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City EDA to consider Kalahari bond request
Date published: 5/14/2010
The EDA is the official conduit through which most of the city's tax-based incentives deals run.
For example, the $19,500 rebate that Capital Ale House received on its sales and meals taxes this year under the terms of its incentive agreement was made by writing a check from city coffers to the EDA. The EDA then passed that rebate on to Capital Ale as a grant.
But the EDA also makes grants of its own with nontax dollars. Most of these are part of its JumpStart grant program.
The money for these grants comes from the fees the EDA charges businesses to access state-allocated industrial development bonds, which are tax exempt. The EDA also charges fees to allow businesses to use it as a conduit for taxable bonds.
The authority typically charges a fee of one-eighth of 1 percent of the outstanding balance on the bonds.
Kalahari first asked for a complete waiver of those fees--something the EDA has never granted.
But going into today's meeting, it has agreed to pay the full fee on the $25 million in tax-exempt bonds it plans to issue, and to pay about $600,000 over 10 years on the $240 million taxable bond issue that would complete its financing package.
The city has offered to augment that fee with about $660,000 over 10 years in city tax money. The EDA has not agreed to this plan and will continue to discuss it today.
This would not be the first time the EDA has agreed to accept less than the full fee on a bond issue.
On a $65 million bond issued in 2002 by what is now Mary Washington Healthcare, the EDA agreed to accept $650,000 over 15 years, significantly lower than the $2.2 million Mary Washington Healthcare would have paid in standard fees on that 30-year bond.
Emily Battle: 540/374-5413