Economic Development Authority Meeting   11/16/2021

Alright, starting again then.

Notwithstanding any provision of the EDA bylaws to the contrary, as permitted under Virginia Code Section 2.2-3708.2a3, Albemarle County's continuity of government ordinance and adult declaration of local state of emergency and the EDA resolution of April 21, 2020, we are holding this meeting by real-time electronic means with no authority member

physically present at a single central location.

This is because the pandemic's catastrophic nature makes it impracticable or unsafe to assemble in a single location.

All authority members are participating electronically.

All authority members will identify themselves and state their general physical location during the roll call, which we will hold next.

This meeting is being recorded and will be uploaded to the county's website.

The public has real-time audiovisual access to this meeting over Zoom and real-time audio access over telephone, both as provided in the lawfully posted meeting notice.

The public is invited to offer live comment during the public comment period.

Comments are limited to three minutes and must be germane to the matters on today's agenda.

Yes, sir, I will do that.

Director Shreve.

Present in the Samuel Miller District in Albemarle County.

Hard to do.

It only gets better, Director McNaughton.

Present, New Jersey Turnpike.

New Jersey is hard to beat.

It is.

All right, good.

So we have a quorum.

All right, thank you, Richie.

Matters from the public, is anybody signed up to speak?

Mr.

OK. All right, so let's move on to the approval of the minutes.

Does anybody have any comments on the minutes?

All right.

Is there a second?

Second.

Second.

Get the mute off, sorry.

Director Imhoff with the second by motion.

So all in favor say aye or raise your hand.

Aye.

Aye.

Aye.

All right, unanimous.

Financial report since Director Shreve is not present, why don't we pass on that

And if he gets in, we can do that later in the agenda.

So let's move on to the director's report.

Chair Long, members of the EDA, thank you for your time and attention.

Today, we're going to cover industrial revenue bond fees.

We're going to talk just a short minute about tourism.

Economic development has a vacancy.

Bonimo's announcement was videotaped.

We're going to send that out later, and we're going to talk about a prospective new member of the EDA.

So that being said, next slide, Ashley.

For your convenience, staff created this chart.

Apologize that it's a little busy, but we wanted to walk you through what you're looking at and then talk about what staff's recommendation is and why.

This is a side-by-side illustration of the location, an application fee for a bond, an annual fee for bonds, and then an example of how that fee would be calculated if the bond amount was in 30 million, 10 million, or $5 million, respectively.

So you'll see the locations on the left-hand side, which include the City of Charlottesville, Henrico, Loudoun County, Orange County, Spotsylvania County, and Stafford County.

The application fees at Charlottesville range based off of the bond fee, the bond amount itself from 1,000 to 10,000.

Henrico's application fee is 500, Loudoun's 2,500, Orange County's 500, Spotsylvania 5,000, and Stafford 1,000.

And you'll notice at the bottom of the chart

The county staff is proposing an application fee of $1500 based off of the benchmarking that we completed.

In the third column, you'll notice the annual fees and these are calculated all over the board.

We could not find a consistent way that folks went about determining an annual fee for a bond.

You'll see they range from 750 to $7,500 per million issued all the way up to 1% of the first 1 million and half a percent of the amount over 5 million.

So because we had a difficult time

coming up with a consistent way of monitoring.

We created the examples on the right-hand side so you can see how each of these annual fees are calculated and what that means in terms of annual revenue for the economic development authority is receiving in terms of revenue.

So the city of Charlottesville, if they borrowed $30 million, if a private entity or someone else borrowed $30 million using bonds, Charlottesville will get $7,500 annually in RICO accounting

$15,000 annually, Loudoun County $22,500 annually, Orange County $18,750.

And I'm gonna pause here on Orange County because you'll know that in Orange County, it's one eighth of 1% on the declining principle.

So what that $18,750 is, is an average over the life of the bond.

It would actually be more in year one and less in the final year of the bond itself, averaging $18,000 a year.

