TIF stands for "tax increment financing." That is a mechanism governments can use to pledge the future revenues from a tax base that is expected to increase to pay for a public project.

City Attorney Kathleen Dooley has defined the public project in this case as, "the commitment by the Fredericksburg Economic Development Authority to pay Kalahari a performance grant, in return for it selecting Fredericksburg for the location of its new Virginia resort."

To do this, the city will have to adopt an ordinance that sets boundaries on a specific "TIF district" for this project. That ordinance will dictate that all new revenues that the land, buildings and businesses on that district generate after Kalahari opens for businesses will go into a designated Kalahari TIF fund.

Of that money, 47.5 percent will go to the EDA, which will give it to Kalahari as its incentive grant. The rest will revert to the city's general fund.

All of the revenue that the land is generating now will not be subject to the 47.5 percent rebate.

Jud Honaker, president of commercial development for the Silver Cos., took issue yesterday with mayoral candidate and Councilwoman Debby Girvan's claims that Fredericksburg "can't afford" the incentives package it is offering to Kalahari Resorts.

"One of the candidates in this year's race keeps saying over and over again that the city can't afford this deal," Honaker said. "The city can't afford not to do this. This is all new revenue the city needs."

Honaker then added, "A vote against Kalahari is a vote for future tax increases."

Girvan has said publicly that the Kalahari incentives package, under which the city would return to the resort 47.5 percent of the new tax revenue it generates over 20 years and waive several development fees, is out of proportion to what the city will get from the more than $225 million project.

"I'd ask him if he would approve this if he were on council," Girvan said. "I think he would have driven a harder deal than this."

Honaker said the new revenue that Kalahari is projected to generate--which would be just over $3 million a year, based on the resort's estimated tax payments, after the incentives are paid out--is crucial to funding city services in the future.

Proponents of the Kalahari project on the council have pointed to flagging sales tax numbers as a sign that the city needs a strong tourist attraction to broaden its tax base, and to keep homeowners from having to shoulder the soaring costs of local government through the real estate tax.

But Girvan said she doesn't think all of the potential costs the project could add to city operations have been exposed.

She acknowledged that many of the costs she brought up--a third fire station and improvements to Fall Hill Avenue among them--would be necessary regardless of whether Kalahari comes to town, but said she thinks the city has "settled for" the deal it's struck with Kalahari, and that it has compromised too much.

Mayor Tom Tomzak, Girvan's opponent in the May 6 mayoral election, said the costs to the city have been studied and presented publicly, and "there is a very positive balance."

He agreed with Honaker.

"If we don't have tourism as our economic engine, we are going to have to look at other options," he said. "That is a distressing thought."

--Emily Battle

The City Council will hold a public hearing on the proposed TIF district, as well as the performance agreement that will govern the Kalahari incentives, on April 8 at 7:30 p.m. at City Hall.

THE KALAHARI INCENTIVE DEBATE