opportunity Fund grant, and we anticipate full repayment as quickly as possible."

"We continue to make steady progress on development of our agricultural markets for fertilizer sales," Randall added. "We are a startup company with the typical early-stage challenges, and we're also a company that has the passion, commitment, and persistence to overcome our challenges and achieve success."

The company, a U.S. subsidiary of Shandong Tranlin Paper Co. Ltd., agreed in August to repay the grant after delaying a project projected to employ 2,000 people in the manufacture of paper products from agricultural waste. Tranlin said the project would be delayed to allow a redesign of the manufacturing process to incorporate new technology already operating in China.

However, Tranlin missed the Oct. 24 deadline to repay the grant. Instead, the company wrote the state a check for $150,000, agreed to a lien on the property and promised to repay the debt in six monthly installments, including interest, of $833,561.

The board voted Wednesday to transfer ownership of the property, valued at $3 million, to the partnership. Tranlin already had given the state a lien on the land.

"Tranlin has committed to help facilitate this transfer," Moret said.

The vote also requested the Attorney General's Office to seek collection of the remaining money due to the state, "after subtracting the value of the land," Moret said. "That shortfall is expected to be less than $2 million."

A new law adopted last year to reform the partnership and its financial incentives for economic development prospects gives the board authority to ask the Attorney General's Office "to collect on clawbacks due that have not been paid," Moret said.

The partnership began the clawback process with Tranlin last year, but the company's failure to make the promised payments escalated the state's efforts this week, he said.

House Appropriations Chairman Chris Jones, R-Suffolk, the chief sponsor of reforms adopted last year on management of VEDP and the financial incentives for economic development projects, said Friday, "Unfortunately, I'm not surprised, given what has occurred over the last year and a half."

"It just highlights the need for the reforms last year with VEDP," Jones said.

Jones said he has introduced legislation in this session to make clear that the board can direct the Attorney General's Office to take legal action on grants, regardless of when the state issued them.

"It was never intended to be prospective," he said Friday. "We will clarify that with a bill I've introduced and possibly with budget language as well."

The reforms adopted last year stemmed in part from a $1.4 million grant made to another Chinese company, Lindenburg Industry, to build a factory in Appomattox County. The company proved to be illegitimate, and VEDP has tried unsuccessfully to recover the money.

Since the reforms, VEDP has changed its process for reviewing potential economic development incentives to base them on risk. In the future, Moret said, the state would provide financial incentives to projects judged as moderately or highly risky only after they are complete, rather than before they begin.

If Tranlin returns with a revised plan for the paper mill, any state incentive would be "a post-performance offer, not an upfront incentive," he said.

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