By Alex Bridges
Front Royal leaders may take another stab at collecting money from the U.S. 340-522 corridor.
Councilman Bret Hrbek has proposed that Town Council reinstate the fees it collected from certain businesses in the commercially rich corridor in Warren County. The fees, referred to as Payment In Lieu of Taxes, or PILOT, come from restaurants and other eateries in the corridor.
The town can't collect meals or lodging taxes from restaurants and hotels in the corridor. Instead, it collected the equivalent to the taxes.
Hrbek said Friday he wants council to consider rescinding the resolution members adopted March 8, 2010 that regards contracts for restaurant utility customers and motel or hotel utility customers in the area served by the town.
Town Council plans to address Hrbek's proposal at its work session Monday. Council does not normally take formal action at its work sessions.
The town holds contracts with businesses and other entities in the corridor to provide water and sewer to the properties. Certain contracts call for the entities to pay PILOT fees that equal the sum of meals and lodging taxes that the county would collect.
After the town lost a court battle in early 2010 over whether or not it could collect meals and lodging taxes from certain businesses in the corridor, council adopted a resolution to stop collecting the levies. This also applied to businesses that the town had contracts with that indicated Front Royal would collect PILOT fees.
Council now must make a formal declaration to repeal the resolution. Once council repeals it, the Finance Department can begin collecting meals and lodging fees from businesses with contracts that say the town can collect this money, Hrbek said.
"That's what I think we need to go ahead and do because we've kind of come to an impasse with the county," Hrbek said. "They're not willing to share any of the revenue they're collecting and we're just going to have to exercise the right that we have to collect those moneys."
Hrbek, who sat on council in March 2010, sided with fellow members in adopting the resolution. Now he wants council to rescind it.
Council adopted the resolution after the town lost a court battle with Applebee's Restaurants and other eateries in the corridor that challenged Front Royal's ability to tax the businesses. Judge Dennis Hupp sided with the restaurants and ruled that three restaurants in the corridor, by virtue of their contracts with Front Royal, are not legally obligated to pay the town the meals tax component of PILOT because the customers, not the businesses themselves, pay the levies.
The town learned from its mistake. All contracts with businesses in the corridor include meals and lodging tax collections
How much the town could collect from businesses in the corridor remains unknown. Hrbek said that information may come up during council's work session.
But Hrbek doesn't see the revenue source as one the town could use to beef up its general fund. Hrbek suggested council put the money collected through the fees into a special pot Front Royal could use for economic development within town limits. Hrbek noted that Front Royal doesn't have the money now for economic development in town.
"There's certainly not an appetite on council to raise taxes to help finance redevelopment," Hrbek said.
Contact staff writer Alex Bridges at 540-465-5137 ext. 125, or firstname.lastname@example.org