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Front Royal
Saturday, December 16, 2017

State, municipal officials continue to express concerns over tax bill

State economic development official Sandra McNinch told municipal officials to alert their congressmen to concerns over economic impacts of some provisions of the Republican tax bill. Photo/Roger Bianchini

Comments by a Virginia state economic official at a December 8 joint meeting of the local Economic Development Authority, Warren County Board of Supervisors and Front Royal Town Council pointed to multiple fronts upon which the Republican tax reform bill still on the table could negatively impact municipal governments’ ability to finance several types of capital improvement projects.

In fact, Virginia Economic Development Partnership General Counsel Sandra McNinch suggested that local officials call their congressmen to alert them to their concerns about the proposed elimination of private activity bonds, New Market Tax Credits and Historic Structure Rehabilitation Credits.  All three help make capital improvement projects more affordable to municipalities and their citizens.

On December 8, VEDP General Counsel McNinch said as much as $34 billion in funding variables could be impacted by removal of the private activity bonds.  Of most concern are impacts on “charitable” facilities such as hospitals and schools.

Among items on the local capital improvement agenda that could be impacted are the new Front Royal Police Headquarters (New Market Tax Credits), any chance of saving the shell of the Afton Inn (Historic Tax Credits), the long-discussed new Warren Memorial Hospital slated for land off Leach Run Parkway, and perhaps even long-term financing options for already completed projects like the new middle school.

Municipal and economic development projects like some on the table here, including a new police headquarters and the potential of saving the shell of the Afton Inn, could suffer from drafts of the Republican tax reform bill.

As Royal Examiner first reported in a November 13 exploration of the initially-unveiled Trump-House Republican tax reform bill, the elimination of private activity bonds immediately got the attention of local officials. see related story

“The issue here is really about the ability to refinance bonds when the interest rates come down,” Warren County Administrator Doug Stanley told us, observing, “The Board of Supervisors has been able to save a significant amount of money in past few years when we were able to refinance bonds associated with school construction.”

“In addition to a dramatic cut in the corporate tax rate, the recently announced House tax bill takes serious, direct aim at the municipal bond market.  Both measures are sure to interfere with state and local governments’ ability to cost-effectively provide financing for projects,” long-time county consultant Springsted wrote in alerting its client base of the brewing problem.

“Some of the proposed tax cuts and job acts could be detrimental to the economic development of not just this community, but the nation as a whole.  Economic development relies on some of these very successful programs to create jobs and tax revenue for the community,” local Economic Development Authority Executive Director Jennifer McDonald added.

Following the December 8 EDA joint meeting, we asked McDonald to elaborate on the range of concerns local and state economic development officials have in various drafts of the Republican tax reform bill.

“As mentioned in the report from Sandi McNinch, General Counsel for the VEDP, there are several items that could directly impact IDA’s/EDA’s in future economic development activities:

  1. The elimination of private activity bonds. The IDA currently can issue bonds to charitable organizations such as schools, private schools, hospitals, etc. and pass along the tax exempt rate for those entities.  With the new tax reform this option would be eliminated, which would cost those organizations more money to build new facilities, renovate current facilities, etc.  The increased cost would then be passed along to the ultimate user (patients), locality, and/or State – it could have a big economic impact on localities.
  2. New Market Tax Credits – The House version eliminates them all together, but the Senate version does not mention elimination for 2018 and 2019. This could impact several projects the Town and County are looking at financing through the NMTC program.
  3. Historic Rehab Credit – the House version repeals it with a transition whereas; the Senate version repeals 10% credit and 20% credit claimed ratably over a 5-year period. This could impact projects that may have utilized the program for historic renovations in the Town.

“Those are the major impacts to economic development with the main hit being the elimination of private activity bonds.”

McDonald also forwarded us an e-mail from the International Economic Development Council (IEDC) addressing the proposed Republican tax legislation.  Like McNinch, the IEDC urged economic officials across the nation to join them in seeking changes to the Republican tax bill.

“There is still time to raise your concerns with your Members of Congress, particularly if one of them happens to be on the conference committee. IEDC remains committed to protecting the tax-exempt status of municipal bonds (including Public Activity Bonds), historic tax credits and New Markets Tax Credits and we continue to communicate those views to Congress,” the IEDC wrote.

“Please continue to encourage your elected officials to include EDA in future disaster supplemental funding requests,” the IEDC added.  “Be sure to include any examples you may have of how EDA has supported your community following disasters. If you have been fortunate enough to not need EDA in these circumstances, you should include a project or two from your community that has used EDA funding in the past. These past few months have seen unprecedented disasters impacting multiple states across broad regions. While your community may not be impacted, it is important to recognize that disaster can strike any community and when it does, resources like those offered by EDA will be there to help you rebuild only if we continue to show strong support for them today.

