City overhauls economic incentives program

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(Hyatt House Hotel on 27th Street at the Oceanfront, seen here Jan. 2016, photo by Judah Taylor)

Hyatt House Hotel on 27th Street at the Oceanfront, seen here in January, 2016. (Photo by Judah Taylor)

Virginia Beach plans to change the process for providing economic incentives to developers by seeking public and stakeholder input earlier, before an agreement is approved by City Council.

During a council briefing Tuesday, Deputy City Manager Doug Smith presented a set of guiding principles for forming investment partnerships between the city and private entities. The partnerships include incentives provided by the city to developers for increasing economic development. Smith’s new guidelines address issues that arose in previous applications by developers for incentives, including concerns brought up by the Virginia Beach Development Authority and the public that projects weren’t unique enough to be eligible for city incentives.

“There’s nothing wrong with saying we made a mistake,” Mayor Will Sessoms said during the briefing. “I do think [the] process, I truly believe that’s where we messed up.”

Currently, city guidelines for evaluating investment partnerships don’t include receiving input from stakeholders, or others in the same industry of the applicant. And agreement plans between the city and the private applicant for these investment partnerships are only made public once approved or not approved by City Council. Smith’s guidelines would make these documents available before being approved by council, which would give the public and stakeholders more of a say in future development.

“The process we used just did not work,” Sessoms said. “If we’d gone out to stakeholders earlier, I think we could have learned a lot.”

Developers of the 27th Street Hyatt hotel at the Oceanfront applied for city funding earlier this year. However, the application was stalled and eventually drifted off the table after the Development Authority, stakeholders and council members voiced concern over whether or not the project truly filled a void in the market. Such a void is one of many requirements the project needed to meet to receive the funding it applied for, which included city funds.

Sessoms said if the city had reached out to stakeholders earlier, it would have been clear the project didn’t fill a void.

Smith’s guidelines include a process for evaluating projects for economic incentives:

Economic-Incentives-program

Like Sessoms, Rosemary Wilson, a council member, said during the briefing that council had made mistakes; she added that Smith’s policy guidelines put the city in a much better place than it was in last year.

“I think one of the key things from this is process,” Sessoms said in a phone interview. “We didn’t do a good process, we’re changing that. The process will include stakeholders and public input prior to council making a decision.”

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