By now, most of you have probably read the story in the Free-Lance Star that discusses the potential for the Board of Supervisors to increase tax incentives to the developer of Aquia Towne Center. If you don't have access to the story, here is a short summary of the issue.
Basically, back in May of 2015, the BoS voted to give the developer of ATC, Mosaic, what is described as Tax Increment Funding or TIF. This means the county would give the developer 75% of the tax revenue earned by the businesses in ATC over a period of 15 years until a total of 6.25 million was reached. Recently, however, Mosaic has had problems securing their anchor grocery store Harris Teeter and has asked for the BoS to increase the TIF to 18.25 million over a 30 year period with 80% of tax revenue heading back to developer until the cap is reached. It is important to note this funding is not ONLY for Harris Teeter but for all development at ATC. That sounds like a lot of money but folks, the story gets so much worse. Let's go back to the start of this nonsense, May 5th, 2015.
If you don't remember hearing about the original 6.25 million dollar TIF agreement in May of 2015, you aren't losing your mind. The TIF agreement wasn't on the May 5th agenda . It was, however, discussed in closed session (i.e. not in front of the public) and according to the minutes (scroll to page 22 for Resolution R15-192) was voted on and approved during that very meeting! But how could they do that, with no public discourse? The State Code of Virginia is very clear on the process the county needs to take in order to issue a TIF. It says:
§ 58.1-3245.2. Tax increment financing.
The governing body shall hold a public hearing on the need for tax increment financing in the county, city or town prior to adopting a tax increment financing ordinance. Notice of the public hearing shall be published once each week for three consecutive weeks immediately preceding the public hearing in each newspaper of general circulation in such county, city or town. The notice shall include the time, place and purpose of the public hearing, define tax increment financing, indicate the proposed boundaries of the development project area, and propose obligations to be issued to finance the development project area costs.
But there were no public hearings because the BoS decided to use another section of Virginia Code to circumvent public involvement.
§ 15.2-953. Donations to charitable institutions and associations, volunteer and nonprofit organizations, chambers of commerce, etc.
A locality may make like gifts, donations and appropriations of money to industrial development authorities for the purposes of promoting economic development.
Here we go again with shady "gifting." The BoS was planning on "gifting" the funds to the county's Economic Development Authority who would then give them to the developer. This is all technically legal and has the added benefit of keeping snoopy voters like you and me from intruding. But why is this coming out in public now? Why didn't the BoS just do the same thing they did last time when the developer came back and asked for more? Well...
In August 2016, there was a change to the BoS by-laws prompted by Meg Bohmke and Bob Thomas, supervisors from Falmouth and George Washington districts respectively. The change stated the following:
"Section 3-3 New Business: No matter which is designated as new business on the agenda, or which was not added to the agenda within the deadline for doing so, may be voted on at its first reading unless it is time-sensitive and two-thirds of the members present at such meeting consent to such vote. Otherwise, the matter shall be carried over to the next Board meeting"
This change means that BoS members can't add new things to the agenda on the same day of the meeting and then immediately vote on them, they have to wait and have them put on the agenda for the next meeting. Either that, or they have to have a 5-2 majority to override the by-laws. No more sneaky loopholes! Hurray for transparency!
Back to today...now, the BoS can't just slide this request in last minute, discuss it behind closed doors and approve with no one the wiser. It is on the June 20th agenda as new business. If you look at the agenda item, you will see that the county is using the same justification it did last time, giving donations to the EDA to circumvent the need for public hearings. The reasoning behind the BoS taking this approach is that the area should be considered a "redevelopment area" and that may be true, but it has not been defined as such in the Stafford County Comprehensive Plan. Hence, the desire for the BoS to move quickly and without all the accompanying public opinion that gets in the way. Honestly, I can understand why they are trying some backdoor methods because when you look at this deal, it is completely ridiculous. The FLS article hinted at why but let me lay out a little more evidence as to why this deal is not a good one for Stafford County.
1) Developers request for 18.25 million over 30 years 80% of tax revenue, up from 6.25 million 75% tax revenue over 15 years:
These figures don't really tell the whole story. This 18.25 million would be paid out sort of like you pay your mortgage, in that you pay a lot more than you initially borrow. For example, let's say the ATC makes 1 million it's first year in tax revenue and get 80% back, as per the new proposal. That's 800K we no longer owe BUT we pay interest at 5% on the rest that we do owe! That gets added to the total every year until we are paid off. This is where the 30 million number comes from in the FLS article, the true amount we could potentially pay this developer over 30 years, a number which by the way was produced by Stafford County staff. And just for a little perspective, from the June 20th Agenda Item "WHEREAS, Mosaic would use these funds to go to construction on approximately 167,000 square feet of new commercial space at an estimated cost of 55 million." So, the developer could get 30 million OR more (we'll get to that in a minute) for a 55 million dollar development. Sweet deal for them, not so great for Stafford County taxpayers.
2) No "High End Retail" language: There is no language in the proposal that requires the builder to bring any high end retail to the development. Harris-Teeter is being discussed but has not been cemented, which is the whole reason the developer has come back and asked for more money. If the BoS grants the TIF and Harris Teeter backs out anyway, the developer STILL gets that 30 million. They could bring Big Lots back to ATC and get that county money.
3) Meal Tax projections are too high: The tax revenue projections were done by an independent company called Renaissance Planning Group. According to county documents, their assumptions on meal revenues generated by restaurants are far too high. From the notes during the closed BoS session regarding the TIF: "Commissioner of Revenue has pointed out that we do not have any restaurants in Stafford that report annual revenues..used by Renaissance of $530 per square foot. The best Stafford has received in the past is $344." So, these projections could be far off and if they are under, remember, we will be paying that 5% interest annually until that initial 18.25 million is paid. Meaning the number could go even higher than 30 million.
4) Speaking of Meal Taxes: Even if the projections of meal tax revenue from new restaurants is low, that money should still be going to schools and not back into the developers pockets. From the Stafford County FY2018 Budget Book :
Clearly, this money is intended to go strictly to schools according to the Code of Virginia. It is possible there is a work around here, potentially meal revenues would not be included in the 80% headed back to the developer. But again, any provision for this would have to be formally outlined.
Guys, I live in Stafford and I would love to have some vibrant, exciting new retail in ATC just like everyone else. It is such a sad reminder of some seriously bad planning on the county's part, it needs to be addressed. But this isn't just giving the shirt off our backs, it's giving all your clothes down to your undies. It is certainly not a "no lose proposition" like Chairman Milde stated in the FLS article. At the very least, there are risks and I think if nothing else the community has a right to a public hearing. Maybe the community wants this development and is willing to make this huge outlay of funds to get ATC back on track. But I don't think anyone wants the BoS to accomplish their objectives by hiding behind closed doors and circumventing the process to grant TIFs as outlined in the Code of Virginia. The money these Supervisors are playing with is not theirs, it is yours, the taxpayers. We have every right to be heard and they have no right to conduct shady, backroom deals. Oh, and elections are right around the corner: if we don't like the way the game is being played, we can always change the players.
No matter what your opinion is on this development deal, please contact ALL of the Supervisors and tell them your thoughts. It is not enough to post an angry message on Facebook, you must contact them directly. Here are their emails, for easy cut and paste:
There is a potential they could vote on this on Tuesday so please, contact them straight away and tell them how you feel about this development deal.