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This blog includes news about City Hall, city schools and other 22401 news.

Pamela Gould reports on City Hall. You can reach her at 540-735-1972 or pgould@freelancestar.com. Robyn Sidersky reports on city schools. You can reach her at 540-374-5413 or rsidersky@freelancestar.com.

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EDA fees and JumpStart grants

The Economic Development Authority today approved a $25 million issuance of tax-free bonds made available through the federal stimulus act for Kalahari Resorts. The EDA will make a final vote on the bonds at its next meeting–May 24. The matter will go to City Council for approval later this month.

At today’s EDA public hearing on the bonds, Kalahari President Todd Nelson asked that the annual fee of one-eighth of one percent of the outstanding debt balance be waived for his project. You’ll read more about this discussion in tomorrow’s paper, but here’s a little background about where those fees go:

You can read here about how the EDA recently started writing a budget to govern its spending of this money, and how it determines how much it can spend in a year. This year’s budget totals $277,000. See a copy of it here.

The biggest part of the budget is the EDA’s JumpStart grant program. The EDA makes a round of JumpStart grants each quarter.

What kind of projects have gotten money this year? It’s a pretty big range. Grant recipients include:

- The fireworks at First Night.

- The giant omelet that the Sister City Association wants to make to celebrate the anniversary of Fredericksburg’s “sisterhood” with Frejus, France, this fall.

- A study to tell the George Washington Foundation how to get people to visit Kenmore and Ferry Farm.

- A state downtown development association meeting that took place at the downtown Courtyard by Marriott.

- DRMI’s downtown Christmas decorations (city taxpayers also give DRMI money for this).

- The riverfront park grading work the city did last summer.

- The backyard set to open soon at J Brian’s Tap Room.

Several more grants were made today (the last cycle in this fiscal year) and you can read about those in tomorrow’s paper.

The issue of whether Kalahari will have to pay the fees wasn’t resolved at today’s meeting.

Nelson said he is looking at much higher borrowing costs than he had originally planned for, and that waiving the fees would be in the same spirit as the city’s waiver of development fees, and return of 47.5 percent of Kalahari’s tax payments for 20 years. Basically, another form of incentive.

“It’s an unnecessary fee,” Nelson said. “The city has no money in this deal.”

Then a few minutes later, he was a little clearer:

“I think the fee’s ridiculous.”

EDA member Rick Pullen replied: “We use the money for economic development in Fredericksburg. So we don’t think it’s ridiculous.”

Then Chris Hornung, an EDA member who works for the Silver Cos.–and abstained from today’s vote–suggested that the marketing Kalahari would do to draw people to Fredericksburg is exactly the kind of thing that the EDA wants to encourage with the projects it gives grants to, anyway.

“In my opinion, it seems like a lot of what you do to bring people to that project will be benefiting the city,” Hornung said.

Read more about this discussion, and about the JumpStart grants, in tomorrow’s paper. In the meantime, any thoughts on whether Kalahari’s fees should be waived, or on how the EDA chooses to spend that money?

[And while we're talking about incentives, in case you were on spring break last week, here is a story we ran on the nitty-gritty details of how the city is managing the incentives deals it already has in place.]

Permalink: http://news.fredericksburg.com/citybeat/2010/04/12/eda-fees-and-jumpstart-grants/

  • ellis

    I could say that if someone balks at paying a small % EDA fee then they might not be the good neighbor we think we are getting… but I won’t. Kalahari should have done their homework as MWH paid the fee. I heard of one other hotel that refused to pay the fee and ‘strongarmed’ some EDA members who voted to not charge the fee. Interesting as there are some of the same players. Bet the EDA members phones an email will be busy tonight.

  • Rufus

    Could it be another scam? What if Kalahari is never built?
    Could Kalahari be just an excuse for people to invest $50 million dollars, and make a fortune in tax-free interest- all the while knowing that the resort will never happen? I would think in that case, that ALL the interest should become taxable with full IRS penalties.

  • LarryG

    I don’t disagree but I have to say..reading through the things that are funded…to be honest.. I was taken aback a bit wondering if these was money floating around without a defined purpose…

    sorry.. that’s just the way it hit me…

    …..aiyeeee…. that capcha is crappta

  • LarryG

    I don’t think Kalahari is a scam at all but I think that the realization that places like Fredericksburg need to be entrepreneurial – which means accepting some shared risk – that idea is not accepted by more than a few.

    Economic development has become highly competitive and deals are the standard now days.

    If you don’t play then you’ll more than likely lose out to the competition.

    Businesses no longer come with hat-in-hand asking if they can locate… you have to chase them … and you have to be willing to accept the fact that some of the may well fail.

    If Kalahari ever does get going, I’m convinced 5 years from now.. the current naysayers will be nowhere seen…

    If Kalahari “works”, it will save the taxpayers of Fredericksburg many cents on the dollar of the tax rate just as Central Park has.

    Fredericksburg citizens have to decide if they want to be a small, insular community willing to pay high taxes for services or if they are willing to “rent” out part of it to businesses that will bring in sales and other taxes from non-Fredericksburg visitors.

    Of course the proverbial fly in the ointment is that there seems to be no unanimous view of which path to take…eh?

  • navyorchid

    Why don’t we just pay for them to build the waterpark, pay all their operating bills, and let them keep the money they make in ticket sales! Obviously Fredericksburg has the money!

  • ellis

    There is no risk to the City, only to the bondholders. The City is not putting up a dime of the bond monies. This is a big risk to Kalahari. Who stands to win the most in the short term. Follow the $$$.

  • Brian

    I think it is ridiculous that the Fredericksburg EDC is so gullible as to be strung along for several years by a water park company that is making money but has yet to break ground. This is starting to look like the Slavery Museum fiasco. The people of Fredericksburg have given enough to this character. There needs to be a final offer take it or leave it. If Kalahari keeps dragging this out for more incentives, they are tying up this property which could be used for other more lucrative and job-producing ventures. And this is coming from someone who was until reading this article “pro water park”.

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