“Your voices as economic development practitioners and constituents will always resonate more and it is critically important that you reach out to your elected officials and speak up in support of federal economic development resources and a tax plan that supports responsible growth,” the IEDC concluded.

Attempts to pin down any changes on these fronts included in the Republican House-Senate tax bill compromise reported on December 14 were unsuccessful prior to publication.  The status of private-activity bonds, New Market Tax Credits and Historic Rehabilitation Credits as the Republican Tax Bill progresses toward a possible vote prior to the end of the year will be addressed as that information becomes available.

Warren County cuts ribbon on Farmview Drive Rural Addition Project

From left at the Farmview Drive ribbon cutting, County Administrator Doug Stanley, Shenandoah Farms POA Board Chairman Ralph Rinaldi, North River Supervisor Dan Murray, Farms POA member Willy Surface, Shenandoah District Supervisor Tom Sayre, and Deputy County Administrator Bob Childress. Courtesy Photos/WC

On Thursday, December 14, Warren County cut the ribbon marking completion of the Farmview Drive Rural Addition improvement project.  Present were members of the Shenandoah Farms Property Owners Association Board and County officials.  The project totals 0.31 mile in length and represents “a major milestone for the POSF Board,” according to a press release issued by the County.

In 2006, the POSF Board established Farmview Drive and the adjacent Fellows Drive and Youngs Drive as priority Rural Addition projects.  The stated reasons were safety concerns for schoolchildren and bus traffic in the area.  Shenandoah Farms is one of the outlying county’s most densely populated areas.

Farmview Drive was the Farms Sanitary District’s number two Rural Addition priority in the County’s Capital Improvement Plan.  The CIP includes both VDOT Rural Addition/Revenue Sharing Projects and “in-house” projects in a prioritized list to provide guidance for staff to implement road and drainage improvements.

The completion of the Farmview Drive improvements represents the 14th project totaling about three miles of Farms roadway the County has developed and constructed through the Rural Addition Program (RAP) since taking on the administration of the Shenandoah Farms Sanitary District road system in 2010.  The Rural Addition Program allows private subdivision streets to be upgraded to minimum State standards, allowing their addition into the Virginia Department of Transportation’s (VDOT) Secondary Road System.  Since completion late last month, Farmview Drive has been accepted by VDOT for maintenance.

Improving rural roadways to minimum VDOT standards to allow their admittance as state secondary roads allows for the redirection of Sanitary District funds to the maintenance of other local roads.

Farmview Drive was re-constructed to provide an 18-foot-wide paved travel surface with 2-foot stabilized shoulders.  Roadway culverts and private entrance pipes were replaced and/or supplemented throughout the project.  Side ditches were constructed where necessary for improved drainage, and according to the release safety signage was also installed.

Work as it progressed on Farmview Drive

In the press release Warren County Administrator Doug Stanley said, “The VDOT Revenue Sharing Program allows the County to administer these types of projects at a much lower cost.  Since we don’t have all the overhead costs that VDOT does, we can complete them much more cost effectively.”

Stanley credited Deputy County Administrator Bob Childress, who manages the Shenandoah Farms Sanitary District, for development and daily oversight of the project.

“Bob’s background and experience in road maintenance and construction with VDOT prior to his employment with the County have proved to be invaluable as we seek to make significant improvements to the infrastructure of the Sanitary District.”

Childress noted that the project “was completed well within budget.”  Childress explained that was due in large part to being able to avoid “existing fiber optic telephone cable” leading to a much shorter construction time-frame.  The original project design and estimate included significant adjustments to the telephone cable.

And that’s a RAP

According to the County, the originally-approved VDOT Revenue Sharing funding estimate for the project was $312,000.  And while not all-final billing has yet been processed, Childress said it appears the project has been completed for approximately $150,000.  The work took about a month, beginning in late October and ending in late November.

Through its Revenue Sharing Program, VDOT provides 50-percent of eligible costs.  Warren County and the Sanitary District split the remaining costs.  The Sanitary District’s 25-percent share of the final cost is now estimated at approximately $37,500.

Childress acknowledged road and drainage work by General Excavation, Inc. of Warrenton, with the asphalt surface being placed by Carroll Construction Company, Inc. of Winchester.  He also acknowledged good weather as a factor in the timely completion of the project – “We were very blessed to experience good weather this fall and to have had knowledgeable contractors on our team which allowed us to complete the project within our tight construction schedule”

Stanley added that, “Several other Rural Addition projects within the District are currently in various stages of planning and development.  The remaining 0.20 mile section of Tomahawk Way, an access roadway shared by the Shenandoah Farms and Blue Mountain Sanitary Districts, is currently in the design stage.   We are hopeful of having this important project under construction during the summer/fall of 2018.  The County has also recently submitted an application to VDOT for Revenue Sharing funds for the Old Oak Lane Phase IV, and Youngs Drive, Phase II Rural Addition projects.”