Spotsylvania is an outlier.

Their fees seem to be exorbitant compared to other localities.

Stafford County is $18,750.

And we are recommending an example of $22,500 per year.

And we came to that conclusion using the calculus of $750 per million issued.

I'll explain why that is in just a minute.

But if you look at the 10 million, you'll see about the same numbers just exponentially lower.

Oh, excuse me.

Go back, please.

Ten million.

You'll see the numbers range from twenty five hundred sixty five thousand and then five million.

They range from twelve fifty to forty thousand.

Our staff decided to benchmark these particular companies, one because Charlottesville is our neighbor.

But also we looked at

In RICO, Loudoun, and Stafford County in particular.

We took a look at their strategic plans to see what they were trying to accomplish.

We saw a lot of similarities between their economic development strategies and Project Enable.

We thought that their particular fees and structure were consistent.

with what their economic development strategic plan and what they were trying to accomplish, which includes things like community development goals, for example, and project enable us to build a better quality of life for folks here.

So we use those three as our primary targets of comparison.

And in doing so, we found that the 750, excuse me, the

$500 per million issued was the most understandable calculus to do it, but we like the fees that resulted from Loudoun County, which provides additional revenue for the EDA.

So we combine those two strategies where it's $750 per million issued

and it results in a greater return to the EDA in terms of financial monies that you could do some other things with, but at the same time, it does not serve as a barrier to future use of these particular bonds.

I have a question, Roger.

Under the city of Charlottesville's fee system, it got $750 per $1 million issued.

Yeah, well, so their fees increase as their total amount of funds are utilized.

So it'd be 750 per million issued, but if you'll go above, and I don't have it in front of me, I can certainly find that information and we can pull it up here in a minute.

In fact, J.T., if you would be so kind to locate the email we received from the city of Charlottesville and pull that up, and I'll show you how they calculate that, George.

It may take us just a minute.

We may have to hop back to it.

But as they increase the amount of bonds financed, their fees actually change.

And that's why you see the number 750 to 7500.

Well, I hear what George is saying.

Let me see if I can find that.

I'm sorry I didn't have that handy.

I wasn't ready for that detailed question.

J.T., were you able to find the email from Chris by chance?

So you see, this is their actual fee schedule, George.

So the $7,500 is if they borrowed $20 million or more, it's $7,500.

OK.

So where it's misstated, it's not per million.

It's a flat fee for a certain tranche or category of bond.

Right.

Yeah.

I got you.

OK.

In general, I've looked at this before and that it would be good to see it and hear it again, because I don't recall

Exactly what I saw.

Yeah, you know what?

We can calculate that information and bring it back, Director Shreve.

I'll also just mention that one of the benefits is just not the interest rate, which is going to be lower than your standard financing.

So it's a combination of those two.

Yeah, and turn the latter item into an interest rate equivalent, if you could, just to give us a single number to fix on.

And my

Yeah.

In fact, if you'll look at the actual resolution, we included that as a rationale for changing the fees because it will not serve as a barrier.

And I mean, I think really the competition is not so much on

is that issue as it is if they get so high, then they'll just go to a different locality, especially when it comes to the ones that they don't have to be locally placed.

If you're doing nonprofit EDA financing, you can get it from any EDA state, so you can very easily go.

I can tell you that for the bank, for like on the bank qualified ones,

The discount is 20% because it's basically the taxable amount that the banks would pay.

So they just take that and produce it to 80% of what the taxable rate would be.

Now, I don't know for other types of, for non-taxable bonds, I guess that's not an issue.

It's just getting the benefit of a public market in some cases.

So I don't have any questions.

I guess the practical aspect of this is we potentially have a bond issuance coming up.

I am recommending, staff is recommending that.

There it is.

Actually, I do have a question.

The $1500 application fee, do you think that is a, I assume you think that is a reasonable estimate of the cost of dealing with this process?

No, sir, I feel like that's a reasonable amount of effort that's going to be put forth by the county as it relates to actually accepting the application itself.

