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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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House passes bill to support Fredericksburg baseball complex

MORE: Read more news from Fredericksburg

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

The Virginia House of Delegates on Wednesday passed a bill that would allow the city of Fredericksburg to capture additional revenue from its planned minor league baseball complex.

State law allows certain localities, including Fredericksburg, to retain a portion of state sales tax revenues generated at minor league baseball stadiums to help pay off the bonds issued to build them.

That “clawback” allows the locality to get 3.5 percentage points of the state sales tax revenues collected at the publicly owned stadium.

The financing plan for the 5,000-seat minor league stadium planned at Celebrate Virginia South for the Hagerstown Suns, as well as the adjacent fields that will be used for Diamond Nation softball and baseball tournaments, calls for the private sector to cover most of the development costs and be supported by tax incentives and fee waivers.

The city of Fredericksburg has agreed to develop the parking lot for the complex, but that cost is expected to be about $8 million compared with a private sector contribution that has been estimated at $29 million.

Because of the unique structure of the Fredericksburg financing setup, the state’s Department of Taxation advised the city to seek supplemental legislation to ensure that it could receive the clawback under the statute.

The House bill would allow Fredericksburg to capture 3.5 percentage points of the state sales tax revenues collected at the complex. The bill passed the House 96-4, with Republican Del. Mark Cole casting one of the four “nays.”

The state Senate previously approved the bill, which will become law July 1 assuming Gov. Terry McAuliffe signs it.

The clawback revenue can be applied only to repay the bonds issued to build the “municipality-owned component of the sports complex.”

In the original incentive agreement struck with the Suns and Diamond Nation, the city of Fredericksburg agreed to return the clawback revenue to the private investors to help pay for their portion of the complex.

Because of the way the bill now stands, the city plans to apply the state sales tax clawback to its debt service on the parking lot, and then to pay an equivalent sum to the team in the form of an incentive grant. The net effect would be the same as under the original incentive agreement.

The 38 acres on which the stadium is planned is where the U.S. National Slavery Museum was once anticipated. It borders Interstate 95′s southbound lanes and overlooks the Rappahannock River. The baseball investors have said they will buy the land by the end of March and try to have the complex ready for the start of the 2015 season.

The Suns, a Class-A affiliate of the Washington Nationals, would then relocate to Fredericksburg from Hagerstown, Md.