Wegmans Distribution Center: Turkey not Trophy

Beginning with the non-public pre-negotiations among Wegmans, the County and the Commonwealth, the Wegmans application for its distribution center has produced an unholy mess: a fast-tracked planning timeline, misinformation, reality checks regarding the County’s poor roads infrastructure and insufficient cost-benefit analysis.
The citizens, who are always saddled with the effects of poor planning, were severely marginalized in what should have been a balanced conversation among County, citizens and Wegmans. Citizen trust is eroded again.
The Board of Supervisors will hold a public hearing on the Wegmans application Wednesday, May 6 at 7:00 p.m. in the Boardroom of the County Admin Building.
[Ed. note: Bob Nelson, a CHF Board member, submitted the following analysis to the Board of Supervisors. Bracketed numerals in text correspond to end notes.]
 
WEGMANS – FUNDAMENTAL REASONS TO DENY THE APPLICATION

 

Executive Summary and Conclusions

This position paper analyzes several major issues in Air Park Associates, L.P., REZ2019-00037 and SE2020-00005.

The Wegmans Distribution Center (DC) should be compared to the SuperValu DC. There were no residential subdivisions near SuperValu when it was constructed, and its access roads have no residential traffic today. SuperValu is close to I-295 and bordered by the Chickahominy River, industrial companies in a business district, and the CSX railroad. SuperValu’s affiliate owns 437 acres, twice the acreage of Air Park. Both DC’s are Pentagon-sized. The similarities end there; and unlike SuperValu, Wegmans DC would radically change the established communities and residences which surround it.

This position paper also discusses issues related to the Wegmans DC at the Air Park site based on the Performance Agreement (PA) and the county’s Comprehensive Annual Financial Reports (CAFR’s). The PA does not mention the Air Park site. Wegmans need not provide a single job to obtain $2.92 million in county tax subsidies and receives $2.35 million of it three years before it receives an identical state grant. The Wegmans tax abatement package is also unprecedented and draws no support from the CAFR’s. Larger investment commitments have been made without county tax abatements or incentives. These are additional reasons to reject the Wegmans application.

Analysis

1. Wegmans DC Compared to the SuperValu DC. Under the revised conceptual plan, Wegmans proposes 1,096,501 square feet (sf) in buildings. The largest building will be the Wegmans DC at 1,034,616 sf with an additional 205,650 sf shown at both ends of the building for expansion. [1] 400,000 sf is shown for potential future development elsewhere on the site.

The only existing Hanover DC comparable to Wegmans in size is the SuperValu facility at 1,249,000 sf. [2] There are, however, major differences between the two DC’s.

> SuperValu’s affiliate owns 437 acres of land, twice Wegmans’ 217 acres.

> Unlike SuperValu, Wegmans is receiving a generous package of corporate subsidies consisting of county tax rebates and reductions and infrastructure improvements.

> The closest residential subdivision to the SuperValu DC is Summer Walk. Summer Walk was developed well after the SuperValu DC began operations under a corporate predecessor. [3] By contrast, Fox Head and Somerset, the closest residential subdivisions to the proposed Wegmans DC, have been in existence for many years. Established neighborhoods, like these and the 150 year old Brown Grove community, should not be sacrificed to a Pentagon-sized DC.

> The SuperValu DC has easy access from I-295 (Exit 42) – 0.4 miles to Richfood Road, and that access road is not used by any residents. By contrast, Wegmans is 2.3 miles from the nearest interchange on I-95 (Exit 86) and, of greater significance, would add traffic to multiple roads used by residents of many neighborhoods.

> The SuperValu DC is bordered by the Chickahominy River, CSX railroad tracks, and industrial development along its entrance road. Wegmans, on the other hand, is surrounding by homes and residential subdivisions on all sides.

The SuperValu DC is not comparable to the Wegmans DC and provides no basis for the latter’s approval. If the Board were to approve the Wegmans DC at this location, it would open up the entire county to Pentagon-size and smaller DC’s in all magisterial districts without regard to existing residential communities, road use, traffic, or parcel size. Future DC developers would likely also seek Wegmans-type tax rebates, reductions, and infrastructure improvements from the county.

2. No Reference to Air Park Site in the Performance Agreement. Air Park Associates, L.P. is not a party to the PA. The PA makes no reference to any specific parcels in Hanover County.

There is no discussion of county applications for any site in the PA. The PA contains no discussion of approval, denial, or any other action by the county or any department on Wegmans or Air Park Associates applications. The PA contains no contingencies related to county, state, or federal approvals for Wegmans. Nothing in the PA constrains the Board from denying the Wegmans application and determining that this is the wrong site for a Pentagon-sized DC.