If you have any questions about this recently completed project, planning for future projects, or management of the Sanitary District, please contact Mr. Robert B. Childress, Deputy County Administrator, at (rchildress@warrencountyva.net) or Douglas P. Stanley, County Administrator, at (dstanley@warrencountyva.net).

(Information assembled from a County press release)

Town Business offices close for holiday luncheon – December 14th


Town Business offices will be CLOSED on Thursday, December 14, 2017 from 11:30 am – 1:00 pm for the Employee Holiday Luncheon. This includes Town Hall and the Departments of Public Works and Energy Services. The night deposit box located at the back of Town Hall is available for your convenience.

Maximum weight limit change on Prospect Street bridge


Tuesday, 12/12/17 – Please be advised, effective immediately, VDOT has advised of weight limit change on the bridge located at Prospect St and Commerce Ave. The posted maximum weight limit on Prospect St. bridge has been changed from 10 Ton limit, to 5 Ton limit. If you have any questions or concerns, please call Public Works at 540-635-7819.

County compromises on Emergency Services staffing needs in FY 2018

It wasn’t all work and no play – the County Board and staff were treated to some seasonal serenading by the E. Wilson Morrison Elementary School Chorus to kick off the final 2017 meeting. Photos/Roger Bianchini

Following county administration’s explanation of funding limitations at the December 12 board of supervisors meeting, Warren County Fire & Rescue didn’t get what it wanted in the way of career staffing at two volunteer departments, but did get what it can live with – at least for awhile.

“We understand,” Fire & Rescue Chief Richard Mabie told the county supervisors following the unanimous vote to approve Option 2, rather than his department’s preferred Option 1 funding.

Asked later about the compromise, Mabie told Royal Examiner, “I’m fine for now with this compromise.  I feel we can cover Station 2’s area better than we can cover Station 3’s area.  And we will still put part time staffing at Station 2 when available and funds permit.”

The preferred option would continue existing staffing at Shenandoah Farms Company 6 through the current fiscal year (FY 2018) and add two firefighter-EMT’s at South Warren Company 3 to provide 24×7 coverage.  The county is facing the loss of Virginia Department of Transportation funding assistance at Company 6 once the Morgan’s Ford low-water bridge is opened.  Conversation at Tuesday’s meeting indicated that opening could come as early as January, if not by the end of the year as had been hoped – at least from a transportation perspective.

Total estimated cost of that preferred option to provide staffing for the two companies through June 30, 2018 (the end of FY 2018) is $195,000 – $130,000 for one year’s staffing at Farms Company 6 (that money is set aside in the current budget); and $65,000 for the additional South Warren staffing through the balance of the fiscal year.  To carry this option’s staffing forward beyond FY 2018, the estimated annual cost is $390,000, $260,000 of which is thus far unbudgeted.

The compromise Option 2 approved transfers two career positions at Rivermont Company 2, to South Warren Company 3 until the new Rivermont fire station is completed (estimated summer of 2019).  That eliminates the $65,000 new position funding for the remaining half of FY 2018.  Past work session discussion has pointed to Company 2 covering some South Warren calls when Company 3 has its staffing gaps.  So essentially, the compromise will continue an existing situation of cross coverage with the relocation of the two Company 2 personnel physically to the South Warren Station House.

Fire & Rescue Chief Richard Mabie explained staffing variables, as well as the need for a lease on new emergency equipment to be signed ASAP – you know what ‘they’ say, ‘Two out of three ain’t bad.’

“I wish we could do better but we’ll do our best,” Happy Creek Supervisor Tony Carter commented.

“We’d all like to do more,” Board Chair and South Warren Supervisor Linda Glavis added, drawing Chief Mabie’s “We understand” comment on dealing with funding limitations in the existing county budget.

The county is looking at almost a penny of real estate tax revenue (currently about $404,000) to cover the total $390,000 cost of the preferred option forward beyond FY 2018, after the new Rivermont Company 2 station opens.

Equipment upgrades

Following the staffing funding vote, the supervisors approved what Chief Mabie called “almost an emergency request” regarding emergency lifesaving and other equipment upgrades.  The request to upgrade equipment in department ambulances and other staff vehicles was added to the Monday agenda due to time limitations on signing a lease agreement for the equipment prior to the end of the year.  Also, Mabie explained that the department has found out that a FEMA grant application to fund purchase of the new equipment had been rejected.

After December 27, the $91,615 (and 52 cent) annual leasing price of the equipment will go up by $81,866, Mabie told the board.  A 2-for-1 trade in on old equipment will also expire if a leasing agreement is not signed in the next 15 days.  Chief Mabie also noted that the old equipment, including defibrillators, was no longer being maintenanced by the manufacturer as of October of this year.

