Front Royal continues talk on corridor fees

By Alex Bridges

FRONT ROYAL — Front Royal may try again to collect fees from certain businesses in the U.S. 340-522 North corridor.

Town Council discussed on Monday the idea of reinstating the practice of levying a type of fee, similar to meals and lodging tax, in the commercial-rich corridor.

Retail businesses in the corridor pay PILOT fees – Payment In Lieu of Taxes – to the town that includes taxes on real estate and machinery and equipment, according to information from Finance Director Kim Gilkey-Breeden. The town does not collect meals or lodging tax from businesses in the corridor.

But Councilman Bret Hrbek says Front Royal can collect the equivalent of the meals and lodging taxes through its PILOT fees. Council may just need to amend a resolution Hrbek and other members adopted in 2010 to reflect that the town can collect the fees.

Town officials have explained that fees such as those for meals and lodging are paid by the customer, collected by the business and remitted to Front Royal. These charges do not come off the proprietor’s bottom line.

Mayor Timothy Darr said he and Town Manager Steve Burke talked about the reinstatement and agreed officials should at least discuss the matter with the Economic Development Authority.

“There is going to be some controversy with this particular subject, but I do think we have tried to exhaust every way possible,” Darr said.

The town could collect an additional $150,000-$175,000 a year if it reinstated the meals and lodging tax portion of the PILOT fees on the newer contracts. Gilkey-Breeden said businesses receive a portion of the taxes collected if they pay on time.

The mayor said council should invite business owners in the corridor to talk about the matter. Darr said some of the owners of the newer businesses in the corridor may not know the history of the debate over PILOT fees. Discussions should involve the Economic Development Committee and the town/county liaison committee, Darr suggested.

Darr and other council members said going this route could spark litigation against the town.

“I do think it will create — maybe, maybe not — an unfair playing field for the newer businesses as opposed to the businesses that are currently open out there,” Darr said.
“But that playing field was not created by us. We’ve done everything to try to make it fair.”

Front Royal lost a lawsuit a few years ago brought on by three restaurants in the corridor that claimed the town wrongfully collected fees from them. The mayor went on to explain that the town could collect fees through contracts only with those restaurants that entered agreements with Front Royal after the judge’s ruling.

“I think we need to move forward with this in order to generate revenue to create a stronger economic base within the town limits,” Darr said.

The mayor hinted that should the town go forward on the matter in the coming months, Front Royal could start collecting the additional fees by January.

Vice Mayor N. Shae Parker said he supported the measure but voiced concern over the fairness of collecting fees from some businesses but not others. Parker said doing so could spark a challenge so the town may benefit from talking to business owners about the intention to revisit the PILOT fees.

“I’m willing to have the conversation but I think we have to look at the best possible scenario and the worst possible scenario.

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