Archives

THE NEWS DESK

Share
RSS feed of this blog

TAX DISTRICT TO SUPPORT BASEBALL LOOKS LIKE A NONSTARTER

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

A proposal to levy a significant new real estate tax on Central Park and Celebrate Virginia South to finance a multipurpose stadium in Fredericksburg received overwhelmingly negative feedback at Tuesday night’s public hearing.

And it came from the two largest property owners in Central Park and the majority owner of the Hagerstown Suns himself.

The feedback appeared to convince the Fredericksburg City Council that the tax plan as originally proposed is a nonstarter. The council then debated whether a much smaller tax should be part of a new financing plan that will be negotiated over the next month with the Suns, or whether the tax district should be scrapped entirely. The initial financing plan put forth for the 5,000-seat stadium earlier this year called for a new tax of as high as 32 cents per $100 of assessed value on most of Central Park and the developed areas of Celebrate Virginia, where the stadium is proposed.

There are other sources of revenue projected from the stadium, but not nearly enough in the original plan to cover debt service on a facility that would require as much as $33 million in bonds being issued by the city.

The logic expressed for the tax district originally was that the stadium would boost business at Central Park and Celebrate Virginia. A case was also made that the 32-cent tax would be lower than the rates on any of the four service districts in Spotsylvania County, where the 88-cent general real estate tax rate is 14 cents higher than the city’s.

But there are differences between the service districts in Spotsylvania—which paid for traffic improvements around Harrison Crossing, Cosner’s Corner and the Spotsylvania Regional Medical Center—and the one proposed to finance a large part of the Fredericksburg stadium. Many affected property owners and businesses in Central Park and Celebrate Virginia have questioned exactly how much the stadium, which the Suns would use, would benefit them.

CONCERNS ABOUT THE TAX

Senior vice presidents at Central Park’s two largest property owners, Clarion Partners and The Rappaport Cos., spoke publicly about the proposed tax district for the first time at Tuesday night’s public hearing. in front of the council.

James L. Dean II, representing Clarion, said he would love to see baseball in Fredericksburg, but he doesn’t think the stadium will significantly help Central Park. He expressed concern that the new tax could reduce property values in a time when retailers are struggling amid a shift toward online shopping.

He also pointed out that people assume the tax can be passed down to tenants but said those tenants could always pack up and go elsewhere if rates got too high.

Dean also said it was “arbitrary and unfair” to exclude from the tax district the undeveloped land at Celebrate Virginia South, which is owned by principals of the Silver Cos. Under the original plan, those parcels would be added to the tax district as they are sold and developed.

There are millions of dollars worth of tax delinquencies on those undeveloped Celebrate Virginia properties due to a sluggish economy that followed a $25 million Community Development Authority bond sale in 2006 to pay for the development’s roads, utilities and other infrastructure.

Charlotte Strain, Rappaport’s senior vice president of asset management, told council members that everyone she has spoken to at Central Park has expressed concern about the tax district. Strain, who made clear at the beginning of her remarks Tuesday that she wasn’t speaking on behalf of Rappaport, said she would like to see alternative financing. Bruce Quinn, the majority owner of the Suns, a Class A affiliate of the Washington Nationals, led off Tuesday’s public hearing by saying he doesn’t support a 32-cent tax district either. He called for a rate of 15 cents or less and said the people who are using the stadium should be the ones paying for it.

He previously brought up the idea of putting a surcharge on each ticket that could cover a significant portion of the debt service.

“It’s not fair for established businesses to pay the bulk of this,” Quinn said.

He did add that he thinks the stadium will drive more business to Central Park.

Quinn was reluctant to have the public hearing in the first place, saying there is no final proposal on the table at this time. He wanted Tuesday’s discussion to instead gauge whether there was public support for minor league baseball locally.

In fact most speakers said they’d like to see baseball locally, though there was little support for the original financing plan.

COUNCIL WEIGHS IN

Among council members, there was also broad agreement that the 32-cent tax was unworkable, but no consensus about whether a tax district should be a component at all in the counter-proposal.

Councilmen Fred Howe and Brad Ellis were appointed by their colleagues Tuesday night to form a negotiating committee along with City Manager Bev Cameron in an effort to work out a deal with the Suns before the council’s Aug. 13 meeting.

The city recently put out a request for proposals looking for a firm to help evaluate and negotiate a lease with the Suns, and Cameron said the winning firm will probably be selected by the end of the week. The council previously allocated $50,000 toward the evaluation process. The money came from contingency funds in the fiscal year budget that ended June 30.

Mayor Mary Katherine Greenlaw said she wouldn’t support a tax district at all and said any successful proposal needs much more investment from the team.

The Suns have offered to lease the stadium for 30 years at a rate of $105,000 a year, split the stadium naming rights with the city and annually contribute 15 percent of its net profits above $700,000. The team has also offered $3 million up front, which could be used toward land acquisition or other project costs.

Ellis and Howe both said they wouldn’t support a 32-cent rate, but neither indicated that they wanted to take a tax district off the negotiating table entirely. Councilman Matt Kelly said he has been speaking with Central Park property owners, including Dean and Rappaport officials, and indicated that they might be willing to accept a smaller rate.

Councilwoman Bea Paolucci did not weigh in on the tax district at Tuesday’s meeting, and Councilwoman Kerry Devine was not present.

Spotsylvania tax districts have record of success

Special tax districts have been used to finance improvements in several Fredericksburg-area developments, including Celebrate Virginia North and South. A Community Development Authority special tax district has also been proposed at Embrey Mill in Stafford County.

Spotsylvania County has created four separate service districts since 2007 for road improvements around Harrison Crossing, Cosner’s Corner and the Cosner East development near the Spotsylvania Regional Medical Center. The Silver Cos. is or was the developer for all of those projects, as is the case for Central Park and Celebrate Virginia.

Spotsylvania has issued a total of $16.1 million in general obligation bonds or short-term notes since 2007 for the projects for which the four districts were created. All of the financing is now through general obligation bonds.

Among the work that the bonds paid for between 2008 and 2010 was State Route 3 and Harrison Road widening, as well as new signal lights at Harrison Crossing, realignment and reconstruction of U.S. 17 between Interstate 95 and U.S. 1 at Cosner’s Corner, the extension of Spotsylvania Parkway over I–95 to the hospital, and the construction of Hospital Boulevard connecting Spotsylvania Parkway and U.S. 17. Property owners in the four districts pay for the debt service on the bonds that were issued. The additional tax rates in those districts range from 33 cents to 65 cents per $100 of assessed value.

According to county records, there are only minor tax delinquencies in those four districts: a combined total of roughly $8,350 in unpaid taxes for the first half of 2013.

Bill Freehling: 540/374-5405

bfreehling@freelancestar.com

 

Permalink: http://news.fredericksburg.com/newsdesk/2013/07/10/tax-district-to-support-baseball-looks-like-a-nonstarter/