One might say the county was made an offer it couldn’t refuse – and it didn’t.  The supervisors unanimously approved signing of the lease agreement with Physio-Control of Redmond, Washington.

Other business

Also on December 12, at the recommendation of County Attorney Dan Whitten the supervisors unanimously approved a public hearing on renewal of the county’s franchise agreement with Comcast Cable.  That public hearing appears to be scheduled for January 16.  Whitten said he believed the public should be given a chance to chime in since the renewal will have a 15-year lifespan, with automatic renewals every five years unless one party notifies the other of its intent not to renew “at least three years before the renewal date.”

Currently the county and Comcast are approaching the end of a five-year extension of its original 10-year franchise agreement with Comcast, signed in 2003.

Among terms of the new agreement are:

  • continuation of a “non-exclusive franchise agreement throughout the county”;
  • a 15-year term with the same automatic five-year renewals without three year’s advance notice of an intention not to renew;
  • system will be underground unless all utilities in a service area are underground;
  • service to areas of the county with 30 residential units per mile with aerial cable, or 60 residential units per mile with underground cable (within one mile of the cable system truck or feeder line). Homes are only counted if they are within 150 feet of the public right of way;
  • within 180 days of receiving easements and authorizations, Comcast will extend its system along public right of ways “in areas of Benny’s Beach and Apple Mountain Lake South;
  • allowance of up to three governmental/educational channels – the County currently has one channel and others will be allowed “once there is at least 8 hours per day of non-repetitive programming”;
  • provision of one free outlet by Comcast to each public school, fire station, police station, library and other buildings owned by the County or School Board and used for governmental or educational purposes;
  • Comcast will post a $50,000 performance bond and there will be an opportunity to correct or appeal non-performance;
  • Payment by Comcast of from $50 to $100 per day for specific failures or delays; and of $500 per quarter for failure to meet federal customer service standards.


Following a Closed Session, the supervisors made the following appointments or reappointments by unanimous votes:

  • David Feiring to the Board of Zoning Appeals’
  • John Vance to the Northern Shenandoah Valley Regional Commission;
  • Lorraine Brandon to the Social Services Advisory Board;
  • Robert Myers and Hugh Henry to the county planning commission.

Tuesday’s, December 12 meeting was the supervisors last of 2017.

Starting with School Board Chair Cathy Bower, winners in the November election were sworn in for the coming term by Judge Ronald Napier. Below, pictured with Bower are the Fork’s Archie Fox, left, and Happy Creek Supervisor Tony Carter.

Council considers changes to FRLP’s 320-unit proffer package

Town Planning Director Jeremy Camp, at far left, goes over power point of proposed FRLP proffer changes on a 320-residential unit project on town’s east side. Photos/Roger Bianchini

Beyond the maze of numbers presented to council on financing options on a two-pronged $16.5-million capital improvement project envisioned to be completed within the next two years, it was a busy December 4 work session for the Front Royal Town Council.

Like a decision on financing construction of a new police headquarters and road improvements on the town’s east side, see related story three other agenda items involve the future physical and fiscal shape of the Town of Front Royal.  Those topics included infrastructure construction to facilitate commercial redevelopment at the former Avtex Superfund site and acquisition of an acceptable bid on construction of a new Criser Road low-water bridge.  We will explore those two items in an upcoming story.

Here we will explore a fourth work session topic crucial to the town’s future look – development dynamics on as many as 320 residential units on 149 acres of Front Royal Limited Partnership (FRLP) property on the town’s east side.  FRLP owns another 604 acres, also on the town’s east side off Happy Creek Road in the vicinity of Mary’s Shady Lane.  That larger parcel was brought into the town limits in a friendly 2014 annexation process with Warren County.  The 604 acres has a maximum buildout of 818 residential units, though actual numbers will be approved, likely in phases during future rezoning applications.

FRLP’s 320-unit project

The original proffer package on the 149-acre parcel already in the town limits was negotiated in 2010.  The bulk of the proposed changes, which were recommended for approval by the town planning commission on November 15, remove “dollar for dollar credits” offered to the developer by the Town, in exchange for removal of some cash proffers offered to the Town by the developer.  The concept is to essentially create a “push” as it’s called in gambling circles, between the two.

Among the credits proposed for deletion are: tap fee payments over $10,000; land value costs on both right-of-way for the access road to the property and piece of land along Shenandoah Shores Road needed for future road improvements in the vicinity of the development; and on engineering and construction costs associated with Phases 2 to 4 of an East-West connector road running through the property, if the Town follows through on construction of Phase 5 of that road.

Town Planning Director Jeremy Camp explained to us that that latter road-associated credit could equal or exceed all of FRLP’s proposed cash proffers.  He also noted that removal of the tap fee credit locks FRLP into paying the going rate on tap fees, a rate currently in the vicinity of $15,000.

