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City grapples with incentives
City approach to incentives still evolving

 Fredericksburg is considering tax incentives to lure Kalahari Resorts to the city.
ROBERT A. MARTIN/THE FREE LANCE-STAR
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Date published: 4/6/2008

BY EMILY BATTLE

Last July, Fredericksburg City Council unanimously approved an ordinance and a set of guidelines to allow it to use incentives to lure businesses.

In the nine months since then, the council has considered four major projects, and tax-based incentives have become the subject of heated debate.

They've also become a central issue in the mayoral race between Debby Girvan and Tom Tomzak.

Girvan announced her long-rumored intention to run for mayor on the day of the first public hearing on the Kalahari Resorts incentives package.

She has made frequent comments at council meetings criticizing two of the most recent incentives deals to come across council members' desks--the still-tentative Kalahari deal, and another package for Capital Ale House.

Meanwhile, Tomzak has defended the Kalahari package as necessary to lure a business that will help Fredericksburg build itself as a tourist destination. He also voted for the Capital Ale incentives.

A central question in this debate is how the dollar value of incentives packages should be viewed.

SPENDING OR PARTNERING?

Girvan wrote in an op-ed that ran in last week's Free Lance-Star that incentives "must be treated as a form of spending because they refund revenues to individual businesses that the city would otherwise collect."

Vice Mayor Kerry Devine said the packages aren't simple spending, but "unrealized revenue."

"Without a business, there's no revenue," she said. "We're not footing the bill for the business."

Councilman George Solley said he doesn't consider incentives spending "unless you are giving out unnecessary incentives."

But determining what's necessary can be tough.

WILL THEY COME ANYWAY?

Government incentives strategies, just like private-sector business negotiations, share some similarities with a game of poker.

The only way to truly know whether a business is going to leave the table if it doesn't get what it wants is to call its bluff.

Solley, along with Devine, Councilman Matt Kelly and others involved in the Capital Ale incentives deal, criticized Girvan for writing in her op-ed that those incentives were unnecessary, and that the business would have come to town anyway.


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KYBECCA On Tuesday, City Council members will consider a 10-year, $80,000 incentives package for Kybecca, which is proposing to expand its William Street wine and food shop and open a wine and tapas bar at the corner of William and Charles streets.

Owners Kyle and Rebecca Snyder say they began talking with the city about incentives in October.

With knowledge of what they might be eligible for, they signed a lease on the space next door to their shop, which had housed a mortgage company.

Kyle Snyder began demolition inside, but says he's waiting for word on the incentives package before he begins building the bar. Rebecca Snyder said the incentives are key to getting financing for the project.

"This is an incredibly big risk for us," she said. "It's a huge amount of money." She said she sees her business as a "trailblazer" in the William Street corridor, and hopes the wine bar will help bring more restaurants and retail to its first-floor spaces.

"All we're asking is for the city to help us out with some of the risk and reap the reward," she said.

Since July, the city has considered the following projects for financial incentives:

Kalahari Resorts

Investment: $250 million-plus, 700-room hotel, 295,000-square-foot water park, 100,000-square-foot convention center in Celebrate Virginia Incentives: City proposes to waive more than $3 million in upfront fees and to rebate 47.5 percent of Kalahari's local taxes over a 20-year period (an estimated $61 million). Status: Public hearing Tuesday; council votes April 22 and May 13.

FREDERICKSBURG EXPO AND CONFERENCE CENTER

Investment: Existing business; wanted city help to allow it to pursue larger meeting events. Incentives: City would have given the center $150,000 a year for three years as a grant; it would have contributed $75,000 a year to help the center attract events during that period. All grants would have required that the center meet specific benchmarks. Status: Council tabled the proposal; Kalahari is now in talks to buy the Expo property.

Capital Ale House

Investment: $1.5 million to open a restaurant and bar on Caroline Street with a focus on craft and microbrew beers Incentives: $100,000, including a $25,000 grant from the Economic Development Authority and $75,000 in business license tax waivers over 10 years Status: Council approved plan on a 5-2 vote in February.

Kybecca

Investment: $2 million over 10 years to renovate a former William Street office and operate it as a wine and tapas bar. Incentives: $105,000 total, including a $25,000 grant from the EDA, along with $80,000 in local tax waivers over 10 years. Status: Council could vote Tuesday.

Micah hosting candidates forum

Micah Ecumenical Ministries will host a forum for candidates in the upcoming City Council and mayoral elections at 7 p.m. Thursday at Fredericksburg United Methodist Church.

The forum will take place in Kobler Hall in the church's new ministry center at 308 Hanover Street. The entrance is on Charlotte Street, as is the parking lot.

Ed Jones, editor of The Free Lance-Star, will moderate the forum. The event is open to the public, and suggested questions may be submitted to the moderator between 6:30 and 6:50 p.m.

The candidates for mayor are the incumbent, Tom Tomzak, and City Councilwoman Debby Girvan. The three candidates for two at-large council seats are incumbent Kerry Devine and newcomers B-J Huff and Mary Katherine Greenlaw.

Another forum is scheduled for April 24 by Historic Fredericksburg Foundation Inc., at the James Monroe High School auditorium.

It will start at 7 p.m. and last about 90 minutes, according to a news release.

--Emily Battle