3. County Tax Subsidies Not Tied to Jobs. The county claims that the Wegmans DC will provide 700 jobs for Hanover. Wegmans will receive $2.35 million in county tax rebates if it meets certain performance obligations.

Wegmans is, however, not obligated to provide any jobs in order to receive county tax rebates and reductions. Under the PA, Wegmans does not have to hire a single worker at its DC in order to receive $2.92 million in county tax rebates and reductions. PA, Section 4 (b)(i) ($2.35 million in tax rebates tied only to Wegmans’ capital investment of $142 million), PA, Section 4 (b)(iii) (50% reduction in merchants’ capital taxes for Wegmans not tied to capital investment or jobs). [4] Jobs play no role in determining Wegmans’ eligibility for $2.92 million in county tax rebates and reductions, and the county pays Wegmans $2.35 million three years before Wegmans receives the state money. Compared to the state, the county is giving money away to Wegmans, an insult to Hanover businesses and citizens paying full county taxes.

4. Tax Abatements. The $2.35 million in tax rebates and $0.57 million in tax reductions for Wegmans are tax abatements.

In the county’s 2017 CAFR, financial note 10, new accounting pronouncements, discusses the requirement to disclose tax abatements to comply with GASB Statement 77. A tax abatement is defined as an agreement between a government and an individual or entity in which the government “promises to forgo tax revenues” and the individual or entity promises to take a specific action that contributes to economic development or otherwise benefits the government or the citizens. FY2017 CAFR, p. 50. The 2017 CAFR then states that the GASB statement “is not applicable to the County as there are no agreements of this type.” Id. Similarly, note J – tax abatements, in the most recent 2019 CAFR, only discusses the county’s speculative building program but states there were no FY2019 tax payments related to this program. FY2019 CAFR, p. 122. [5] No tax abatements are reported under a note with the broadly inclusive title “Tax abatements.”

Tax abatements have not been reported in the county’s CAFR’s. The $2.92 million in county tax subsidies for Wegmans are unprecedented and a major departure from prior county practice.[6]

5. Capital Investments – Wegmans and Cascades. Under the PA, the Wegmans DC will entail an investment of $175 million, consisting of $128 million in the construction of new buildings, $22 million in tangible personal property, $20 million in site improvements, and $5 million in land purchases. PA, p. 1 (whereas clause). Eligibility for county tax rebates is, however, tied to lower capital investments. If Wegmans makes a capital investment of at least $120 million in the construction of new buildings and $22 million in tangible personal property by January 1, 2023, it will receive $2.35 million in county tax rebates. PA, Section 4(b)(i).

Cascades, a Canadian company, is the successor in interest to Bear Island Paper Company and took over its facility. The county’s most recent 2019 CAFR states:

“Cascades, a major international cardboard and tissue company, announced a $275 million investment in Hanover County that will create 140 well-paying jobs. This project alone was one of the top five announcements in Virginia over the past 12 months and one of the largest industrial projects in the Commonwealth during the same period. The company will take over the idle Bear Island Paper facility, and after full build out, will once again be one of county’s largest taxpayers.” FY2019 CAFR, p. 6.

Cascades received a $1.95 million grant from the state but no county tax rebates or reductions. The investment decision and the state grant were announced on July 26, 2018. 

Cascades is making a capital investment which exceeds Wegmans required investment for tax rebates by $133 million. Unlike Wegmans, however, Cascades will receive no tax rebates or reductions from the county.

The situation with Cascades raises an obvious question. Why did Hanover County provide a generous incentive package to Wegmans for $142 million in investment when no county incentive package or matching of a state grant was needed to induce Cascades to make an investment commitment of $275 million at the Bear Island facility?

Cascades’ commitment demonstrates that county tax rebates and reductions are not needed to attract industrial and commercial development to Hanover County. As the CAFR’s show, save for Wegmans, this is true for investments up to $275 million. The county tax rebates and reductions for Wegmans are unnecessary, excessive and unprecedented corporate welfare.

Dated: April 20, 2020

Bob Nelson, Chickahominy District

 

1 The Pentagon building gives some idea of the size of the Wegmans DC. The Pentagon building sits on 28.7 acres or 1,250,172 sf, almost the same sf as the Wegmans DC expanded. Wegmans SE application requests a DC maximum height of 62 feet above ground. The Wegmans DC is the equivalent of the Pentagon with the top floor removed. 

2 Other large Hanover DC’s include Amazon – 321,000 sf, Vitamin Shoppe – 312,000 sf, Republic National Distribution Company – 300,000 sf (expandable to 500,000 sf), and Supply Room Companies – 280,000 sf. None of these DC’s are located near residential subdivisions.

3 The SuperValu DC was built in the 1960’s. May 14, 1997 Board minutes (Richfood resolution).

4 Wegmans has to meet jobs and investment performance obligations in order to receive the state grant of $2.35 million. PA, Section 3(a).