“Under the proposed proffers, FRLP would still be obligated to build and dedicate ROW for the portion of the access road (east-west connector) on their 149 acres,” Camp explained to Royal Examiner, further noting that, “As proposed, the rest of the road would be addressed with the future 604 acres.”

And while the majority of cash proffers to the Town will be removed in the proposal, proffers related to impacts on the public school student population are not affected at all.

Of the proposed changes as a whole, Camp told Royal Examiner, “The existing proffers have some degree of balance between credits the Town pays FRLP and cash proffers paid to the Town by FRLP.  Both the credits and cash proffers are proposed to be removed and FRLP would simply build what they are required to by Town Code and pay the County their cash proffer towards schools.

FRLP principal David Vazzana, yellow shirt, and project consultant Bill Barnett to his right, at the Dec. 4 work session.

Town, County officials briefed on dynamics of economic development

Turn the lights down low – Virginia Economic Development Partnership General Counsel Sandra McNinch, left, presented an overview of the dynamics of economic development work across the commonwealth. Photos/Roger Bianchini

The Front Royal-Warren County Economic Development Authority’s monthly meeting, held jointly with the Front Royal Town Council – well, at least two members (Tewalt and Sealock) – and Warren County Board of Supervisors (4 of 5 members, Fox absent) Friday morning, December 8, served largely as a course in the processes and intent of local municipal EDA’s.

That class was provided in a detailed, 33-slide power point presentation by Virginia Economic Development Partnership (VEDP) General Counsel Sandra Jones McNinch.  McNinch began by explaining the role of VEDP at the both the state level and as a facilitator and conduit to municipal EDA’s across the commonwealth.

The VEDP is comprised of a 17-member board of directors, 11 of whom are appointed by the governor or state general assembly; the remaining 6 are ex-officio members.  It serves as “Virginia’s Business Welcome Center” to international and national companies seeking new or additional bases of operations; and on the flip side of that equation as a “Global Gateway” for Virginia companies seeking expanded markets.  McNinch lauded the work of Governor Terry McAuliffe over the past four years on these economic fronts.

Teams, competition & powers

She also stressed that economic development “is a team sport”.  At the state level that is achieved in trying to see “that every region wins” as far as “positive growth in employment and median earned income of workers”.  On the local level that “team” partnership involves the municipalities that create EDA’s or IDA’s to oversee the nuts and bolts of economic growth.

One interesting point McNinch noted is that once created, EDA’s have financial powers “that don’t exist at the municipal level”.  Such powers include: making grants to private entities; sale of property without public hearings; the lease of sale of properties at, below or above fair market value – not just to the highest bidder; bond issues for the benefit of private entities; the ability to forgive loans that it makes to private entities; and the ability to act beyond the boundaries of the localities it serves.

And with all those powers in hand, McNinch stressed that it can be difficult, particularly in smaller communities, to maintain a primary motivation of helping the outside prospect company, rather than one’s self, family and friends.  That can be particularly true as EDA/IDA directors (and also board members) can be “well-positioned to influence economic development in their communities” the power point noted.

And as one might expect, while economic development may be a “team sport”, it is also a highly competitive one as regions and localities try to draw the businesses that will facilitate economic growth, better jobs and higher wages their way.  Succeeding in this highly competitive environment depends on a variety of factors revolving around what each community has to offer new business in the way of land, infrastructure, workforce, access, financial assistance when needed, and “reasonable costs and taxes”.

At several points McNinch stressed that “reasonable taxes” does not necessarily translate into “the lowest tax”, but rather “the fairest”.

And while she observed that Virginia is limited in offering tax breaks as incentives because of the State’s “Uniformity of Taxation Clause” that mandates that “all similarly situated property and taxpayers should be taxed similarly”, there is way for Virginia and its EDA’s to compete on that level as well.

“Virginia localities can get to the same place by offering, through the Authority (EDA or IDA), a grant equal to the % of the taxes paid,” the power point stated.  One chart showed the circular nature of this system: 1/ Local tax assessed to company; 2/ Company pays tax; 3/ Governing body approves payment to Authority; 4/ Locality pays Authority; 5/ Authority pays $ to company (equal to amount of tax consideration approved in recruitment of the company).

Mission Confidentiality

VEDP counsel McNinch also addressed the sometimes misunderstood role of confidentiality in business recruitment.  Her presentation noted that “Maintaining confidentiality is critical” and “Loose lips sink ships”.  Among the reasons listed were:

  • companies want to maintain confidentiality to preserve relationships with vendors, suppliers, customers and employees;
  • publicly-traded companies need to be mindful of any forward-looking statements (which can be illegal);
  • known interest in a site may drive its price up;
  • if confidentiality is broken a company may be afraid to share relevant information important to reaching a deal;
  • the company or its product may be controversial (while I don’t begrudge the others, the reporter in me says this one is NOT a good excuse for confidentiality).

