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Kalahari details are work in progress page 2
Kalahari hearing, vote pushed back as city eyes tax increment financing

Date published: 3/7/2008

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Dooley said outside counsel the city hired with the Richmond-based Troutman Sanders law firm found the legal basis for this much less common use of TIF.

The state TIF laws permit localities to use this tool to pay down debt on public infrastructure or to finance "development project costs."

"Development project costs" are defined as including "the purchase price of any project."

And the legal definition of "project," in turn, includes "any undertaking for which the locality is authorized by law to appropriate money."

State law allows localities to give money to their economic development authorities for grant programs to attract businesses.

Dooley said that's the "undertaking" that this TIF will finance.

So under this framework, Kalahari would pay its taxes to the city. The city would put the difference between the tax revenue Kalahari's 49 acres generate now and what they would generate after the hotel opens into a special TIF fund.

The city would transfer 47.5 percent of that money to the EDA, which would give it back to Kalahari. The rest of the money in the TIF fund would go into Fredericksburg's general fund.

George Scruggs, a Troutman Sanders attorney who consulted with the city on this, said he wasn't aware of any other Virginia TIFs that are financing incentive grants, "but that doesn't mean it's not happening somewhere."

Emily Battle: 540/374-5413
Email: ebattle@freelancestar.com


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CHANGES The news: The city has delayed a public hearing and votes on the agreement that will govern Kalahari's incentives.

The reason: That agreement isn't ready yet, and since the city has decided to use tax increment financing to distribute the incentives, it will have to hold two public hearings: one on the incentives agreement, the other on creating a TIF district.

The upshot: The Kalahari hearings will be April 8 at 7:30 p.m. at City Hall. The council could take the first of two required votes on the incentives April 22, with the second vote May 13.