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Incentive packages become routine page 2
Kalahari is just the latest of many incentive deals


Date published: 1/13/2008

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In addition, it will return 25 percent of the new sales tax money generated by any expansion of an existing department store at the mall.

Spotsylvania also offered incentives to entice outdoors retailer Gander Mountain to move into the old Wal-Mart building on State Route 3 in 2004.

Under that agreement, the county is to return to Gander Mountain half of its local sales taxes from 2005 until 2012.

Both of the Spotsylvania plans use percentages similar to the city's Kalahari deal to determine the amount of incentives to give their target businesses.

But both of the county plans only use the sales tax as the basis.

The city, on the other hand, will return money to Kalahari that's equal to 47.5 percent of its business license, real estate, meals, lodging, admissions and local sales taxes.

But the Kalahari project is also more than twice as big an investment as either of the Spotsylvania projects.

Kalahari plans to invest more than $225 million in the initial phase of its 700-room resort. Within 10 years of opening, it must invest another $25 million, or the 20-year incentives deal becomes a 10-year deal.

Gander Mountain was required to invest $2 million in the old Wal-Mart building, and the Towne Centre is a roughly $100 million project.

TYPES OF INCENTIVES VARY

These "grants" of a percentage of a business's tax bill are only one type of incentive Virginia local governments use to attract projects their officials believe will benefit their economies.

To entice Great Wolf Lodge to locate near Williamsburg, York County gave it a flat $300,000 grant when it got its occupancy permit, along with $60,000 toward some soil improvement work that was needed.

York County Economic Development Director Jim Noel said the county got its grant back within three months of Great Wolf's opening.

The hotel has since expanded, but the first phase of its project constituted a $64 million investment.

"Great Wolf Lodge was the biggest incentive we've ever provided," Noel said.

Another tool localities can use to help business projects along is what's called a community development authority.

That's what Hanover County created to assist a large retail development on Interstate 95 that will include a Bass Pro Shops.


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WHAT: Public hearing on Kalahari incentives WHEN: Tuesday at 7:30 p.m. WHERE: City Council chambers in City Hall, 715 Princess Anne St.

In addition to the Kalahari deal, the city has also used forms of incentives and public-private partnerships on the following projects: SLAVERY MUSEUM: In 2002, the city agreed to give the museum $1 million. That money was to be spent on "governmental services," per the agreement between the city and the museum. Museum staff reported that the money was spent on promotions, educational projects, programs, offices and various engineering and environmental plans. It was paid back to the city, with interest, by the landowners in Celebrate Virginia, through a special tax district. That district did not include the Slavery Museum, which is tax-exempt. INFRASTRUCTURE: The roads and utilities infrastructure in Celebrate Virginia was built by the Silver Cos., using a Community Development Authority. That allowed Silver to access tax-free bonds to build $25 million worth of public infrastructure in the development. The debt is being paid back by the landowners in the complex through a special tax district, not by the city. WEGMANS: Last summer the council approved a deal to waive $1.7 million in business license taxes over 10 years to lure a Wegmans grocer to Celebrate Virginia. EXPO CENTER: Council members are considering granting the Expo Center $225,000 a year over three years, if the center meets certain benchmarks. The grant is intended to help the private center compete with publicly financed convention centers in the state. The council will discuss this at its Jan. 22 meeting.

NOT JUST TAXES In addition to the 20-year agreement to return 47.5 percent of the resort's local taxes, the Kalahari incentives package also includes: FEE WAIVERS: The city will waive $3.35 million in upfront development fees for the project. WATER AND SEWER RATES: Kalahari will pay reduced water and sewer rates that basically amount to the city's cost of providing those services to the resort.