Yeah, as such, you really shouldn't even consider it in terms of a perfect user fee.

So I guess the question I'll ask first, I'm certainly in support of these numbers and obviously we can revisit them at any point if we decide that somehow that we don't think they're accurate.

Does anybody have any concerns about proceeding and adopting a

I have just one question, and that is, let me direct it to you, Don, since you brought the matter to our attention.

Do you see any disharmony here with such a rate structure as it plays out in this dynamic between, say, a nonprofit organization shopping around or

I mean, in my experience for these sorts of transactions, this amount is not an issue.

As Roger pointed out, I mean, the legal fees on these things far exceed the costs of the kinds of numbers we're talking about.

OK.

All right, is there a second?

I'll second.

Okay, so we have a second.

Is there any further discussion?

All right, no further discussion.

Director Long Aye Director Ray Aye Director Shreve Aye Director Munson Aye Director Imhoff Aye Director McNaughton He seems to be gone through the tunnel

Yeah, I can't believe they don't have coverage, but maybe not in the tunnels.

So without it, it's still unanimous.

I'll just note them as not voting.

One other quick thing, Mr. Shreve, I know that you're here.

Where are you located?

Albemarle County.

All right.

Thank you, everyone.

Seems after two years, I would learn to use the unmute button.

I want to talk just a little bit about tourism.

As I think I mentioned a meeting or two ago, the tourism adopted a new marketing campaign called Historic Vines and New Roots.

And the general idea is moving away from history as our leading attractor to the wineries being our leader attractor.

And now that when you get here, you can obviously see all of history as well.

Next slide, please.

But I thought it would be interesting for this group to see what's happening this fall with tourism because it sort of speaks to what's happening to the economy in general.

So from September the 26th to November the 6th, the start of this fall season, if you will, the occupancy rate in Albemarle County proper is 74 percent.

which is usually below what we normally find and I'll talk about that in just a minute.

However, the average daily rate is $168 per room which is significantly higher than historical averages.

Combined, those two numbers that I just spoke to create something called Revpar or a standard metrics that is used in the industry for revenue per room.

And that number is $125.36 per room.

What this means for our community is that the tourism sector this fall is off to a very strong start.

In fact, it's so strong that it exceeds previous 2019 levels in many indicators, and our 2021 numbers overall are now approaching our 2019 pre-pandemic numbers, meaning tourism is back and is coming back with a vengeance at this particular time.

In fact, the average daily rate, the 16828 per night on average, is 25% greater than the second district in the Commonwealth.

So we're 25% higher in our average daily rates per room than the second closest region across the Commonwealth altogether.

Now some of that has to do with our labor shortage in this particular industry.

Because there's a labor shortage, there are some hoteliers who can't open up all their doors and provide the level of service that they want to provide so they don't offer some of the rooms up for occupancy.

However, I wanted to make you aware that this is happening across the industry and that is the pay is increased.

We don't have a dollar figure to share with you at this time.

Speaking with the CACVB Director of Coordination, she told us that this is a general conversation that they have with the hoteliers on a regular basis.

And it's increasing so much so that in many cases the pay is over $15 an hour now.

And we're talking about housekeeping staff, barkeepers, baristas, whatever the case may be, that is in this particular industry.

They're increasing significantly, almost to the point now that they can provide a living wage, which is a lot different than what has historically happened in that particular industry.

And I'll just say anecdotally, again, that this is not necessarily just related to the tourism industry.

It's hospitality in general, whether it's restaurant, waitstaff, and so forth.

Pay increases are happening across the board as a result of the labor shortage.

So I'll pause here and see if you have any questions or comments about the tourism sector.

My only comment would be, I guess it doesn't matter because

Anybody can meet with us because of virtual meeting.

But because Susan Payne, who is chair of Virginia Tourism Corporations here in town and is quite knowledgeable about the Charlottesville-Albemarle region, I think it'd be really important at some point to invite her just to have a chance to talk with the EDA.

