As restaurant reopens, taxes an issue

By Uriah A. Kiser

Published: June 6, 2008

STAFFORD — Fredericksburg officials are asking surrounding jurisdictions not to lure businesses away from the city.

Fredericksburg City Manager Phillip Rodenberg introduced a voluntary ban on business poaching that was discussed at a George Washington Regional Commission meeting last month.

The regional planning commission, with representatives from Fredericksburg, Stafford, Spotsylvania, King George and Caroline counties, would be responsible for enacting such a ban.

The measure would prevent surrounding counties, such as Stafford, from offering incentives to local businesses to relocate to their jurisdiction.

While local officials say there have been no instances of business poaching, they say now is a time to lay the ground rules to prevent it from happening.

“We live an die as a region,” said Kevin Gullette, Fredericksburg’s economic and tourism director. “Companies don’t look at boundaries, and as we grow as a region, offering companies incentives to move five miles doesn’t help us much.”

In recent months the city has been successful in luring high-profile businesses, such as the Kalahari Resort Water Park and Wegman’s grocery store, to the Celebrate Virginia complex.

Gullete said a major selling point to attract the businesses to the city was a temporary suspension of the city’s Business and Professional Licensing tax.

Kalahari will not have to pay a BPOL tax for at least 20 years after opening its doors. Wegman’s will have 10 years before it will pay.

The BPOL tax is collected on businesses’ gross receipts of $100,000 or more, with the amount of tax being collected capped by the state, at maximum amount of 58 cents per every dollar.
The BPOL tax rate varies depending on the type of business, and each jurisdiction is allowed to set it’s own BPOL tax rate.
The BPOL tax rate in Spotsylvania County is 10 cents for each dollar; in Fredericksburg the rate is 20 cents. 
There are 45 cities and 90 counties in Virginia that currently have a BPOL tax. Stafford County is not one of them.
Local officials credit the county’s continued economic development and job growth the to the absence of the tax.
“I’ll bet [Fredericksburg] Mayor Tomzak was just up here hoping that we pass BPOL,” said Paul Milde, R-Aquia, at the Stafford County Board of Supervisors meeting on Tuesday.

Other board members, including Chairman George Schwartz, D-Falmouth, disagree and say BPOL would generate an additional $3.7 to 8.8 million dollars in revenue that could be added to the county’s general fund.

During the Tuesday meeting the board voted to advertise a proposed BPOL tax rate at just half of the state’s maximum amount. The possibility of enacting BPOL in the county will now move to a public hearing on July 1 at 7 p.m. at the Stafford County Administration Center.
Stafford County Treasurer Scott Mayausky said he knows that most business do not have to be conducted in a storefront setting.
With the advent of e-commerce, Mayausky said that some local companies have only a few employees based in the region, with others possibly residing across the country. He said a BPOL tax in Stafford could force companies out.
“Logic would dictate that [Fredericksburg is] having trouble while we are doing very well,” said Mayausky. “The tax rates in the state are very competitive, and ours is much lower than others.”
On Friday Stafford County will welcome one of its newest and most sought-after businesses, The Globe and Laurel Restaurant.
A Marine Corps icon for more than 40 years, The Globe and Laurel was forced to move from its former location in Prince William County, due to the widening of U.S. 1.
The owner said he looked at other places in Prince William, but Stafford welcomed him like none other.
“We were without a home. I was facing shut down which I couldn’t do,” said Maj. Richard T. Spooner, owner of The Globe and Laurel. “This is place where people come to meet their friends, cut deals, transact business or just reminisce. We had to keep the place alive. Before Stafford County came to me I was ready to give up.”
The new Globe and Laurel is located along U.S. 1, in the former Philly’s Restaurant building in the Boswell’s Corner area.
The restaurant has traditionally catered to military and law-enforcement clientele. The 125-seat restaurant will offer a full lunch and dinner menu when it opens Friday.
The Globe and Laurel has been one of the only businesses to relocate locally in recent times. Since the voluntary poaching ban would not include Prince William County, the restaurant or Stafford County would not have been penalized if the ban were in place.
Gullete said the model for the anti-poaching ban is similar to one used in Hampton Roads, where there have been reported incidents of counties attempting to lure businesses away to their respective jurisdictions.
“If someone came to me and said they couldn’t grow their business in Stafford County and they wanted to move to Fredericksburg, I would first call [Stafford’s Economic Development Office] and make them aware of that fact that business owner was calling me. Then I would try to have them work it out,” said Gullete.
Spooner said that he has not heard much about the poaching debate, and that he has more important thing to worry about - like opening his restaurant.
“We don’t have a brass band and Kate Smith is not going to sing God Bless America. We are just going to open,” said Spooner.