Bottom lines

A bottom line of business recruitment is problem solving, McNinch told Town, County and EDA officials.  Among potential problems many relocating businesses are seeking solutions to are a trained workforce; ready access to suppliers and customers; access to innovative resources; access to some level of capital investment; and as mentioned above, those reasonable costs and a fair tax system.

If confidentiality is broken or there are obstacles to their “problems” being solved, a successful recruitment becomes increasingly unlikely.

“They read your papers. So, if you’re fighting about stupid things – stop it,” McNinch advised municipal officials.

At the top of the VEDP list of typical company needs was a “new, expanded or improved facility with good infrastructure”.  Perhaps ironically, infrastructure development, who would pay for it and when, has been an issue between our EDA and town council in recent weeks and months.

Specifically that infrastructure involves a primary access way through the Royal Phoenix Business Park at the former Avtex Superfund site – the West Main Street extension (estimated total cost $2 million to $2.5 million) – and a wastewater pumping station (estimated cost $385,000 to $400,000) to serve the first seven or eight commercial clients recruited to the Royal Phoenix site; and off-site road improvements to facilitate access (Phase 1 estimated cost $400,000-$500,000),

The EDA and its first Royal Phoenix client ITFederal are awaiting a final West Main extended design from the Town and a commitment to the idea of a Town-constructed wastewater pumping station developed by former Town Manager Steve Burke.  Council has committed $9,200 to the design phase of the pumping station, but not the construction cost.

But if council, 4/6’s of whom were not in attendance at Friday morning’s joint meeting, are having trouble grappling with those infrastructure costs to propel forward economic re-development on the Town’s wish list for over two decades, perhaps another bottom line will help them out.

VEDP General Counsel McNinch presented numbers documenting a $9.1-dollar return on investment for every $1-dollar in incentives offered new businesses in Virginia over a 14-year period from 2002 and 2015.  Based on 387 projects where $450.2 million in incentives were paid, net positive revenue to the commonwealth of $3.662 billion was cited.  Okay, incentives aren’t exactly infrastructure investment – but apparently you aren’t likely to get to the incentive phase without the infrastructure investment first.

But recent work session discussion see related story indicates a town council majority seems more willing to gamble on New Market Tax Credits that the US House Tax Reform Bill currently on the table is poised to eliminate. – Hey guys, why not gamble on something that might pay off in the end?

WATCH: Town Council Work Session – December 4th


Monday, December 4, 2017 @ 7:00pm Town Hall Council Chambers

1. Presentation from People Inc. on New Market Tax Credit – Continued Discussion of Fixed Term Financing Option for new PD
2. FRLP Proffer Revision Request (R1-A) – Director of Planning/Zoning
3. Agreement between the Town and County for collection and remittance of fees paid online through EnerGov software. – Director of Planning/Zoning
4. Continued Discussion of IT Federal/Royal Phoenix/W. Main Street Extension – Director of P & Z
5. Criser Road Bridge Update – Town Manager

6. Audit/Finance Committee Terms expire 12/31/17
7. Joint Tourism Advisory Committee Recommendations
8. Council Discussion/Goals (time permitting)

Download agenda here:Worksession12042017


Council ponders financing gamble on FRPD and Happy Creek Road projects

Finance Director B.J. Wilson explains variables that could impact long-term financing of the new FRPD headquarters and Happy Creek Road Phase 2 improvements. Photo/Roger Bianchini

After receiving a more-detailed work session summary of financing options for construction of its now estimated $11-million police headquarters, as well as Phase 2 of the Happy Creek Road upgrades, the Front Royal Town Council appears torn over a final decision.  That is because by gambling on a best-case or close to it scenario through the New Market Tax Credit Program (NMTC Program) offered through People, Inc. the Town could realize savings of as much as $5.5 million over a 30-year bond issue.

However, there’s a reason they call it gambling – and that reason is why Town Manager Joe Waltz and Town Finance Director B.J. Wilson both recommended a more stable 30-year fixed-term loan now being offered outside the tax credit program at a set interest rate of 2.65 percent.  And while two councilmen – Vice Mayor Eugene Tewalt and Gary Gillespie – were ready to commit to the safer path at a total 30-year debt service cost of $16.08 million for the FRPD project alone ($24.41 million coupled with financing of a second capital improvement project, the $5.5-million Happy Creek Road Phase 2 Project), others were not yet ready to hedge their “bets”.

And that bet is, first, that the New Market Tax Credit Program will be around through the initial interest-only ($247,500 annual) nine-year payment period.  The second part of the bet is that the 2.65-percent interest rate, or close to it, on the balance will be available in 2027 when the full debt service on the remaining 70 percent of the FRPD balance is coupled with the debt service on the cost of the Happy Creek road improvements project.

