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05-05-2010 Special Meeting SPECIAL MEETING OF THE ISLE OF WIGHT COUNTY BOARD OF SUPERVISORS HELD THE FIFTH DAY OF MAY IN THE YEAR TWO THOUSAND AND TEN PRESENT: BOARD OF SUPERVISORS Phillip A. Bradshaw, Chairman Thomas J. Wright, III, Vice - Chairman Stan D. Clark Al Casteen JoAnn W. Hall PRESENT: PLANNING COMMISSION James P. O'Briant, III, Chairman Lars S. Gordon, Vice - Chairman Lee Winslett, Jr. Nancy Guill Leah Dempsey Barbara Easter James B. Brown, Jr. James Ford ABSENT: Bryan B. Babb (absent) Don G. Rosie (absent) Rex W. Alphin (absent) Also Attending: A. Paul Burton, Interim County Attorney W. Douglas Caskey, County Administrator Carey Mills Storm, Clerk Chairman Bradshaw called the special meeting to order at 6:00 p.m. at The Smithfield Center for the purpose of conducting a joint meeting with the Planning Commission concerning innovative ways to encourage development in the County. // Beverly H. Walkup, Director of Planning and Zoning, advised that staff, responsive to the Board's directive, have been investigating why there has not been any movement occurring in the County with respect to approved developments, particularly those in the Newport Development Service District. She advised that property owners, economic development entities and developers had been interviewed and it was found that consistency and consensus in the information offered by the development community and confirmation on how other competing jurisdictions are doing business. Ms. Walkup stated that the budget process revealed a $2.4 billion dollar deficit for FY2011 due to shrinking State and Federal sources and the closure 1 of International Paper, related industries and changes in manufacturing at Smithfield Packing and that staff began to focus on commercial and retail development, realizing the potential for attracting corporate office -using tenants as a beneficial means by which to provide employment opportunities, as well as to address the fiscal impact generated by property taxes on office buildings; however, it became apparent that that part of the County's market has most likely been absorbed in the trade area of the City of Suffolk and the Peninsula jurisdictions. She advised that the County's retail sectors have not grown due to the small consumer base and competitive pressure on existing shopping centers, which resulted in a leakage of retail dollars out of the County and more reliance on residential real estate taxes. Ms. Walkup advised that staff has determined that the manufacturing industry still represents an opportunity for the County due to its proximity to the Port of Virginia and development of the Intermodal Park. She advised that future projected need for distribution space is attributed to the recent trend of big box retailers and other companies employing supply chain management strategies to place facilities closest to a port of entry and to the final customer. Ms. Walkup advised that staff has reviewed several large, approved, but undeveloped projects which represent potential growth in key industries and determined that they remain undeveloped due to stricter lending practices; a decline in land values; excessive cash proffers and fees on top of infrastructure cost improvements; traffic counts on County roads and lack of proximity of those roads to an interstate; and, no local incentive to compete with those of neighboring localities. She advised that other road blocks include approved residential density is not adequate to support commercial development and the Planning Commission and Board's review process is too long. Ms. Walkup stated that the County can attract new growth industries and remain a competitive market in the Hampton Roads region by developing public /private partnerships; offering proffer flexibility; offering tax incentives; and, other ideas to sustain/create a vibrant, attractive community. She advised that the County can attract new growth industries as it has great existing assets, such as its Comprehensive Plan; great neighborhoods; great natural resources for outdoor recreation; great location within the region; great historic resources; a strong community organization network; and, the lowest real estate tax rate in the region. She advised that the County can attract new growth industries by offering tax abatement programs for new commercial development in targeted industries; provide proffer flexibility; develop public /private partnerships to build needed infrastructure and by implementing measures that could include Tax Increment Financing (TIF) and Community Development Authorities (CDA). Ken Powell, Managing Director of the Public Finance Group of Stone &Youngberg, LLC, provided examples of Community Development 2 Authorities (CDA) and Tax Increment Financing (TIF) which have been successful in other jurisdictions, as well as those that are currently in a default status as a result of the real estate recession, which include Frederick, Stafford and York Counties and the Cities of Fredericksburg, Hampton and Portsmouth. He advised that this development tool can be used to build public infrastructure to entice an economic development prospects without placing the County at risk for the infrastructure. He advised that bonds issued by the CDA do not affect the County's credit rating or debt capacity. He stated that bonds can be paid for by assessments, which are add -ons to the County's real estate tax, or by Tax Increment Financing (TIF), which is an arrangement whereby a certain percentage is given to a trustee to pay off the bonds and a certain percentage is given to the County from the new taxes that are a result of a business coming into the County. He advised that bond buyers like mixed -use projects best as they like to see a jurisdiction that is bringing people together and not putting together just retail development that will create more problems with the transportation system. Jay Joseph, Senior Vice- President, Harvey Lindsay Commercial Real Estate Development, advised that retail business needs people, purchasing power and growth in order to be successful. He advised that Walmart, Lowes and Home Depot's interest in locating in the County have diminished because of the loss of jobs and the succession of growth. He advised that if the Board wants growth to resume in the County, its fees, proffers and off - site infrastructure costs need to be more in line with those being asked by surrounding counties. He stated there also needs to be more flexibility associated with the master planning process for projects to allow staff greater responsibility for changes that occur so that the project can proceed in a quicker manner. He mentioned that the County's low real estate tax rate could be used as a competitive advantage as it provides room to structure an assessment as a backup to a Tax Increment Financing (TIF) financing for a Community Development Authority (CDA). William (Trip) Ferguson, Senior Vice - President, Harvey Lindsay Commercial Real Estate, recommended that proffers be used in a more creative fashion, such as trading them for values in a home in the way of more square footage, an additional bathroom or more brick versus siding. He stated that if the County creates value for the land, good things will come from it. Chairman Bradshaw recalled that in the 1970's, the County went from a small rural county to one (1) of the fastest growing counties in the State responsive to regional sewer being piped in to support Smithfield Foods. He stated that the Board had gone into a reactive mode in order to manage the growth that followed by putting in proffers to address needed infrastructure. He stated that it is now time to react to the downturn in the economy and work together with the development market. 3 Supervisor Clark moved that staff be tasked with developing a draft revised Proffer Policy focused on financial and regulatory flexibility using Community Development Authorities' tax increment financing to maximize the use of our low real estate tax rate with the goal being to jump start the four (4) large mixed -use developments in the northern end of the County and to achieve long -term value added real estate tax revenues from value added infrastructure and development structures. The motion was adopted by a vote of (5 -0) with Supervisors Bradshaw, Casteen, Clark, Hall and Wright voting in favor of the motion and no Supervisors voting against the motion. // At 8:10 p.m., Supervisor Hall moved that the Board adjourn its special meeting. The motion was adopted by a vote of (5-0) with Supervisors Bradshaw, Clark, Casteen, Hall and Wright voting in favor of the motion and no Supervisors voting against the motion. P • ip A. Bradshaw, Chairman !11.' Ji Carey M "is Storm, Clerk 4