5 Notwithstanding these statements in the 2017 and 2019 CAFR’s, it is possible that tax abatements are buried in the CAFR’s with a number of “netting” adjustments. Non-disclosure of tax abatements and agreements to provide them does not comply with GASB Statement 77. Compare, FY2019 CAFR, p. 175, Table 8, n. 2 (total fiscal year property tax levies are net of undisclosed amounts for supplemental levies, abatements, land use deferrals, and tax relief).

6 Note K in the county CAFR’s references two special assessment Community Development Authorities (CDA’s), Bell Creek and Lewistown Commerce Center. CDA’s issue bonds to acquire land and/or construct infrastructure improvements, and special assessments are imposed on taxable real property to pay interest and principle on the bonds. FY2019 CAFR, pp. 122-124. The county’s $1.5 million in infrastructure improvements for Wegmans is the polar opposite of principles governing CDA’s and a major disincentive to their formation in the future.

Lake District Mixed Use proposal a mixed mess

The proposed rezoning of 323 acres for a Mixed Use development on U.S. 33 at the Henrico County line has been churning through the planning process for 18 months. At the June 20 Planning Commission public hearing, Commissioners voted to defer action on the case for 30 days. Bob Nelson, Chickahominy District resident, hit dead center with analysis submitted to the Hanover Planning Office:

LAKE DISTRICT, C-24-17 — FACT CHECK AND COMMENTS

  1. The Lake District Will Not Preserve Rural Character

Claim – The Lake District will preserve rural character by allowing growth in one large development.

Discussion — Approval of the 520 unit mixed use Rutland development in 2004 occurred before  Giles Farm – 442 units, Cool Spring West – 276 units, and the mixed use Caldwell Park or “New Rutland” project – 532 units, 200,000 square feet (sf) commercial. A total of 1,250 additional units, all within about a mile of Rutland. (Additional residential developments of less than 200 units within a mile of Rutland were approved before and after Caldwell Park.)

The most comparable project, Caldwell Park, was approved 11 years after Rutland and before completion of Rutland’s residential development. It is more intensely developed than Rutland.

Almost 700 additional acres of land can be developed along the SSA Route 33 corridor if the Lake District is approved. See attached. The Lake District and the 36” inch sewer line extension through the property is a dagger pointed up Route 33 to the rural heart of Hanover, creating a new problem corridor.

Conclusion — The claimed preservation of rural character by limiting development to one mixed use project is false. Hanover’s history with mixed use developments does not support it, nor does the development of Short Pump. The Lake District cannot be viewed as a one-time development, will not preserve Hanover’s rural character, and will spawn mixed use and other development along Route 33.

  1. The Density Is Not 5.5 Units/Acre

Claim – The applicant and the staff’s report state that the proposed density for the project is 5.5 units/acre.

Discussion — The 5.5 unit/acre calculation is simply the total number of residential units (1,787) divided by the gross acreage (323.3). Neither the staff report nor the applicant discuss Comp Plan or mixed use and multi-use provisions related to density or population growth issues.

Residential land bays 3, 4, and 6 contain 1,055 units. Using reasonable acreage estimates, the density in these areas is between 16.3 and 20.3 units/acre. See attached. The highest one, 20.3 units/acre, is based on the applicant’s submission. See pdf page 180 of the staff report.

Conclusion — The density of the residential only sections of the Lake District is unacceptably urban and substantially exceeds Hanover’s 15 unit/acre maximum. While it may be appropriate for Short Pump or Richmond, it is patently excessive for the Route 33 corridor and Hanover County generally.

  1. The Scale and Scope of Housing Development Is Unacceptable

Claim – The Lake District will provide attractive housing for its residents.

Discussion — 970 apartments will be located in 17 buildings, with first floor commercial in 12 of them and parking lots throughout land bays 4 and 9. 817 townhouses, stacked or unstacked, will be built row upon row, along streets and narrow alleys, in land bays 3 and 6. The urban size, scale, and scope of the housing projects is incompatible with existing development in Hanover County, particularly along Route 33.

Conclusion — The Lake District provides ultra-dense, urban housing incompatible with the Route 33 corridor and Hanover County.

  1. The Economic Development Is Unknown and Speculative

Claim – The designation of land bays 1, 2, 7, and 8 for economic development is acceptable.

Discussion — The applicant has proffered M-1 uses for these land bays. These include manufacturing; transportation and warehousing; professional, scientific, and technical services; hotels and motels (conditional use permit); and professional offices.