The coupling of the FRPD and Happy Creek Phase 2 capital improvement project base costs is an assumption in all five financing scenarios presented to council.  Due to that coupling of financing the two CIP’s, the base construction cost upon which all five financing scenarios are calculated is $16.5 million ($11 million FRPD, $5.5 million HC Road).

However, the potential range of 30-year debt services on that two-project cost vary from the best-case NMTC Scenario A at $19,115,400 (at 2.65% interest); to a worst-case NMTC Scenario D total of $26,464,890, the latter calculated at a 5.65-percent interest rate.  All tax credit program estimates are based on guesses of interest rates available in 2027 after the NMTC Program interest-only payment period ends.

The total non-gambling, 30-year fixed rate debt service currently being offered is $24,415,550.  And while that total is lower ONLY than the worst-case NMTC Program Scenario D – scenarios B and C totals are $21,422,880 and $23,876,580, respectively – according to the town finance director those tax credit projections are only guesstimates.  As for the actual interest rates available after the cost-friendly nine-year tax credit interest-only payments end, “They could be better or they could be way-way worse,” Town Finance Director Wilson told Royal Examiner.

Then there is the variable of whether the NMTC Program will continue to exist through those first nine years.  The New Market Tax Credit Program is a federal stimulus program dating to the year 2000, late in the Clinton Administration, though it was first implemented in 2001-2002, in the first year of the George W. Bush Administration.  It was designed to provide government-assisted investment in struggling local economies.  From 2001 to 2016 the program invested $50.5 billion to that end.  It is administered through the Community Development Financial Institutions (CDFI) of the U.S. Department of the Treasury.  The program is administered regionally through People Inc.

Town Manager Waltz explained the hope was to have a People, Inc. representative present for the December 4 work session discussion.  However, he explained that Economic Development Authority Executive Director Jennifer McDonald had not only not been able to schedule a People, Inc. person for December 4, but had not been able to reach a representative to schedule another date.  At the work session discussion’s conclusion, the town manager was instructed by Mayor Tharpe to work with the EDA to give another shot at bringing a People, Inc. representative to a future work session.  Council’s next work sessions are slated for January 2 and 15.

But if the mayor and a majority of council weren’t ready to hedge their bets on the NMTC Program gamble, that reluctance was based on the numbers – kind of like the $200-million lottery pots that pop up now and then.

For starters there is the low nine-year interest-only payment on both major CIP projects ($247,500 annually in all NMTC scenarios) followed by $562,930 annual payments from 2027 through 2056 in Scenario A ($19,115,400 total cost);  $639,846 annually in “B” ($21,422,880); $721,636 in “C’ ($23,876,580); and $807,913 in “D” ($26,464,890).

Those “guesstimate” numbers stack up against guaranteed numbers, including an annual fixed rate annual debt service of $804,185 paid from 2021 to 2050, after a first-year $268,063 payment in 2018 and payments of $681,125 in 2019 and 2020; again totaling $24,415,550 over the 30-year debt service on the $16,500,000 project costs of the police headquarters and Happy Creek Road Phase 2 projects.

You know – if the police could just work out of their homes – AND we gambled on the advent of the flying cars we’ve been promised since the 1950’s, ALL those costs could just vanish in the wind … couldn’t they?

How much better does it have to be? Courtesy Photo/Town of FR

Front Royal joins Warren County in dog tethering, neglect code

With the pro-code 3-vote contingent (Gillispie, Sealock, Tewalt) holding strong to his right and one absence on the other side, Mayor Tharpe didn’t have to cast a second tie-breaking vote. Photos/Roger Bianchini

On Monday evening, November 27, one local animal rights activist’s nearly 11-month journey to increase legal protections for the community’s canine population came to a successful conclusion.  By a 3-2 vote, Jacob Meza and Chris Morrison dissenting, the Front Royal Town Council approved the second reading of a dog tethering ordinance mirroring one passed on September 19 by Warren County.

John Connolly, who voted with Meza and Morrison against the proposal at the November 13 first reading, was absent Monday night.  That absence and council’s initial tie vote forcing Mayor Hollis Tharpe to cast the tiebreaking vote for the ordinance, led Meza to attempt to have the second reading removed from Monday’s agenda.  However that effort failed by the same 3-2 margin the code was eventually passed by, as Vice-Mayor Tewalt and Councilmen Sealock and Gillislee voted against removal of the agenda item.

“All Dogs Matter” Community Outreach Coordinator Carol Vorous first brought the tethering code proposal to the county government on February 8.  From the outset, the Warren County Sheriff’s Office Animal Control Department, responsible for enforcement on both sides of the town-county line, supported establishment of the local ordinance.  The stated reason was to take what are considered vagaries out of existing codes that leave too much wiggle room for interpretation as to what is “cruel”.

