Potential Revenue - Route 29 North Service District




Discussion of the potential annual revenue generated from a tax on commercial development in the Route 29 North area




Tucker, Foley, Davis, Graham, Wiggans, Woodzell, Benish, Bowman







January 3, 2007


ACTION:                            INFORMATION:   X



  ACTION:                          INFORMATION:   











At a previous meeting, the Board of Supervisors discussed the creation of a Community Development Authority or a service district involving the Albemarle Place and Hollymead Town Center development projects. During the discussion, a question was asked concerning the amount of revenue that would be generated annually from a twenty-five cent special tax per $100 of assessed value on the commercial properties in these projects. At a later discussion, before this initial analysis had been completed, the Board requested staff also examine the revenue that would be generated annually from a service district consisting of the commercial properties in the broader Route 29 North (RT 29N) area. Staff presents the following analysis of these questions for the Board’s information.




Goal 5: Fund the County’s Future Needs




In order to project the revenue that may be generated annually from a service district, the boundary of such a district must first be defined. Determining the boundary of a service district is an important process because revenues realized from parcels within the service district must be “expended in the district in which raised.”  § 15.2-2403(6). For purposes of this revenue projection, maps from the Places 29 master planning process were utilized to identify commercial parcels in the broader RT29 N service district (Attachment A). Revenues were projected also for an alternative service district boundary that included only the Albemarle Place and Hollymead Town Center developments. After defining the service district boundaries, staff applied the methodology and assumptions overviewed in Attachment B to project how and when projects in the service district would develop. Upon completing this analysis, staff applied a special tax rate of twenty-five cents per $100 of assessed value to project annual revenues in five and ten years for both service district boundaries. The results are as follows:


Service District Boundary

Projected Annual Revenue*



Broader RT 29N Area (Attachment A)



Albemarle Place and Hollymead Town Center



*All figures are in today’s dollars and do not account for appreciation in commercial properties. See Attachment B for additional details on this assumption and methodology.


It is important to note that the above table illustrates the amount of projected annual revenue in 2012 and 2017. Revenue annually generated prior to 2012 or 2017 would gradually increase to the identified amounts, depending on the type and

timing of developments. Because not all projects in the service district will be fully developed within the next ten years, the 2017 figures are not a theoretical maximum. Aside from appreciation (which again, is not factored in above table), many parcels’ assessed values would increase due to new development and / or redevelopment.


While staff has attempted to present a consistent, conservative scenario, one must recognize that a significant number of economic and market factors may affect these projections. If the projects within the service district develop slower than anticipated under this scenario, the above revenues may not be realized until later than 2012 and 2017. Conversely, if properties develop at a faster rate than assumed, revenues would likewise increase or be realized sooner. These external factors could become more significant in projecting revenues generated from a service district for only the Albemarle Place and Hollymead Town Center developments. For example, within a smaller service district, these projects might be valued less due to the prospect of paying a tax rate that is 33.8% higher (99 cents versus 74 cents based on the current tax rate) than other commercial centers throughout the County. Because numerous variables may affect the above projections, this information is provided to the Board for general information and is not intended to be the sole rationale to create or not create a service district within the County.


Background information on service districts is available in Attachment C. In addition to this previously provided information, the Board should be aware that a recent Circuit Court decision in Stafford County ruled that funds from service districts could only be used for the construction and maintenance of new roads and facilities. While this decision may be appealed or the existing legislation may be amended to allow for improvements to existing infrastructure, at this time, it is uncertain whether a service district could be used to fund improvements to an existing state road, such as Route 29.




The potential fiscal impact is detailed in the Discussion section. Furthermore, should the Board desire to create service districts in the County, the creation of such districts would require staff time to establish the districts, collect the taxes and administer the projects for the benefit of the district.  Whether additional staff would be necessary would depend on the extent of the districts, whether existing software could be used to implement the tax collection and the nature of the projects to be constructed.




The projected annual revenues and service district background are provided to inform the Board. Staff will be in attendance at the Board meeting to answer any questions on the information presented in this report.




Attachment A – Sample Service District Map

Attachment B – Methodology for Projecting Service District Revenues

Attachment C – Service District Information provided to the Board on January 4, 2006
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