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.]

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