The Future of Incentives

Below is a copy of an e-mail I had sent to Council and staff before the meeting at which an incentives package was passed for Creative Design Group (CDG) who has now decided to stay in Spotsylvania after receiving a more lucrative incentives package from the county. What happened with CDG points up the need for us to better plan for the use of incentives in the future. And just as important--gain community support and understanding of how incentives can be used to meet our shared goals.

Re: special Meeting

As I will not be able to attend tomorrow's meeting I wanted to pass on a few thoughts to support my request to discuss the future of incentives at our September retreat.

When discussions first started regarding the use of incentives with David Holder it was in the context of identifying the type of projects we want for the city and actively trying to recruit them. Projects that help diversify our tax base, insured that the remaining land we had in the city would generate a large return while fitting the overall goal of maintaining the unique character of the City. Wegmans comes closest to fitting this approach. There was strong community support to attract an up scale food market to the city with efforts going back at least (8) years to try an attract one here--Mayor Beck's effort to get Ukrops to open a small market in the Fredericksburg Hardware building downtown. In providing Wegmans with incentives we secured a "unique" business that had a history community support with a documented history of economic success.

The incentive for Kybecca shows that existing businesses could benefit from the Incentive program. Kalahari and Capital Ale were more "targets of opportunity." These projects will help secure the City's future economic viability but we found ourselves having to build public support for these projects--trying to explain how they fit "The Plan" to secure Fredericksburg's future. In the case of Kalahari, we talked about a tourism project in a tourism zone and the need to expand our tourism tax base. In the case of Capital Ale we stressed how this business had attracted a more upscale clientele from outside the area and its community involvement. The fact of the matter is we have not had the time to sit down and discuss exactly what "The Plan" is. We have the basic concept, but not a plan with everything in place--zoning, ordinances, target businesses, etc. And just as important-- a plan that the community both understands and supports.

We have completed the Comp Plan. We are now talking about changing our zoning to allow mix-use development, and making changes to assist in implementing the goals of JumpStart. We are also now looking at redevelopment corridors and should start looking at re-development opportunities in some of our older shopping centers, as well as infill development, and identify areas for employment centers. Decisions we make in these areas will help define what incentives will be used for and place projects in a context of an overall development plan whether we recruit them or they are, "targets of opportunity." These are discussions that cannot be completed in an evening, Nor can we continue to discuss incentives without placing them in context of the City's future financial security while meeting the community's shared goals.

As previously noted we have all discussed both the successes and failures of the incentive process thus far. Based on my discussions with the Council and staff it was agreed we needed to have all the parties involved--applicants, developers, and staff-- at the table for some frank discussions about the process. Mary Katherine has implied that the business community probably has something to say about incentives and should be given an opportunity to express them. The work session as planned does not have all the players at the table and I would hope that no action is taken regarding changes to the incentive program until such a meeting is held. We also need to have a long discussion in how incentives fit the City's goals and how they will be achieved-- with community support.

-Matt-

What happened with CDG also points to the need for the localities of Planning District 16 to better coordinate their economic development efforts to preclude the possibility of businesses moving around the region chasing the better incentive package or engaging in bidding wars for a particular business. This will require good communications between the Economic Development offices within the region. Something that does not currently exist and CDG is the example of what happens without it.

At the elected official level we have discussed working together to market the region on the understanding that everyone can benefit from a project even thought it is not physically located in their locality. Lets us look at the CDG experience as a lesson learned, take steps to avoid the situation from occurring again, and look to how we can work together for our mutual benefit.