WINCHESTER — An economic incentive designed to entice a multimillion-dollar global company to move to Winchester has been given the green light, but not before raising red flags among some city officials.
On Tuesday morning, members of the city’s Economic Development Authority (EDA) voted unanimously to approve the incentive but objected to the manner in which it was brought to them for approval. This followed comments last week from City Council members who criticized the measure for being ill-timed.
Both meetings ended with the governing bodies approving the incentive.
At the heart of the debate is Trex Co. Inc.‘s corporate headquarters, currently located in a shared office building at 160 Exeter Drive in the Sunnyside area of Frederick County. Trex wants to move its administrative operations into a new $7 million facility it plans to build on a vacant parcel of land along Crossover Boulevard in the city of Winchester.
According to Winchester City Manager Dan Hoffman and Development Services Director Shawn Hershberger, Trex agreed to make the move in exchange for an economic incentive from the city that would significantly lower the company’s real estate taxes on the new 70,000-square-foot building for the first seven years of its existence.
“Anytime you can attract a corporate headquarters into your city, especially one of our size, it’s a great thing,” Hoffman told the EDA, noting that over a 20-year period, Winchester stands to collect $2 million or more in real estate taxes from the new Trex facility. “There’s no measure or math that makes this bad for the city.”
The agreement calls for Trex to pay all of the assessed annual property taxes on its new building near Crossover Boulevard. However, for the first seven years, the EDA will refund any portion of Trex’s tax payments that exceed the amount currently being generated by the site. The city of Winchester would then reimburse the EDA annually for the refunds.
The specific address of Trex’s future headquarters has not been revealed, and Hershberger and Hoffman have not said how much the vacant parcel currently generates in real estate taxes. Once Trex completes its office building, though, the estimated property tax will increase by approximately $65,1000 per year, Hershberger said. Over a seven-year period, Winchester will refund the company an estimated total of $455,700.
The incentive was first discussed by EDA members in closed session on March 16, after which the panel took no action. It was then shared with City Council’s Planning and Economic Development Committee on March 25, which forwarded it to the full council with a recommendation of approval.
The full council voted 6-2-1 on April 13 to approve the tax break, with Councilor Richard Bell abstaining due to a potential conflict of interest and members Corey Sullivan and Les Veach opposing the request.
“The timing on this is really not good,” Sullivan said at the April 13 council meeting, referring to Winchester extending a tax break to Trex at the same time it is considering an increase to the real estate tax rate it charges citizens and businesses.
More concerns were raised at Tuesday’s EDA meeting.
Authority member Lauri Bridgeforth said the EDA should have issued a recommendation on the proposal before City Council voted, rather than casting what could be construed as a meaningless vote after council already approved the Trex incentive.
Hershberger replied there is no written process for presenting a joint resolution to both the EDA and City Council, but in the past, it has been standard for the authority to review a measure before it goes before council, then vote on it after council has done so.
Hoffman added: “We would not have moved this forward to council had we heard any serious concerns from the EDA.”
He then attempted to elaborate, but his choice of words raised eyebrows.
“If the EDA were to act against the will of council and outside of the best interests of the residents of Winchester, which would be the case at this point,” Hoffman said, “I think council would have very serious concerns for the efficacy of ...”
Hoffman was cut off by EDA Chairman Jeff Buettner.
“We’re an authority,” Buettner said. “We don’t necessarily have to bow to the will of council.”
“But you’re all appointed by council and you serve at the will of council,” Hoffman replied.
“I don’t like the insinuations there personally,” Buettner said. “We are an autonomous body and, as an authority, can act in our own interest. This council thing, I think, is a little heavy-handed.”
In Winchester, the EDA is a self-funded agency that operates independently of all other appointed and elected governing bodies, including City Council. Its mission is to aid business development in the city and to help existing companies succeed.
“I certainly want to do what’s best for the city of Winchester, and I’m all about working with City Council, and I welcome Trex within city limits,” Bridgeforth said. “I’m not questioning that at all. What I am questioning here is the procedure of how it’s done.”
Bridgeforth said the issues regarding the Trex incentive could have easily been avoided by calling a special meeting of the EDA prior to last week’s council meeting. That would have allowed the EDA to issue a recommendation on the tax-break proposal and forward it to council to help that panel’s members make a better-informed decision.
“Note taken,” Hoffman said, agreeing that it may be more prudent in the future for the EDA to issue recommendations on joint resolutions before the proposals are presented to City Council.
After resolving the dispute, Bridgeforth made a motion to approve the Trex incentive. The measure was then adopted unanimously, clearing the way for the company to receive the seven-year tax break.
Trex, a publicly traded company (NYSE: TREX) that produces wood-alternative decking, railing and other outdoor products, opened locally in 1996 with 36 employees. The global manufacturer now has more than 1,200 employees worldwide and annual revenues in excess of $800 million.