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Lindley Estes is a business writer for The Free Lance-Star and This blog is on Fredericksburg-area business. Send an e-mail to Lindley Estes.

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Parking would be city’s largest fixed cost at baseball complex

COMPLETE COVERAGE: View all related stories and images on the Fredericksburg baseball proposal

Here is a rendering showing the layout of the proposed baseball complex at Celebrate Virginia South.

Fredericksburg’s debt service on an 1,800-space parking lot at the proposed minor league baseball complex would be between about $500,000 and $800,000 annually, according to the agenda packet for the city Planning Commission’s meeting Sept. 25.

The commission will hold a public hearing starting at 7:30 that night in City Hall to consider adding the parking lot to the city’s capital improvements and comprehensive plans.

The city would likely finance the parking lot, whose cost is estimated between $7 million and $8 million. Some of it could be paid for with cash reserves, according to the planning documents.

The remainder of the upfront costs of the complex would be covered by the Hagerstown Suns and Diamond Nation, which are proposing a 4,750-seat stadium and five turf fields that would be accessed near the current end of Gordon W. Shelton Boulevard in Celebrate Virginia South.

The team’s portion of the upfront costs are estimated at $29 million.

The Suns and Diamond Nation are currently negotiating to obtain the 38-acre parcel in Celebrate Virginia South that was once intended to be home to the long-stalled U.S. National Slavery Museum. Much of the team’s current focus is on obtaining that well-located land along Interstate 95.

The city-owned parking lot would be on land adjacent to the team-owned slavery museum parcel. The city has spoken to the current owners of the additional required land, an affiliate of the Silver Cos., about purchasing it.

Under the deal between the team and city, Fredericksburg would receive half of the revenues from the parking lot. The team would maintain and staff the lot and keep the other half. The city is estimating its portion of the parking revenues at $150,000 annually.

Even with that revenue, the parking lot would be easily the city’s largest fixed cost of the project. The city’s other agreed-upon fixed costs are purchasing $50,000 worth of marketing and advertising from the team per year for five years, and reimbursing the team for police and EMS costs for home baseball games at up to $75,000 per year for 20 years.

All of the other revenues that the city has agreed to give the team are in the form of myriad tax reimbursements that put the burden of performance on the Suns and Diamond Nation. Those incentives could be worth more than $22 million over 20 years, but only if the team performs as expected.

Most of the tax revenues that the Suns and Diamond Nation could get back from the city would come from the stadium complex itself — for example tax revenues from sales of tickets, food, beverages and concessions.

The team could also receive a percentage of the incremental meals and lodging tax revenues that Fredericksburg generates citywide in the first 10 years of the baseball complex’s operations. The exact amount that the team could get from that incentive is still being negotiated.

The city estimates that the baseball complex will result in an additional $2 million in tax revenues annually, much of it from Diamond Nation’s visitors going to area hotels, restaurants and stores. That figure doesn’t include the tax revenues generated at the baseball complex itself.

If those estimates prove true, the city would likely be able to cover its fixed costs from the stadium complex and still have significant new tax revenues, though the exact figures remain unclear due to the ongoing negotiations on the meals and lodging tax incentive.

The city also hopes that the complex will help turn around the struggling Celebrate Virginia development, and provide a new amenity for local residents.