Tech, Tourism Biz Incentives Overhaul Tabled

The Fredericksburg City Council tabled two measures expanding two downtown business incentive programs, saying more discussion was needed before incentive programs are overhauled.

The two measures would have made big changes to the city's tourism and technology zone incentive programs, which give business license tax breaks to certain businesses which expand or relocate in Fredericksburg.

"We need to look more strategically  at incentives, period, technology or tourism regardless," said Ward 1 Councilor Brad Ellis, who supports the idea of expanding the programs. "We did not have time to really get into the weeds about how we want to utilize incentive programs."

The City Council held a public hearing to expand the technology zone to include the entire city and take away council approval of some tech zone business incentive programs.

The revised tech zone and incentive program was designed to cash in on otherwise "missed opportunities" to entice tech companies to relocate in the city. By stripping City Council of it's direct approval of the tech zone incentive program for incentives up to $100,000 in total value, city economic development officials hoped to make it easier for interested businesses to participate in the incentive programs. The measure also would have reduced the eligibility criteria for tech zone incentives.

So far, the existing incentive program has lured two businesses into Fredericksburg and helped an existing company expend their operations here. As a result, 50 new jobs were created in the city and about $215,000 in business taxes have been collected.

"The city has missed opportunities with companies considering locations outside of the five existing zones and other businesses have not qualified under the programs current employment and capital investment eligibility criteria," reads a memo to City Council members explaining the changes.

Currently, tech businesses looking to participate in the incentive programs have to create a minimum of 10 new jobs and invest $250,000 into operations in the city.

"There is a potential loss of revenue because of those current criteria," said Richard Tremblay, economic development manager for the city, to members of the City Council last night.

Under the new incentive program, tech businesses would only need to add five new jobs and invest $75,000 into their city operations to qualify for incentives.

Former City Councilor Matt Kelly, during the public hearing, advocated for a wholesale overhaul of the incentive programs, arguing that incentives should be more specifically targeted to lure high-profile businesses which would have a big impact on the city's tax revenues.

"We want to bring jobs and expand our tax base, that's what it's all about, not being nice to everybody" said Kelly. According to him, the proposed overhaul would do nothing more than make more businesses eligible for incentives. This, he added, only serves to stress the markets of existing businesses competing against newer incentivized businesses.

Right after the hearing and vote for the revised tech zone incentives, a nearly identical measure geared towards the tourism industry went up for a public hearing. Like the tech zone amendments, the new rules expand the boundaries of the Tourism Zone, but only to include the Route 3/Gateway Boulevard corridors, strip the City Council of direct approval of Tourism Zone incentive programs up to $100,000 in value, and reduce the eligibility criteria for Tourism Zone incentives.

This too was quickly tabled until after the City Council meets to discuss business incentives. Both votes to table were unanimous, however Ward 4 Councilor Bea Paolucci was absent with an illness.