Commission hears Bristol-Washington County voluntary settlement addressing retail competition and revenue sharing

The Virginia Commission on Local Government on May 12 heard oral presentations on a proposed voluntary settlement agreement (VSA) between the City of Bristol and Washington County designed to resolve disputes tied to The Falls development and competitive pressures from a Tennessee project.

Commission Chairman John T. Stirrup Jr. opened the session and said the Commission would review whether the settlement serves the public interest before presenting findings to the court. Zachary Robbins, the Commission's Local Government Policy Manager, said the record would remain open through May 30, 2014, and the Commission hoped to issue its report by the end of July.

City counsel Carter Glass said the agreement reflected sustained negotiation and improving intergovernmental relations. City witnesses, including Andrew "Drew" Trivette, the city's assistant city manager and planning and economic development director, described The Falls DRI boundaries and stressed the economic importance of retail clustered at Exits 5 and 7 to Bristol's tax base. Trivette told the Commission that some older commercial areas, including the Bristol Mall, have declined as retailers have relocated.

Trivette linked the dispute to Tennessee's 2011 Border Regional Retail or Tourism Facility Act and to The Pinnacle project in Tennessee, saying those measures and subsidies had already attracted retailers away from the Virginia side. He said Tennessee had provided about $9.6 million in subsidies to The Pinnacle developer and that Bristol, Tennessee, had committed roughly $16 million in general-obligation bonds to the project.

The VSA the jurisdictions presented would: waive the City's and County's ability to contest Va. Code § 58.1-608.3 and related authority questions; provide the County $350,000 per year from the City for seven years to offset retailer relocations; allocate revenue from the Trammel property on a 75% County/25% City split for seven years; institute a 50/50 revenue split for major businesses relocating between the jurisdictions for 15 years; and include a one-year waiver of the City's annexation right on the Trammel property after VSA affirmation, among other provisions.

Washington County counsel Richard "Dickie" Cranwell and county witnesses emphasized Exit 7's outsized role in county revenues. County administrator Jason Berry told the Commission that Exit 7 generates roughly $2.2 million annually and that "about 81% of the sales tax for Washington County is generated at Exit 7." Berry said the disparity in sales tax rates between Virginia and Tennessee has historically given Virginia an advantage in retail location.

Berry and other County supervisors said the VSA was the County's practical recourse after failing to secure DRI-enabling legislation at the General Assembly. County witnesses said the agreement had increased investor interest in the Trammel site and improved cooperation between the City and County.

Commission members asked about the probability the Trammel property would develop within the VSA's timeframe, outreach to local businesses about revenue-sharing provisions, and broader economic diversification efforts. Trivette said the City is pursuing diversification in tourism and food manufacturing in addition to retail. Ms. Victoria L. Hull asked about public outreach; counsel said copies of the agreement were available to the public.

County supervisors Randy Lee Pennington and Phillip B. McCall described prior strained relations and urged the Commission to recommend approval, saying the agreement would protect the County's retail base and support regional economic cooperation.

Chairman Stirrup closed the afternoon session, reminded attendees of a 7:00 p.m. public hearing on the VSA that evening, and reiterated the Commission's target to complete its report by the end of July 2014. No formal vote was taken at the May 12 presentations; the Commission's review and a public hearing remain part of the record before any court action.