Council Members Cast Critical Eye on Incentives

Members of Fredericksburg's City Council continued to cast a critical eye on the use of city incentive programs for businesses expanding in the city. Despite their skepticism, the City Council approved two incentive packages worth more than $90,000 designed to bolster the city's business climate. 

On one side, you had City Council members Kerry Devine, Brad Ellis, Fred Howe and George Solley all wondering if the incentives really played a role in convincing the two companies to either relocate or stay within city borders. 

Speaking in favor of the incentive package was Mayor Thomas Tomzak.

"The deicison of where to stay is a local decision by local management," said Tomzak. "They had a lot of options around here, less than half a mile away in high traffic areas…the main focus of these incentives is business vitality and generating tax revenues for the city."

The two incentive packages, one for an auto maintenance facility on Plank Road owned by and another for a Caroline Street southern-style restaurant called Buttermilk and Olde Lace carried the approval of city staff.

The incentive package initially offered to AAA-Mid Atlantic would provide an annual 50 percent discount in licensing taxes worth $15,500 over five years. However, at-large Councilor Kerry Devine noted that the facility scored 34 out of 100 points in the city's incentive guideline test. Such a score should only qualify the establishment for a 40-percent refund in business licensing taxes. Citing the discrepancy, she modified the incentive package to a 40-percent annual refund for the AAA center's business licensing taxes. 

AAA-Mid Atlantic plans to buy the old Fudruckers restaurant site on 2871 Plank Road in Central Park and turn it into an experimental business which combines aspects of a auto mechanic's shop with its traditional AAA services like travel planning according to a memo from City Manager Beverly Cameron.

In the process, AAA will move its regional operations from 1171 Central Park to the new "prototype business" site. The organization already has 13 years of history working within the city of Fredericksburg. AAA plans to invest $1.3 million in the project, including $800,000 in site improvements and $500,000 on equipment and other items. AAA says the move will create 12 new full-time jobs. 

The City Council also last night approved a special use permit for AAA to construct and operate their new facility. 

The City Council also approved a seven-year, $78,700 incentive agreement for a planned Buttermilk and Olde Lace restaurant at 623 Caroline St. in the Chimneys Building, itself vacant for the last two years since Eileen's Bakery moved to its current location.

The restaurant will seat approximately 120, including 20-30 outdoor seats, and plans to employ 40 full and part-time workers. The total investment being made in the restaurant is approximately $300,000. The restaurant will serve lunch and dinner five days a week, Tuesday through Saturday as well as a Sunday brunch. According to documents filed with the incentive application Dishes will range in price from $4 to $34.

A staff memo to City Council says that the restaurant "will fill a prominent building and address the demand for southern dining in the regional and visitor markets."

Under the Downtown Tourism Zone incentives, the restaurant qualifies for between five and 10 years of full business license tax waivers and a 10-percent refund on meals and sales tax revenues up to $11,250 per year. 

City staff project the restaurant will generate $551,600 in new tax revenue for the city, despite the incentive package.