Report: Town reaped rewards of corridor deal with county

By Alex Bridges

FRONT ROYAL — A deal over the U.S. 340-522 corridor helps Front Royal more than Warren County, a consulting firm says.

But town officials say Springsted’s report on the impacts of the 1999 agreement between the two jurisdictions doesn’t paint the whole picture and even downplays the corridor’s benefits to the county.

The Board of Supervisors held a work session Tuesday to receive the Springsted report presented by Springsted representatives John Anzivino and Nick Dragisich. Town Manager Steve Burke and town councilmen Hollis Tharpe and Daryl Funk attended the work session along with other county officials.

The county hired Richmond-based Springsted last year to study the effects of the corridor and the related agreement on the town and the county. Springsted collected historical data from each jurisdiction related to revenue collection and spending. The county allocated $18,800 in the current budget to cover the estimated cost of the study.

“As we look at all that data, as independent, third-party reviewers take a look at the data and analyze it, our conclusions are that the town of Front Royal has benefited from the corridor agreement,” Anzivino said.

The consultants also concluded that the corridor agreement needs no changes.

Board Chairman Daniel Murray Jr. called the agreement “a win-win for the town” and noted that the deal also works well for the county.

“But I would say the winner in this was the town, very strongly from an economic standpoint,” Murray said.

The consultants state in the executive summary that the town received an estimated benefit of $26.7 million from fiscal 1999-2012 that resulted directly from the corridor agreement. By comparison, the agreement’s effects amount to a loss of more than $900,000 to the county over the same period. However, in the later years of the study period the county revenues collected as a result of the agreement appear to exceed spending. The consultants said the county will likely see revenues increase.

As Anzivino noted, Front Royal received revenue from businesses in the corridor not located within town limits known as payment in lieu of taxes, or PILOT. The town collected money through water and sewer connections to the businesses and usage fees.

The consultants also looked at the effect on the county of taking over some services that were handled separately by Front Royal in the town limits. While the town saved money by not having the responsibility to fund fire and rescue services, animal control or parks and recreation, the county incurred the additional costs, the consultants found.

After the work session, Burke criticized the report for including savings the town sees as part of the total revenue picture. Burke also pointed out that the report appeared to compare apples to oranges by using “estimated new revenue” for the county and “gross” figures for the town. The estimated new revenue does not appear to include the gross revenue the county collected, Burke said.

“My opinion is that the report does document that the town government appropriately entered the agreement to the benefit of the town citizens in transferring services that should be budgeted countywide to Warren County,” Burke said. “The report also documents that the town has managed our finances conservatively over the years to achieve a very stable, fiscal position.”

Anzivino told the board that new development in the corridor should help the county offset some of the costs it has incurred over the years.

“We do also believe that the county and its residents, who also include the town citizens as well, will continue to benefit from the development facilitated by the U.S. 340-522 corridor agreement,” Anzivino said. “That’s from not only the standpoint of revenue but it’s also from the standpoint of quality of life and opportunities for employment as well as shopping and extra activities in the corridor that have developed by the joint cooperation of the town and the county.”

“We see this as a long-term situation,” Dragisich added. “It takes some time to recover those kind of investments.”

But Burke pointed out after the work session that the presentation given by the firm’s representatives glosses over and minimizes the economic benefits the county reaps from real estate and machinery and tools taxes it collects in the corridor. Front Royal cannot collect these taxes as the properties lie outside town limits. Likewise, Front Royal cannot benefit from the sales and meals taxes collected by the county in the corridor.

Revenue from all sources for the county increased from $29.3 million in fiscal 1999 to about $70.1 million in fiscal 2012. The county spent $15.3 million in fiscal 1999 compared to $68.5 million in fiscal 2012. However, the figures presented for fiscal 1999 did not include spending on education. The county handled education spending as a transfer of funds to the school system and thus the amount did not appear in the 1999 figure, the consultants explained.

A copy of Springsted’s report can be found on the county’s website at http://tiny.cc/afhzcx.

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