Warren County braces for consequences of Republican tax bill
FRONT ROYAL – Sandi McNinch, general counsel for the Virginia Economic Development Partnership, discussed the impacts of the Republican tax bills working their way through Congress during her presentation at the Warren County Community Center Friday.
McNinch expressed her concerns about the removal of private activity bonds in the House of Representatives’ version of the tax bill.
Private activity bonds are bonds issued by a government entity to nonprofit institutions with tax-free interest. Typically, these bonds are distributed to help fund capital improvements aiming to have a positive impact on the community, such as affordable housing or nonprofit hospitals.
The removal of these bonds, McNinch said, would cost the federal government $34 billion annually.
“In the House (of Representatives) version of the tax bill that just got passed — not the Senate version, but the House version — these go away,” McNinch said. “There’s no further ability to provide private activity bonds for manufacturing facilities and charitable facilities.”
Jennifer McDonald, executive director of the EDA, said that under the bill, if Warren Memorial Hospital were to seek tax-exempt financing from the EDA to help fund its expansion, the EDA would be unable to provide the necessary bonds.
Instead, McDonald said, the cost of the expansion would likely be tacked onto the patient’s bill.
“That’s a huge hit, because they’re going to pass that cost on to us as the users of the facility,” McDonald said. “That’ll impact your insurance rates, because insurance companies are going to be billed more than what they would have been. So, it could have a trickle effect that I don’t think any of us are prepared for yet.”
The EDA board approved a motion to permit McDonald to refinance the organization’s debt before Dec. 31, to keep interest locked in at lower rates ahead of a final version of the tax bill becoming law.
“If the rules change, we could lose our tax-exempt ability,” McDonald said. “Currently our interest rates are 2.65 percent. If we were not tax-exempt, they would be over 4 percent.”
McNinch also discussed means to attract white-collar jobs to Warren County, rather than having so much of the community commute to D.C. every day.
One of her suggestions was not to wait for a company to show interest before getting land ready, but to proactively zone land and build infrastructure to offer prospective companies a smooth transition to the area.
“The last fiscal year that we were working in, we lost four prospects that the state had brought to us because we did not have a building that was vacant and ready to go,” McDonald said.
“The notion that we’re ready to rock and roll is very important. Especially for a commercial real estate developer, it’s all about taking away risk and taking away unknowns,” McNinch said. “And if you can make it as easy and quick as possible to get that building up and ready to go, that’s going to all be to the good.”
The EDA has had issues in the past with delayed permitting processes through the Department of Environmental Quality (DEQ), with some permit applications stretching past the 1-year mark.
The DEQ has been reluctant to issue wetlands disturbance permits in the county unless companies had already expressed interest in moving to the area, McDonald said, but she argued that companies wouldn’t want to move to the county unless the permits were already in place.
She called the situation “a terrible chicken and egg thing.”
Also on Friday, the EDA approved a motion to make a purchase offer for buildings located at 426 Baugh Drive and 999 Shenandoah Shores Road.
Warren County Administrator Douglas Stanley announced that craft store chain Michaels, which is slated to replace the Staples in Crooked Run Plaza, has received its demolition permit but is still waiting on a building permit.
Stanley also announced that Café Amore had officially opened for business on Main Street, the Board of Supervisors had given approval for the final designs of the fire station replacement, and that the traffic-beleaguered North Fork Bridge project is “about 98 percent complete.”