Monday, May 9, 2011

Incentives for UMW Foundation--A Discussion

"On the incentives for the Eagle Village hotel there are some question to ask--A hotel has always been part of this project to support the university and hospital. if it was planned to be here anyway why are we providing incentives? If the incentives were not provided would the hotel go away? Doubt it. What is the hospital contributing... to this project? How many hotel rooms are currently in the area and what is the vacancy rate? How are they doing financially? Again, the intent of incentives was to actively recruit businesses that diversify the city's tax base. Are we still just taking what is offered and throwing incentives at it? What is the city's overall plan towards the future economic development of the city? Do we have one?"

"If the case is made that this incentives package meets city goals Council should also take this opportunity to get some commitment out of the university regarding their plans, and city involvement in, future land acquisitions. Land that will potentially be going off the tax rolls. Up to this point the city has not been consulted by... the university regarding land acquisitions. And the Foundation seems to have adopted a "target of opportunity" approach acquiring land without any specific plans for its use. Actual adherence to, and input from the city in, the university's long range plan should also be up for discussion. A city representative on the Board of Visitors could also be a consideration."

These two posts I made on the recent Free-Lance Star story on the Mary Washington Foundation application for incentives to build a new hotel at Eagle Village resulting in an interesting e-mail exchange in which local businessman Rodger Provo took issue with my position. The e-mails were copied to Council members, city staff, UMW President Rick Hurley, Foundation CEO Jeff Rountree, EDA members, and the press. My thanks to Councilman Howe and Foundation CEO Jeff Rountree for their input in this discussion.

Below is the e-mails thread which covers issues such as the city's use of incentives. The merits of the Hotel project. And whether the city should use this opportunity to secure commitments from the university on other issues such as future land acquisitions. It is a good discussion and while some questions put forward have been answered others have not. The question is whether these issues will be discussed, and answers to the questions forthcoming, at Tuesday night's Council meeting?

Get yourself your drink of choice, get comfortable, and let's discuss incentives for a hotel at Eagle Village...............................

Matt -

I read your posting on the Free Lance-Star about this matter. I would suggest to you this opportunity means more to the community and the university than what you appear to want to acknowledge. I seem to recall when you were in office you never took issue with such packages. Now that you are exercising your free speech rights as an activist your position appears to be different. Cheers!



Well I guess there are at least two of us concerned on the direction in which we are headed, if that’s the case, because I personally agree with Matt’s analysis – for the record!

There really doesn’t seem to be any comprehensive plan embraced by both the City and UMW – just the continued real estate acquisitions of what minimal City land base we have, with the promise of spill-over taxable income in return to off-set our City services expenses.

The master plan expansion for the University places continued stress on the surrounding communities who are struggling to deal with the student population / rental issues, parking issues to provide just a couple examples, of resident complaints I have personally received.

I am equally concerned that we are enabling without a plan the demise of our historic City character into just another College town – as the University continues to expand and gain a larger foot print and a more prominent position, ultimately over shadowing who we are, as a national historical City.

I will offer an observation – case in point, the Rt. 1 UMW Eagle Village walking bridge where travelers are not greeted to the City Fredericksburg – they are greeted to the University – the walking bridge UMW Bill Board is a very clear representative of where we are headed and yet two more walking bridges are planned across City property to accompany the further expansion of the Foundation and University City land grabs.

I am deeply concerned for the City’s ability to retain its historical prominence in the ever growing expansion efforts of the University and concur that we need to address this at a higher planning and economic development level than we have done to date. There definitely needs to be a plan we can all support and embrace offering a balance between further development based on internal pressure for University expansion within the City’s limited foot print, which serves the City, UMW and our citizens - well into the future.

Fred Howe

I would suggest to all of you that the university is a great asset for the community. We should be grateful it has taken on the task of revitalizing a dead shopping center on Rt. 1. Yes, we do have problems resulting from the presence of UMW in the city, such as the adverse impact of student renting of single family homes in College Heights. Our energies would be better spent working with the university administration relative to that problem that hurts the quality of life of our residents and the value of their homes than getting over exercised about issues I consider to be in the margins.

Rodger Provo

With the recent university land acquisitions, all the construction going on, and announced business openings at Eagle Village some explanation is necessary as to why this one project will not move forward without an incentives package from the city. Has the university/foundation financially over-extended themselves? If that is the case, is Phase II also in jeopardy? Does this also mean that the city should not see any further acquisition of property in the foreseeable future? Don't oppose the hotel concept, said so when it was first discussed, but why incentives now? What other requests can the city expect in the future? Just asking for a public explanation.

