Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, November 26, 1995 TAG: 9511270001
SECTION: BUSINESS PAGE: G-2 EDITION: METRO
SOURCE: DAN CASEY STAFF WRITER
DATELINE: LENGTH: Long
Branch Highways spent a lot of time and money earlier this year winning a heated rezoning battle to build an asphalt plant on 11 acres in Northeast Roanoke.
Now, the company may get that money back and then some - from state and local taxpayers.
City Council on Oct. 16 approved an enterprise zone application that included the Branch tract - months after the company said it would build there anyway.
The designation could mean more than $250,000 in state and local tax breaks for the road builder, provided the company qualifies for incentives the enterprise zone provides by meeting certain investment and hiring standards. The subsidies will be available only if the proposed Roanoke zone is approved by the state this week.
Council members say they were unaware last month when they considered the enterprise zone boundaries that the 11-acre Branch property was on the zone's southern edge.
Branch Highways President Ralph Shivers said he also had no idea the site was inside the proposed zone.
And the city's economic development staff, which drew those boundaries, said there is no good reason not to include the site in the zone.
But the act has angered citizens in Northeast Roanoke who fought furiously against the $3 million plant, only to see their pleas dismissed in unanimous votes by both the City Planning Commission and City Council.
It means that as taxpayers, they'll be footing part of the bill for something they strongly opposed.
"It's amazingly coincidental," said Jim Phillips, who lives in Springtree, a community across U.S. 460 from where the plant will be built. "The taxpayers are going to subsidize it."
"I would like to see somebody say, 'Any deal made prior to this, the tax breaks wouldn't be valid for them,'" said Paul Smith, another Springtree resident who fought the plant. "That wouldn't be right. Prior knowledge of this break translates into windfall profits."
Branch has yet to develop the site because the company is still negotiating with adjacent landowners for a right-of-way that will allow access for its trucks. Shivers said ground-breaking is months away.
Roanoke never discussed the enterprise zone proposal with Branch while the lines were bring drawn, said Doug Chittum, the city economic development planner who spearheaded the application for the new enterprise zone.
But the tract's inclusion in the proposed zone made sense, he said, because all other nearby land with similar zoning was included inside the enterprise zone's boundaries.
"It would be arbitrary and capricious to draw a line around them," Chittum said. "I have a hard time seeing why you should."
Moreover, while one purpose of the zones is to attract new business, they also serve to retain existing business and encourage their expansion, Chittum said. He noted that Branch's plans for the land might change if the economy nose-dives before it breaks ground.
"What we've got now is a vacant piece of property," Chittum said. "I know what Branch's intentions are. But suppose we draw a line around them, because they were going to do the project anyway, and they're excluded from the enterprise zone.
"Then interest rates go sky high, business takes a downturn. And they pull out. Where are we then? We still have a piece of vacant land," Chittum said.
Shivers said his company's decision to develop the site had nothing to do with the enterprise zone, which wasn't even in the works when Branch began eying the land.
Besides, "our investment here is too great for something so small as an enterprise zone to be the decision-maker," Shivers said. "We would be foolish to go into the business just to get an enterprise zone credit."
Councilwoman Elizabeth Bowles said the subject of the Branch property never came up at the Oct. 16 public hearing over the zone.
"It's a good question. Why should you bring someone in an enterprise zone when they're already interested in bringing a business in there anyway?" she said.
"Yes, it is like giving tax money away," said Councilman Jack Parrott. "But it's kind of like a gerrymandering deal there, to go in ... and cut the line to draw [Branch] out. I think it would be kind of [unfair] not to give them something we're giving to their neighbors."
Branch's proposed advantages
Here are the subsidies Branch Highways could receive if the state approves a new enterprise zone in Roanoke:
Free city water and fire hookups that would normally cost a large industrial user $20,000.
A 50 percent cut in the city machinery and tools tax. A company with $1 million in new tools and machinery would save $10,350 in the first year but less in later years as the value of the machinery depreciated.
Savings of $125,000 in state corporation taxes.
At least $15,000 - and possibly as much as $25,000 - from the city in job training grants for the 30 workers Branch intends to hire at the proposed plant. How much Branch would get depends on whether those workers live in the zone.
Up to $90,000 in three-year-long, $1,000 job grants from the state for creating 30 new full-time jobs (less if the workers hired live outside the enterprise zone). A company is eligible for the grants only if it increases its total employment by 10 percent or more.
by CNB