And I don't disagree with you at all, Roger, about how the industry is really changing and we've got a really strong play here with the vineyards and events

Okay.

I'll speak a little bit to the VTC.

They actually are offering several different grants right now.

to support building new programs or events that can encourage tourism and additionally that's through the VTC and additionally there's American Rescue Plan funds that are coming directly to the city and the county

and we're working with the CACBB to create a plan that spends those funds appropriately.

That's still going through the grant process and board approval and et cetera.

But yeah, we are actually tapping into some of those VTC funds that we speak directly to them often.

Roger, do you know if Courtney or anyone else collects information on

And I'm wondering about price elasticity, whether these are all- Yeah, in fact, they do capture some of that information, but not all of it, meaning that if someone goes through their process, they capture that information, their process being the website where they get referred to a hotelier,

And they use the CACVB system.

They're able to track some information and data related to those, but not necessarily somebody who goes directly to a hotel and purchase it independently.

So they have some data, but it does not necessarily reflect all the data.

But I will say this.

I asked that very question, Director Shreve, about the elasticity of the ADR.

And she does not believe that 16828 is sustainable just because it so far exceeds the other rates across the Commonwealth.

It just happens that this was a combination of Virginia football foul foliage as well as people having a desire to get out of their house.

And then there's some also some other small local events that have brought people in for overnight stays as well.

Yeah, I suspect it as much.

But I guess what I was getting at is whether or not they collect data on simple categories such as commercial

No, they don't have that level of granularity.

I do know that the CACVB is contemplating a product called Zartico, which tracks the movement of people once they come into our community.

So we'll be able to track not only to some degree, we won't know by who it is, but we'll be able to track folks to determine when they come for a football game, where else do they go?

Or when they come for a winery, where else are they gonna visit?

So we can track the flow of money if that's approved by the CACVB.

Yeah, there is a thing called an STR or STAR report where the properties all across the region provide information to a questionnaire and it's confidential information because it has hotel specific data, but all that information is compiled to provide this.

Yeah, I'll be happy to bring back a star report and have it redacted whenever Ms. Payne comes to join us.

Next slide, please.

As you guys heard from the last meeting, Jennifer Schmack, who was our economic development project manager, left the organization.

She became the economic development director at Fluvanna County.

Staff had already begun and the county executive's office was in support of a reevaluation of all the positions within economic development.

And so there's two things to announce there.

One is J.T.

has a new title.

His new title is, J.T., you want to show your new title?

It's business development manager.

So congratulations on that.

And then secondarily, the vacated position has changed from project coordinator to economic development senior business manager.

So that will be a vacancy that we'll feel hopefully in the not too distant future.

I want to let you know that our Office of Community and Public Engagement created a video for the bottom-most announcement.

I know many of you were unable to attend.

We were going to try to show that today, but recognize that showing a video tends to overwhelm folks' technical capability from time to time.

So we're going to send out a link to that particular video.

You can watch that at your leisure.

And the last thing we wanted to make you aware of

is John Mottola, who's the Chief Operating Officer of Perron Robotics, was appointed as the Whitehall District Economic Development Authority Director.

Mr. Mottola is not here yet today.

He has to first go through a swearing in ceremony.

So that's great.

So back to the job.

Have you guys posted that job?

We haven't had one since.

Dave Mellen.

I think was the other one.

Okay.

All right.

Okay.

I've been thinking a long time.

Couple of years anyway.

Yeah.

I would think so.

Well, it would have been probably just less than two.

Yeah.

Yeah.

Right.

Yeah.

Yeah.

Anything else, Roger?

If Mr. Shreve's ready, we can do that now.

Yeah, I apologize for jumping in late.

I had trouble finding the link.

I was looking in my wrong, wrong mailbox.

So for our financial report, which is fiscal year through

Halloween, 10-31-21.

I'm reporting operating revenues, $30,564.61.

Against operating expenses, $25,675, $25,000 of which went to the CIC grant.