As for the issue of future land acquisitions this has been an issue for years. And frankly just, "working with the administration," has not been very productive as is the case on other issues to which Roger alluded. Based on past experience even the University's long-range plan is already suspect. If the University/Foundation are truly looking for a partnership with the city then coming to an agreement with the city in regards to a process for future land acquisitions, and establishing boundaries for future expansion, should not be an issue. The request for incentives by the University is a good time to have that conversation, before taking action, so as to establish a good and open working relationship for the future.


Matt -

It appears to me that you and one member of City Council have a fix on certain issues concerning the university without regards to other matters more important to the community.

The reality is current hotel financial markets are difficult and, though I have no seen a budget for this proposed hotel, I think it probably needs certain considerations from the city, not unlike the massive
tax concession package you so willingly supported for the proposed Celebrate Virginia water park resort that has yet to be funded.

The university acquisitions are a driving force in revitalizing the Rt. 1 corridor that adjoins our neighborhood, College Heights. We should be thrilled with their activity at Eagle Village which has had a positive impact on the city. I think the current UMW administration will work with the city and residents about problems we need resolved and we should not slam the door on them relative to that prospect by being unreasonable relative to their request about the hotel.

It strikes me as odd that you and Mr. Howe are so exercised about this matter, given he has supported two zoning requests that adds more rental units to the city's housing inventory which we do not need. In one case, we got additional townhouses for a portion of a project primarily located in Spotsylvania County that adjoins commercial properties along Rt. 1. That land should have been packaged with the Rt. 1 property for commercial development.

I guess you and Mr. Howe's concerns about our tax base are tainted by who is involved with the property. All of this reminds me of a less productive time in the city's history when one City Council member-activist often used the the college and hospital for political purposes with unproductive attacks and criticisms.

Rodger Provo


There are hotels that will attract new visitors to the area and spur additional development to meet city tourism goals. The primary goal of the hotel proposed by the University/Foundation is to meet a need for both the university and hospital by providing hotel rooms close to their respective facilities. For people who would be coming anyway and would normally stay at another hotel facility like the downtown Marriot. I know that Marriott had conversations with the University as a potential user for their hotel in making their decision to move forward with the project. This is not a criticism it is a reality.

It is also a reality that Eagle Village and even the proposed hotel will have a positive financial impact on the city. Don't know where you get the idea that I am opposed to the University or this specific project. As noted above it has potential impacts on similar facilities in the area. As discussed before the city needs to stop looking at projects in a fishbowl ignoring other outside factors. I also have a concern that no case has been made that this project would not move forward without the incentives package. Is this another example of just taking advantage of the incentives program. Again not a criticism of the university. If I were in Rick's and Jeff's shoes I'd be doing the same thing.

We have had conversations regarding the city's recent use of incentives before and I thought we were in agreement on the lines noted above. It is also a discussion, as you know, that has gone on in the community. Regardless if the project is a downtown bar or a hotel for the university. The city needs to do a better job explaining the use of incentives in meeting the city's overall goals.

As for the issues with the university in other areas such as future land acquisitions I do believe this is a good opportunity for the city and university to come to some kind of understanding and a little leverage doesn't hurt. Especially based on past experiences. It's called negotiating. And I think the city should be looking at more than just space for artwork.

Most of questions, not criticisms, I have put forward should be asked of any applicant for incentives. For example--Meeting city goals, issues of competition, other parties to the deal and what they bring to the table, and finally is there a real need for the incentives.

Finally, I would like to thank-you Rodger for starting this discussion. While we may not agree on all the points it is a discussion that should be taking place. It probably would not have if you didn't start the ball rolling.


Matt -

Given my experiences in the hotel industry, I would suggest to you and others a hotel at Eagle Village will generate new business for the city. It will offer the opportunity for the medical center and university to provide rooms for patient families, student families and attendees for special events, etc. Many communities would love to have a quality medical center and university as a cornerstone of their economy. We should be more grateful for the opportunities we have.



As always I do respect your insights and experience but, as is sometimes the case, we may not agree. In this case, our disagreement is not as much about the project itself but rather on the process that has brought it before Council. I have asked a number of questions--not criticisms--which I believe are legitimate in judging the overall merits of this or any project. Some questions are project specific but most should be asked regarding any project that involve incentives. Should they be ignored?
The city does have some legitimate issues, many you have voiced yourself, with UMW. And on occasion you have expressed frustration with the university's response. Again our disagreement is not with the project but whether the city should take the opportunity presented by the university's request for incentives to come up with more concrete solutions that will strengthen the university/city relationship.

