Gov. Bob McDonnell announced on Wednesday the approval of the first Virginia Tourism Development Financing project, a new program recommended by the Governor’s Commission on Economic Development and Job Creation and approved by the General Assembly in 2011.
The program provides gap financing for tourism development projects which are identified as critical to local economic development and are done in partnership with developers, localities, financial institutions, the Virginia Tourism Corporation and the Virginia Resources Authority. The City of Fredericksburg will be the first locality in the state to access the program to create a five-story, 96-room hotel and mixed-use development. The project is expected to generate more than $3 million in tax revenues over 10 years according to local estimates.
The Virginia Tourism Development Financing Program works by allowing approved tourism projects to temporarily retain a portion of state and local tax revenue generated from the project combined with a matching contribution from the developer to provide gap financing for up to 20 percent of the project’s total cost.
“Virginia’s tourism industry provides thousands of good, quality jobs across the state, which is why I have made tourism a key part of my economic development initiatives,” said Gov. McDonnell. “In 2011, we passed legislation creating the Tourism Development Financing Program to help increase tourism and new business in Virginia. Tourism is a multi-billion dollar industry in Virginia that supports hundreds of thousands of jobs in the state. The Tourism Development Financing Program allows identified, locally-approved tourism projects to retain a portion of local and state sales tax to complete financing for a project to help Virginia’s tourism sector continue to grow. The project announced today in Fredericksburg is the first to be approved as part of this new program. The new hotel and mixed-use development will allow for more tourism in the city, and will bring greater economic growth and opportunity to the region.”
The University of Mary Washington Foundation is the lead partner on the Eagle Village project, with the City of Fredericksburg and Fredericksburg Economic Development Authority as supporting partners. The roughly $13 million project will include five-story, 96-room hotel with about 1,500 square feet of meeting space and 6,000 square feet of retail. According to local figures, the project is estimated to generate $3.27 million for the city in tax revenues over 10 years.
“The UMW Foundation is proud to be the recipient of the Commonwealth’s first award under the Tourism Development Financing Program,” said Jeff W. Rountree, Chief Executive Officer of the UMW Foundation. “In fact, the combined incentives between the City of Fredericksburg and the Commonwealth of Virginia made the development of our Hyatt Place hotel possible and will meet all of the objectives set forth by Governor McDonnell including the creation of over 55 new jobs and increased tax revenue for both the locality and the state. The UMW Foundation and the University continue to play a leading role in economic development in our region and the Governor’s new program has allowed this project to move forward, contributing yet again to the economic well-being of our community.”
The Eagle Village project also makes use of the Commonwealth’s Tourism Zoning opportunities. Enacted by Virginia Code § 58.1-3851, Virginia tourism zones allow any city, county, or town to establish one or more tourism zones, which grant tax incentives and provide certain regulatory flexibility to aid local businesses.
“We are very pleased that Fredericksburg has attained eligibility for this new tourism program and that the Eagle Village hotel be the first in Virginia to benefit from the state incentive. The additional funding is essential to this hotel’s financing package and I hope we are able to utilize the program for additional city projects,” said Karen Hedelt, Director of the Department of Economic Development and Tourism for the City of Fredericksburg.
Tourism is an instant revenue generator for Virginia. In 2010 tourism generated $19 billion in revenue, supported more than 204,000 jobs and provided $1.3 billion in state and local taxes for Virginia’s communities. Communities interested in the Tourism Development Financing Program can visit http://www.vatc.org/TDFinancingProgram/index.asp. Visit www.Virignia.org to learn more about travel in Virginia.
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