08-16-07 Wegman's predicts Fredericksburg store will generate $60 million in sales; City Council approves tax incentives plus creates opportunity fund

Date published: 8/16/2007

BY EMILY BATTLE

Fredericksburg City Council members did two things Tuesday that they hope will fill Celebrate Virginia's hotel rooms with people and its empty land in with high-end businesses.

With unanimous votes, the council set up an "opportunity fund" for the Fredericksburg Expo Center and approved $1.7 million in tax incentives to lure a Wegman's Grocery to the development off Fall Hill Avenue.

The $50,750 "opportunity fund" is meant to subsidize certain costs for meetings and conventions that have the potential to bring in lots of meals, lodging and other tax revenues for the city.

Councilman Matt Kelly said at Tuesday's meeting that cities that own their convention centers often let groups use them at no cost, knowing that they'll make more than that in the tax revenues that convention guests generate.

Fredericksburg's Expo Center is privately owned, and can't offer its services for free.

"We're trying to give our convention center a little more competitive edge to deal with this situation," Kelly said.

The money for the fund comes from the landowners in Celebrate Virginia South. Under an agreement they signed with the city two years ago, they make an annual contribution to the city to pay for FRED transit and other services, including marketing the development.

To qualify for money from the fund, conventions that are new to town must bring in a minimum of 500 hotel room nights for every night of their event or attract a minimum of 1,500 attendees.

Conventions that already come here would have to meet those criteria and commit to expanding their number of attendees or the number of hotel rooms they fill.

Council members also voted Tuesday to offer $1.7 million in tax breaks over 10 years to lure a Wegman's Grocery to Celebrate Virginia.

This is the first time the council has used the provisions available under a tourism zone ordinance it adopted last month.

Those incentives have been criticized in letters to The Free Lance-Star.

Former Mayor Bill Beck said they favor large national retailers over small, startup businesses, since a business has to invest $500,000 or hire 25 people to qualify.

City resident Tom Byrnes asked at Tuesday's meeting why an independent retailer downtown couldn't meet those thresholds.

Falmouth resident Ron Utt argued in a Sunday op-ed that Wegman's would only draw customers from other local grocery stores, and therefore wouldn't really bring the city any new revenue.

City Economic Development Director Kevin Gullette disagreed.

He said Tuesday that Wegman's has a record of drawing customers from a 30-mile radius, and that the store tends to act as an anchor that spurs other high-end retailers to locate near it.

Wegman's predicts its Fredericksburg store will generate $60 million in annual sales.