Tax rebate new twist to downtown Blacksburg development plan
BLACKSBURG, Mar 29, 2013 (The Roanoke Times - McClatchy-Tribune Information Services via COMTEX) --
A request for a 25-year tax rebate on development at the old Blacksburg Middle School is further roiling discussion of the long-debated project.
Blacksburg and Montgomery County officials who could be contacted Friday said they did not support a request from Fiddler's Green Partners for public money to help turn a 20-acre piece of downtown Blacksburg into Midtown Village, a proposed complex of offices, apartments, a hotel and restaurant -- and also public parks, paths, roads and a parking deck.
But attorney James Cowan of Blacksburg, who represents the developer, said assistance will be needed to carry out Fiddler's Green Partner's proposal to earmark more than 40 percent of the old school site for public use.
"This would not happen without significant public investment ... That's what it takes," Cowan said.
The old Blacksburg Middle School site has been a sore point for local officials for years. Owned mostly by Montgomery County but with the zoning that controls its development determined by the town, the site has long been hailed as either the key to relieving county budget pressures or to launching downtown Blacksburg into a new, vibrant era.
The future of the site on South Main Street has been tied up between county supervisors' hopes that they can raise millions of dollars from a sale and subsequent taxes, and town council members' vision of appropriate development for the only large open space left in central Blacksburg.
Supervisors, who had to spend years convincing the school board to give up the school site, have more recently groused about town foot-dragging. Town council members have complained that the county was hasty in accepting Fiddler's Green Partners' plan without a national search to see what other offers might emerge. The town and county worked together in 2011 to create a master plan for the site that calls for a mix of commercial and residential use, along with parks and other features that Fiddler's Green Partners says are contained in its proposal.
Ideas were floated and abandoned through last fall and the winter. But on Wednesday, Fiddler's Green Partners turned in a rezoning application and the Midtown Village development proposal for Blacksburg officials to consider. The proposal came with cautionary notes that many details, such as building sizes and uses, could change when actual tenants are found. But if town council approves rezoning the old school site, it would let Fiddler's Green begin what is envisioned as a five- to 10-year build-out, developers said.
Fiddler's Green Partners also filed a draft memorandum that asks for public help in several areas of the proposed development.
It asks that the town and county rebate half of real estate, meals, lodging and other taxes on the development for 25 years.
Council members had a sharp response to the request Friday.
Blacksburg Mayor Ron Rordam wrote in an email Friday that he "would find it difficult to support a tax rebate" and wanted to know more about why Fiddler's Green thought the support was justified.
In another email, Councilman Michael Sutphin wrote that the requested rebate was too big. Also, "The draft memorandum ... doesn't specifically say that the developers would dedicate the tax rebate money to infrastructure on the site," Sutphin wrote. "Under this agreement, the developers could conceivably just pocket the money."
County officials have said as recently as a statement released last week that the project could bring in $1 million in annual taxes for the county and town. Cowan used a range of $700,000 to $1 million Friday, but estimated that after the project is fully built, the rebate would amount to $350,000 to $500,000 per year.
Cowan said the developer is likely to spend $50 million to $60 million developing the property.
The draft memorandum also asks that the town apply for Virginia Department of Transportation matching funds to build the public streets in the development. Cowan said the developer would give the town half the cost of the streets to trigger state payment of remaining half, and would agree to deed the streets to the town when they are built.
The Midtown Village proposal sets aside an area designated as the "Flex-Housing Block" for residential development aimed at senior citizens, workers at Midtown Village businesses, or for moderate- or low-income families -- all groups for which the town has tried to improve housing opportunities. The developer's draft memorandum says it would be up to Blacksburg to construct this housing, and that the town would have to buy the land for it from the developer at the price the developer paid to acquire it.
Contracts between the county, Fiddler's Green Partners, and Modea -- the ad agency that was to construct a $10 million headquarters on the site before reducing its plan to renting offices -- set the purchase price for the old middle school site at about $5.1 million. Jeanne Stosser of SAS Builders, the managing partner for Fiddler's Green, said last week that that cost likely would be renegotiated as developers get a better understanding of what is economically feasible for the site.
Cowan said today that the developer will pay up front for parks and other public improvements. A tax rebate offers a less-risky way for the county and town to contribute than would, for example, a loan raised by selling bonds.
"They only have to pay the rebate as (cq) there's tax revenue," he said.
Some means of public help is needed to build the parks and other facilities that will be dedicated to public use, Cowan said. Whether the help will be quite in the manner described in the draft memorandum will be up to ongoing discussions, he said.
"You've got to start that conversation somewhere," Cowan said.
Two county supervisors said Friday that they saw little chance for approval of a rebate on the scale requested.
"I wouldn't support something like that," supervisors Chairman Jim Politis said.
"It is my opinion that this request is not even close," echoed Supervisor Bill Brown in an email.
But both supervisors said they were completely willing to talk about some sort of incentive. Politis said it is common for the county to consider tax breaks for economic development prospects, although he said they are usually linked to a performance requirement and added, "I've never seen one that large."
He and Brown emphasized that the developer's draft memorandum was just that, a preliminary version that neither local government had approved.
Brown predicted that if the town approves a rezoning for Midtown Village, there will be a lively debate about incentives.
"I believe we will keep the county's primary goal at the forefront of any kind of ... discussion, and that primary goal is to maximize the return on this property," Brown wrote.
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