Thank-you again for your comments and criticisms. Unfortunately most of those who should be participating in this discussion remain quietly on the sidelines. Yet they will ultimately make the decision on providing incentives for this project. Based on past actions I would surmise that there will be little public discussion on these issues and the incentives package passed. If that is the case it is a great disservice to city residents.


Matt -

I am a real estate guy. The merits of this opportunity are simple .... the city will trade a poorly built 1960s vintage portion of a shopping cheaply updated now with low end businesses and stores and vacancies for a new hotel that will bring new customers to the neighborhood. I think it is a great opportunity.


Fred, Matt and Roger,

My apologies for being late to the discussion, but with Graduation and family commitments this weekend, I have been uncharacteristically off email for a few days. Although I’m not exactly sure where to jump in here, let me focus purely on the hotel project and answer one key question that was asked several times…”why the need for a City incentive.”

The answer is very simple, we probably can’t make the numbers work without it. As I will report to Council tomorrow night, the UMW Foundation has discussed this project with 22 banks, with only four positive responses…that is how tight the lenders are right now, especially with hotels. The equity requirements for a hotel developer borders on the ridiculous right now and the preliminary deal we have with our “bank of focus” is contingent on successfully receiving the proposed City and State incentive. Simply put, if we do not get the incentives, that deal will be withdrawn and will need to be restructured in a way that will not work for us.

Please also note that the University (and hospital for that matter) have nothing to do with the hotel ownership or operation…this is purely a UMW Foundation issue.

Hope this answers the question,

Jeff W. Rountree

So you now have a handle on the issue does the city move forward with providing incentives? Should the city provide incentives with additional stipulations regarding outstanding issues with the university? Should incentives be denied? Are there other issues you feel were not covered?


Larry G said...

I agree about the bridge. It's a monstrosity that only a UMW zealot could love.

Out of town visitors are going to say ..." what the..... "

HOWEVER, if I look at the BEFORE and AFTER of Park & Shop - I'll take the AFTER any day, warts and all and I'm betting that all the adjacent property owners do too.

Fredericksburgers like Matt are a bit pedantic about SOME issues but unconcerned with others.

I'm actually amazed that UMW can still access capital when folks like Silver and Kalahari cannot.

MATT KELLY said...

First--Larry it is nice to hear from you again. Been a while since we have crossed keyboards. I have to say I've been called many things but pedantic is not one of them. There are actually some broad (not narrow) issues here:

1. The city is still reacting instead of acting when it comes to economic development. Again the original intent of the incentives program was to help recruit businesses to diversify our tax base. We can't just keep throwing money at everything that comes along.

2. The city is looking at projects like this in the proverbial fishbowl based on projections provided by the applicants. And the focus is on those revenue projects to the exclusion of all else. Issues related to existing hotel stock, and the performance of hotels are ignored.

In regard to this particular project, based on the statements from the university and hospital most of the people using this hotel are probably already coming to F'burg and would be staying at other hotels. I understand the convenience factor for the university and the hospital but does it meet the goals set out by the city for incentives?

3. Negotiating has not been the city's strong suit. Note all that seem to be of concern to the city, beyond revenue projections, is space for local art work. There are outstanding issues with the university. The question is whether the city should try to address some of them as part of this deal? What about explaining why this project does, or does not, meet city economic development goals. These and other question raised in these e-mails should at least be discussed which brings us to number four....

4. As far as I can tell there is no discussion either between Council members or between the Council and city residents. No explanation as to how a particular vote further city goals or even whether it is appropriate to interject other issues when discussing incentives with the university. As a Councilman I know I never made everyone happy but by the time of a vote I had taken every opportunity to explain my position, try to answer questions and address concerns. That is part of the job.

Don't think pedantic is the right description.

Larry G said...

Okay so maybe not pedantic but I think I figured out how to get you going!

But you do have this thing wrapped up in a uber-connected ball... citing "other issues with the college" as well as implying that there may be "too much" hotel rooms.... etc..

I don't recall questions like that being asked with regard to Wegmans, the hotels near Wegmans or the ton of restaurants in the area but if there is a case to be made in that regards - I would think it could be made - by those so inclined, right now.

I do not know how much hotel space is needed ..but I bet someone knows....

but if we're going to do stuff like this - should it not be institutionalized for EVERY proposal?

Would that be pedantic?


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