Warren County offers corridor deal

By Alex Bridges

Warren County plans to give Front Royal an olive branch to settle a dispute over the U.S. 340-522 North Corridor.

A deal proposed by the county, if agreed to by Town Council, would mean extra revenue each year for Front Royal it can otherwise not collect from business in the commercially dense corridor. The deal, if approved, also would head off any attempt by the town to annex the corridor — an idea some councilmen have mentioned publicly.

While not required by statute, the Board of Supervisors has decided to schedule a public hearing on the proposed memorandum of understanding. County Attorney Blair Mitchell said “there was a feeling by, I guess, a consensus of the board members that they wanted it to go to public hearing.”

Front Royal Mayor Timothy Darr said Friday he has seen the proposal and expects Town Council to discuss the deal Monday night at its work session. He said each councilman has seen the offer and members have discussed it in previous closed sessions. The mayor gave no indication that council would endorse or pan the memorandum of understanding.

“Right now we’re just kinda going to look at it and see where were at,” Darr said. “There’s a lot of questions about it. There’s a lot of parts to it.

“We gotta discuss it as a group, talk about it, try to figure out if it’s the best benefit for the citizens of the town of Front Royal as a whole,” Darr added. “We haven’t discussed it a whole lot because we didn’t know what [the county’s] intent was.”

Darr plans to communicate council’s feelings about the agreement to board Chairman Archie Fox. Supervisors then may or may not choose to move forward with the proposal, Darr said.

Front Royal provides water and sewer services to properties in the corridor outside town limits under an existing agreement with the county. But by law, Front Royal cannot collect the meals and lodging tax revenue generated by many of the businesses in the corridor.

Vice Mayor N. Shae Parker broached the idea in a Town Council meeting that the existing agreement allows Front Royal to annex all or part of the corridor. County leaders question Parker’s interpretation of the agreement. Parker has said the option remains one of several that the town and county could consider to help Front Royal recoup some of the lost revenue.

Meanwhile the town has hired an attorney to look into annexation.

The memorandum of understanding for the revenue-sharing agreement calls for the county to pay the town the equivalent of 1 percent of the 4 percent tax on meals collected from businesses in the corridor for the current fiscal year that began July 1. The county would pay the town Dec. 31, 2014.

The payment amount would increase to 2 percent of the meals tax collected for subsequent fiscal periods. The county would pay that money to the town on Dec. 31 or the first business day thereafter.

“The county is saying merely on an accounting basis we’ll figure out … of the 4 percent meals tax would be and we will pay the equivalent,” Mitchell said.

The memorandum notes that town council has discussed the possibility of instituting a hostile annexation application to annex the corridor, as defined in the agreement.

The county “is confident that such a hostile action by the Town would fail, but would result in legal and consulting fees for both localities that could approach one million dollars each, which would be an undue financial burden on both localities …”

The county hired Springsted Incorporated to study the benefits both jurisdictions receive from the corridor agreement, including the economic development activity and revenues the town collects through utility charges and from payment in lieu of taxes.

“Whereas, in the spirit of cooperation and assistance, and not due to any legal obligation to do so, nor due to any discussion of annexation, the County is willing to agree to make voluntary contributions to the Town, on an annual basis, of funds representing a portion of the meals tax PILOT surcharges heretofore collected in the Corridor by the Town,” the memorandum of understand states. “Whereas, it is the desire of both the Town Council and the County Board of Supervisors to formalize this Agreement in the spirit of amicable cooperation.”

The deal comes with some strings.

The agreement calls for the town to “not publicly discuss or commence annexation proceedings concerning any portion of the 522 Corridor” as long as the county approves fiscal budgets that include appropriations to Front Royal the equivalent of 2 percent of the meals tax collected and pays the money to the jurisdiction.

Future town councils could not explore or go forward with annexation, the agreement states. Such action would terminate the deal and Front Royal would owe the county all money paid to the town for the three immediate previous fiscal years. The town would need to pay the money to the county in a lump sum no later than 60 days after initiating annexation efforts.

The agreement also would terminate if the county failed to make the budget appropriation or pay the town. Council no longer would be restricted from talking about or moving forward with hostile annexation. Under the agreement the parties understand that this term doesn’t mean the county endorses annexation.

Front Royal must cooperate with Springsted during its study and provide the consultants with any financial information available through the town.

Contact staff writer Alex Bridges at 540-465-5137 ext. 125, or abridges@nvdaily.com