The New Market Town Council is looking forward to hearing about a proposed ordinance offering tax and start-up incentives for new and existing tourism businesses. Alex Berryman, town planner and zoning administrator for New Market, proposed the idea of a tourism zone at a council meeting earlier this month.
Tourism zones are a popular draw for businesses in Virginia. According to the Virginia Tourism Corporation, there are 71 tourism zones in the state. The proposed ordinance would allow new and existing businesses to set up shop anywhere in the town limits while receiving discounts on water/sewer connections, business license fees and town real estate taxes.
Berryman said he thinks this is a good idea for the town but he wants to treat theirs differently from most others in the state.
“These zones exist across the state,” Berryman told council members, “[but] a lot of these municipalities are using these as home runs to secure the last big deal.”
Berryman said he thinks New Market should focus on hitting singles, bringing small businesses rather than drawing a huge industrial plant.
One home run example Berryman used was the Foxconn plant in Wisconsin. Foxconn produces LCD panels for iPhones. In November, Foxconn signed a contract with Gov. Scott Walker to create a plant in Mount Pleasant, Wisconsin. The multinational company will receive “pay as you go” tax credits once it invests $9 billion and creates 13,000 jobs.
Berryman said a project like this is the opposite of what New Market is looking for. The incentives for Foxconn are roughly $4 billion, he said, with about $3 billion in tax incentives. Tax breaks for New Market tourism business will be much more moderate.
“The tourism zone principle is quite the contrary,” Berryman said. “It’s that we can use incentives that are revenue neutral. We may be giving up revenue we could potentially accumulate, but we’re not adding expenditures to our already kind-of-stressed budget.”
Virginia state code allows any city, county or town to establish a tourism zone that provides tax incentives for up to 20 years and can include waiving permit fees, zoning restrictions and ordinance exemptions.
A draft of the ordinance shows that businesses that qualify can receive a range of modest incentives including a 50 percent reduction in real estate taxes, exemption from off-street parking requirements, minimum business license cost and up to half off connecting or upgrading a water/sewer system to a building. The incentives would last for five years, according to the ordinance.
The Town of New Market would be within the tourism zone Berryman is proposing. Jeremy Camp, director of Planning and Zoning for Front Royal, said his town segmented its tourism zone into three areas: downtown, community and entrance corridor sectors.
Although it is segmented, the tourism zones cover 95 percent of the commercial property in Front Royal, Camp said.
The recent boom in Front Royal isn’t all due to the tourism zone, either, he said.
“It’s certainly not a fix everything solution,” Camp said about the efforts to revitalize downtown. “The tourism zone is mixed in there, and part of that for sure, but it’s not the sole factor that has made it turn around.”
If New Market Town Council members determine they want to bring a tourism zone to town, existing businesses will not be grandfathered into the program. Both new and existing businesses must apply to receive the incentives outlined in the ordinance. The application will include a description of the business; how it plans to meet eligibility requirements; revenue projections for five years; and the number of full and part-time jobs it will create.
Minimum requirements for eligibility include creating either one full-time job, two part-time jobs or investing at least $5,000 in a building or building improvements. Purchasing land to build on will not qualify, according to the draft ordinance.
Berryman said the requirements and definitions to apply are intentionally broad. Examples of qualified businesses are conference center services, galleries, entertainment, food services and outdoor activities.
“Its a very liberal definition,” Berryman said. “This is a supply-oriented initiative versus a demand [initiative].”
While New Market considers tourism zones, Shenandoah County is working on a plan to create overlapping zones between the county and towns. Jenna French, director of Tourism and Economic Development for the county, said she hopes to have a draft proposal by the end of the year.
“We are looking at creating a tourism zone that would basically encompass the entire county and ideally have overlapping districts the towns put in place as well,” French said.
Incentives would be similar to those New Market is proposing — reduced real estate taxes and water/sewer connection costs. County requirements for eligibility may be more strict, however. Where New Market is casting a wide net, the county would be seeking specific types of businesses for different areas.
Berryman mentioned the county’s plans to create a tourism zone of its own to the Town Council. While the county is focused on bringing people to the area, New Market wants to capitalize on people who are already in town.
“We are in a position where, I believe, we need additional businesses or encourage our businesses that are already there to expand,” he said.
Differences in appeal aren’t a bad thing, Berryman said. He said he wants the town and county to work together moving forward.
“Ultimately, this will be more efficient if the county joins us,” Berryman said. “We can help start that charge by being the leading party.”
Whenever incentives and tax breaks are brought up, town governments are apt to ask if they are worth it. Berryman asked himself before presenting the idea to council members if a tourism zone will attract anyone who wasn’t planning on coming to New Market already or if they are handing out needless benefits.
“With any sort of incentives, you are either paying out funds or cutting what you would take in,” Berryman said. “But I think that’s always a critique or challenge.”
Berryman said he believes the modest incentives will produce long-term growth and health for New Market.
“I think this is a means to get folks to commit when they have ample choices between Staunton and Winchester,” he said. “We think a town with thriving businesses is a thriving town. So we want to have that.”