Formal action on the formation of the Community Development Authority (CDA) for South Peak is perking up with the help of Bonnie France of the McGuire Woods law firm in Richmond. France has been advising Roanoke County on bond issues for 25 years.
Developer James Smith will first start with a 120-unit condominium project followed by a 90-unit Hilton Garden hotel, restaurants, retail and office space. The bonds issued through the CDA will help with $11 million of infrastructure improvements.
County Attorney Paul Mahoney informed the Board of Supervisors Tuesday that state code mandates three newspaper public notices before any action can be taken. Mahoney gave the board an opportunity to see the documents at Tuesday’s work session. The first notice goes out Friday, July 16.
Board member Mike Altizer asked for stronger language to protect the county from any monetary liability before the public hearing takes place. Altizer believed that the $30,000 yearly CDA operating expenses figure came up short. France explained the figure was for budgeting purposes and would be low initially but high in the waning years.
The expenses, principle and interest on the bonds are to be paid with 70% of local taxes generated from the new development. “If that fails then there is a special assessment that will be added to the real estate taxes,” said Mahoney. If that fails to meet all of the costs then the applicant would make up any difference.
There was some uncertainty as to whether a CDA would be liable for assessments similar to those assessed by homeowners associations. France said that she “had never seen that happen” but agreed with Altizer to add wording that would spell it out in the operating agreement.
Altizer did not want the CDA to be responsible for any temporary infrastructure for the proposed condominiums. He didn’t want the CDA to turn around and “have to pay to do it all over again later.” Altizer also wanted any rebates for water connections to be paid directly to the CDA.
The $300 monthly stipend to CDA members will only apply to citizen members and not apply to county staff or developer members. France recommended that no employee of the developer be placed on the CDA saying that, “they would be subject to a conflict of interest.” The board will hold a closed session at their July 27 meeting to begin identifying five individuals to serve on the governing board.
Altizer was adamant that no building permits are to be issued until the development agreement was approved and signed.
Board member Ed Elswick wanted assurance of the success of the bond issuance. France said there were instances during the financial crisis where “bonds hit the market at the wrong time.” France said that in Roanoke County’s case incremental tax revenues rather than special assessment would protect the county. “As the developer gets the project up and running it creates incremental tax revenue to pay debt service [on the bonds],” said France.
Altizer asked if any CDAs had failed resulting in only partial development. France said that Virginia has only a couple of CDAs that could be considered as failing. These failures were largely ”due to the developer being unable to produce,” she said.
Mahoney who indicated that staff had been working on the board’s concerns for more than a year closed by saying, “if everyone’s comfortable we’ll launch this ship.”
Public hearings will be on August 10 and 24. Board members will get their final chance to question and modify the agreement at a work session on July 27.
By Valerie Garner [email protected]