Netting us thus far for the fiscal year, $4,889.61, which

gives us a current cash balance as of 1031 of 761,401.27.

I should also note we've had pass-through funding and pass-through expenditures thus far in the fiscal year, 7,000 in housing funds in pass-through income,

and 8,000 for Willow Tree and 3,000 for Afton Scientific going out totaling 11,000 for a net negative 4,000 in pass-through funds, which combined with our net balance of revenues and expenditures leaves us with $889.61 net for the fiscal year.

All right, any questions, comments?

Thank you, Dave.

All right, so I think we are ready to, unless there's anything else, we'll go into the closed meeting.

I move that the Albemarle County Economic Development Authority go into a closed meeting as authorized by the Virginia Freedom of Information Act Section 2.2-3711A of the Code of Virginia under Subsections 5 and 6 to discuss and consider the expansion of existing Albemarle County businesses, projects Puma, Poma, Cardinal, Gadget, Cavalier, and Stark,

where no previous announcement has been made of their interest in expanding their facilities in Albemarle County and where the investment of public funds to support such expansion involves bargaining and if made public initially would adversely affect the financial interests of the EDA and or Albemarle County.

Is there a second?

I'll second.

Second.

All right.

All in favor?

Aye.

Aye.

So, Chair Long, we have somewhat of a process change.

J.T.

is going to email everybody a new link.

We had to disable chat to be consistent with the new policy to comply with both FOIA as well as some inappropriate things that have happened, including the bombing of meetings.

So everybody will get a chance to leave the meeting.

Go to your email.

J.T.

is going to send you a link to the closed session, and then he'll send you another link at the conclusion of the closed session to return back here.

OK.

I was able to receive the one that went to PEC.

So I usually do this off my private email, but I disappeared, David.

My Gmail account today, it's gone, completely gone.

Okay.

Thank you all.

Okay.

I'll connect on my phone for the closed session.

Yes, that'd be great.

J.T., I don't have an email from you.

Are you sending it to

Okay, great.

Yeah, I'm not getting it.

Yeah, hold on just one second.

Oh, okay.

I'm too anxious.

I completely understand.

I'm with you.

Do we have everybody now?

I think we do.

All right.

So I will read the closed meeting certification.

I move that the EDA certified by recorded vote that to the best of each director's knowledge, only public business matters lawfully exempted from the open meeting requirements of the Virginia Freedom of Information Act and identified in the motion authorizing the closed meeting were heard, discussed or considered in the closed meeting.

Yes, I'll do it.

Okay, so and I'll just note that Director Long did not participate in the discussion on Project Cavalier.

Director Ray?

Aye.

Director Shreve?

Aye.

Director Imhoff?

Aye.

and Director McNaughton.

Or is he in a tunnel?

He was in the closed session.

But he is not, I guess, currently on.

Yeah.

And Ashley, if he comes in, you can let us know.

All right.

Any unfinished business?

All right, and then the next is the scheduling.

Normally our meeting would be the 22nd.

And I guess the question is, do we have, I know Kat has a conflict on the 14th.

Do others want to move the meeting up?

Do we want to leave it on the 21st?

I'll be around, so it doesn't matter to me.

I do know that we've got a potential Bond presentation and I think, did they want to move it up?

I can't remember.

They didn't care.

OK, so it doesn't really matter.

Yeah, I am available on the 21st, but if you can get a quorum for the 14th and you want to get the bond locked in, it is two weeks later.

It's one way.

I mean, I'm not sure that that's going to make much

Difference.

Does anybody else have a conflict on the 14th?

I didn't go either way.

Yeah, I can do it.

Why don't we why don't we go with the why don't we move it to the 14th and

That will be an excused absence for Kat since we have moved the meeting and she was available for the regularly scheduled meeting.

So why don't we do that?

OK, great.

Thanks.

Yeah.

All right.

Any other comments, questions?

All right.

Thanks, everyone.

Take care.