County is first to formally endorse Corridor Agreement update

FRONT ROYAL – On Tuesday morning, April 3, the Warren County Board of Supervisors voted unanimously to approve a Resolution of Support to amend the 1998 Voluntary Settlement Agreement regarding Town of Front Royal provision of central water-sewer utilities to the Route 340/522 North Commercial-Industrial Corridor.

As Royal Examiner reported in a related story following Front Royal Town Council discussion of the matter the previous evening, the 1998 “Corridor Agreement” was a joint effort by the community’s two municipal governments to cooperate in re-establishing a substantial commercial tax base, particularly in support of adequate funding of the county’s public school system.  See related story 

One might note that since the Corridor Agreement’s inception and the consequent north side commercial and industrial development the County has built a new high school and middle school; renovated existing high school and middle school buildings to state of the art facilities; and engaged in renovations to several elementary schools. However, the County still struggles to maintain competitive operational funding, particularly as it applies to teacher salaries and benefits.

The proposed new amendment to the “corridor agreement” is designed to update and formalize a 2015 Memorandum of Agreement (MOA) that ended six years of often contentious negotiations between the Town and County. Those negotiations focused on replacing revenues lost to the town government following a 2009 Circuit Court decision that removed an estimated $600,000 to $800,000 in annual Meals Tax-based PILOT (Payment In Lieu Of Taxes) fees from the Town’s corridor revenue stream.

Following the unanimous, roll call vote approving the Resolution of Support of the amendment and formalization of the 2015 MOA, Board Chairman Tony Carter, a former town councilman and vice mayor, commented, “I hope this puts all this to rest once and for all.”

Well, at least until 2044, Tony …

That is because part of the proposed amendment bars any Town annexation efforts aimed at corridor commercial property for 25 years. Hostile annexation of portions of the north side commercial corridor was one option considered by the Front Royal Town Council during the contentious period between the lost court case in 2009 and the MOA of 2015.

The 2015 MOA mandated that the County pay the Town 30% of the revenue realized from its corridor Meals Taxes and 5% of its Lodging Tax revenue. According to Front Royal Finance Director B.J. Wilson, over the past two fiscal years that revenue has totaled about $465,000, $227,874 in FY17 and an estimated $237,252 in FY18. The County pays the Town in two installments in December and June of each fiscal year.

As noted by the town finance director, the great bulk of those payments are from the meals tax portion of the arrangement, as illustrated by the FY17 split of $225,266 in meals tax revenue and just $2,608 from the 5% lodging tax aspect of the payment. According to auditors the County collected $782,066 in corridor meals tax in FY17 and $52,619 in corridor-associated lodging tax.

As noted in our related story, concerns expressed by the corridor’s newest proposed restaurant client Chic-fil-A prompted the move to formalization of the 2015 MOA.  According to staff summaries Chic-fil-A worried at the informal nature of the MOA that allowed either side to pull out of the agreement on short notice; potentially leading the Town to re-impose meals tax-based fees, potentially doubling a corridor restaurant’s meals tax.

The proposed amendment also adds the land targeted for the Crooked Run West expansion to the 1998 Voluntary Settlement Agreement, and perhaps most importantly to the County places that formal 25-year moratorium (to 2043) on the Town’s ability to launch annexation proceedings on County land in the north side commercial-industrial corridor.