Outside of the Rail-to-Tysons heavy rail debate, the most fascinating development battle taking place in Virginia at the moment is in the Fredericksburg region. The City of Fredericksburg, which is experiencing major fiscal stress at the moment, is pushing development of the Celebrate Virginia project just off Interstate 95 as a way to expand the tax base.
The developer, the Silver Companies, is touting the project as a net plus to the region because attractions like the National Slavery Museum and the Kalahari waterpark would bring in thousands upon thousands of visitors, who will fill city coffers with sales and lodging taxes. Critics contend that the project will incur millions of dollars in tax breaks, public subsidies and other costs — many of them hidden — and could never stand on its own.
Today in the Free Lance-Star, reporter Emily Battle underlines City Council’s motivation for backing the project. Revenue from the sales tax, the city’s second largest source of taxes, is down. In November sales tax revenue fell short of $900,000 — the first time November revenues had dipped below $1 million since 2003 before Central Park, a massive retail project at the intersection of I-95 and Rt. 3, opened. That project, ironically, also was developed by the Silver Companies amidst considerable controversy and billed as the city’s financial savior.
Noting that the City has spent $30.2 million so far this year but has brought in only $25.5 million so far, the Fredericksburg City Manager is implementing a hiring freeze. Under the circumstances, some councilmen argue that the City needs the Kalahari waterpark all the more.
Before betting the farm on Kalahari, however, City Council might be well advised to revisit the deal they cut with the Silver Companies to develop Central Park. Back when the deal was being inked, what sales tax revenues did the City expect Central Park to yield in fiscal 2008? How do those forecasts compare to reality? If Central Park tax revenues are falling short of expectations, what assurance is there that Celebrate Virginia projections can be relied upon?
Just asking.