The new code will allow for uniform enforcement of the new standards throughout Warren County.  As a Class 3 misdemeanor, violations can carry up to a $500 fine on each count owners are convicted of.  The code sets specific criteria for the age and condition, how long, and in what weather extremes dogs may be kept tethered outside unattended.

Now prohibited throughout Warren County are the tethering of dogs less than four months of age; of female dogs in heat; as well as specifying extremes of heat (90 degrees) and cold (32 degrees) dogs may be left out in “unless the dog is provided adequate shelter under Virginia Code 3.2-6500.” (see state definition below).  Dogs on cable runs may not be left out longer than 12 hours in 24-hour period; and no longer than four hours per 24 hours on fixed tethers.

On Nov. 13 ‘All Dogs Matter’ Community Coordinator Carol Vorous made her case for all of Warren County’s canines to the Front Royal Town Council.

There are other requirements as to the length and weight of tethers related to the dog’s size.  Tethers may not be more than 10-percent of the dog’s weight; must be at least three times the dog’s length; and must be attached so as not to injure the dog or become entangled or used at height so that the dog could become strangled.

Prior to the decisive second reading vote, Meza called the local code unnecessary due to existing state codes he feels adequately define and prohibit animal cruelty.  He also wondered at the need for additional enforcement, pointing to what he said was a “point 7-percent (.7%)” complaint rate (40 cases annually) of cruelty to dogs based on the number of canines registered in the county.  Meza said he felt the Town was being too intrusive in dictating such detail on how people keep their pets, which he later pointed out are defined as “personal property” by state law.

William Sealock took issue with Meza’s reasoning.  He wondered if the low prosecution or complaint numbers Meza cited weren’t impacted by the lack of enforcement teeth the state code presented.  Sealock also reasoned that adding strength to state guidelines will do more good for the county’s canine population, than harm to its human population’s sense of self determination in the conduct their lives.

“The problem … is that we have some people who do not honor the lives of their pets – and I see a lot of that myself – and we need to be in line with the County, and that’s what we’re doing.  This is not costing the taxpayer here in the town any dollars. All we’re doing is following the code for enforcement by the County, so keep that in mind.”

Discussing the vote after the meeting Meza worried that the ordinance approved by council does not take into account variations in different breed’s ability to withstand weather variables.  During the public hearing before the county board of supervisors at which 14 people, 13 in favor, spoke, similar concerns were expressed.

However County staff indicated the new code’s wording allowed for some flexibility that could be used to accommodate working dog situations, as in shepherding and protecting sheep and cattle herds against predators.  The county discussion also expressed a belief that common sense applied to breed, temperature and “adequate shelter” standards could and would be applied when necessary.

Discussing the code and vote with this reporter, Meza worried whether “common sense” could be successfully legislated.  He also said he was not sure the code approved by council was a precise mirror of the one the county approved or that his colleagues supporting it were precisely aware of the parameters of what they had passed.

Meza again made it clear he does support anti-animal cruelty statutes but believes those written at the state level should be adequate to ensure protections.  A similar point was made during the county public hearing.

One pro-ordinance speaker told county officials on September 19 that perhaps additional training for animal control officers on exactly what both the existing state code and the proposed local code allows to be cited as legal violations could be helpful.

The ‘adequate shelter’ variable

As to the state definition of “adequate shelter” applying to temperature extremes dogs may be left out in, the state code definition of “adequate shelter” reads, “Adequate shelter means provision of and access to shelter that is suitable for the species, age, condition, size, and type of each animal; provides adequate space for each animal; is safe and protects each animal from injury, rain, sleet, snow, hail, direct sunlight, the adverse effects of heat or cold, physical suffering, and impairment of health; is properly lighted; is properly cleaned; enables each animal to be clean and dry, except when detrimental to the species; and for dogs and cats, provides a solid surface , resting platform, pad, floor-mat, or similar device that is large enough for the animal to lie on in a normal manner and can be maintained in a sanitary manner.”

The state definition of what is ‘adequate shelter’ and what constitutes cruelty by neglect now has some added TEETH throughout Warren County; below, Luda was smiling at Monday’s vote – at least 3/5’s of it.

The state code goes on to describe wire, grid or slat floors that could injure the animals feet as “inadequate” and further bans floors that sag under the animals weight.

And that sounds like the groundwork upon which the new local code with its additional specifics can be successfully enforced without being obtrusive.

Other business

Prior to Monday’s public hearings the Chriskindlemart ‘Silent Monks’ warmed council up for the coming holiday season.

Among other actions on Monday, Council approved the second reading of an ordinance that will see the Town and County create a Joint Towing Board; amended its “Weeds & Debris” ordinance facilitating year-round enforcement of high grass and trash removal standards; and appointed Andrea White to the Board of Architectural Review.