650,000 sf of general and corporate office space in these land bays, plus 42,000 sf programmed for land bay 5, is assumed to be developed for 59 businesses and requires the construction of an assumed 16 buildings.  While not so limited by the M-1 use proffer, only office space uses are projected by the applicant; and the assumed development appears not to be reflected in its proffered phasing plan. Otherwise the proffer for these land bays merely states that construction will be in accordance with general conditions and architectural standards in the master plan.

The applicant has not provided concrete plans for developing these areas, only an assumed one. The applicant will apparently rely on the county to attract prospects and does not indicate that it will be taking an active role in marketing the land bays.

Without knowing specific M-1 uses for any acreage within the land bays, it is impossible to assess the economic benefits which would be received by the county or the economic burdens which would be imposed on the county. Examples of uses which may be less desirable would be Commonwealth of Virginia (or similar) entities not subject to Hanover taxes, such as the recent ABC warehouse at issue in Riverstone, or a Fed Ex facility with major traffic impacts.

The future economic development of land bays 1, 2, 7, and 8 is speculative and immature. This A-1 land should not be approved for M-1 uses. An assumed plan for economic development does not provide a basis to approve the Lake District’s proposal. If and when the county or the applicant identifies businesses and uses for these land bays, applications can be filed and considered for approval by the Planning Commission and the Board of Supervisors.

Conclusion — Unknown and speculative future economic development of land bays 1, 2, 7, and 8 does not provide a basis to approve the project. It provides a reason to deny it.

  1. Open Space and Undevelopable Land, Environmental Impacts

Claim – The applicant is providing almost 100 acres of open space.

Discussion — Staff calculates that 85.85 acres of open space would be provided and notes that some is double counted. That is less than the 97.14 acres of undevelopable land, including the lake, dam inundation area, streams, wetlands, and steep slopes calculated by the applicant.

Conclusion –The applicant is developing every acre it can and maybe some undevelopable land as well. The environmental consequences of Lake District development have not been assessed, are likely to be unacceptable, and should not be deferred to construction plan reviews.

Dated: June 18, 2019

Bob Nelson, Chickahominy District

 

2017 Comp Plan update: four October community meetings scheduled

Beginning with a workshop session of the Planning Commission at 6:30 pm October 10 in the county board room, the next phase of the Comp Plan review and update process is commencing.

Four community meetings will be held around the county. All meetings start at 6:30 pm. Dates and locations:

October 16 — Patrick Henry High School

October 18 — Atlee High School

October 23 — Montpelier Park Community Center

October 26 — Lee-Davis  School

What changes could be in the offing? Check it out. Click on this link to view draft language for the 2017 Comp Plan update:

 https://www.hanovercounty.gov/879/Comp-Plan-Update-2017-Draft-Items

Comp Plan input: specifically speaking . . .

Preliminary community meetings for input to the Comp Plan update are underway and citizens are offering some excellent insights and recommendations about quality of life in Hanover County. How might some of the chafe points with Hanover citizens be alleviated or avoided as we move forward? How might some good emergent ideas be encouraged?

We reached out to Stewart Schwartz, Executive Director of the Coalition for Smarter Growth in the DC region and also a board member of CHF’s Richmond-region partner organization, Partnership for Smarter Growth. A 20-year veteran of comprehensive planning and growth discussions, Stewart offered the following ideas.

Comprehensive plan language, illustrations and maps:

1) Identify all publicly owned land and ensure it is strategically allocated for school and park space.

2) Include language that describes the amount of public park space the county seeks within walking distance of each community and incentives for private developers to set aside that public space within their developments.

3) Clearly define what “open space” means within a development. Is land allocated to stormwater ponds and median strips “open space?” As an alternative, why not more specific language that summons people-friendly images, such as “natural park”, “urban plaza” or “playground”?

4) Include maps that clearly show strong stream protection buffers, approximate locations of public parks, and a transportation plan map that shows a requirement for connected local streets, not just large arterials.

5) Cite VDOT access management requirements to reduce the conversion of arterial roads into strip development corridors.

6) Include a bike/ped plan including trail networks, sidewalk requirements or street bike facilities (“complete streets”).

7) Include language about revitalization and infill for older areas.

8) Include language that CIP must ensure repair and replacement of aging infrastructure — schools, water, sewer, streets, sidewalks — are the top priority.

Adding form-based language to the zoning ordinance as well as well-defined park, playground and natural area requirements for each zoning category:

1) Define lot setbacks to achieve the form desired for each zoning type.

2) Define park and playground space requirements.

3) Include a traditional neighborhood development zoning category.

4) Include street connectivity and complete streets (bike/ped) requirements in the zoning ordinance/zoning categories.

5) Include a mixed-use zoning category that allows for the conversion of an older strip area with good transportation access to mixed use with residential and connected streets.

Overlay zones:

1)  To protect rural and historic road corridors, suburban development should be set back and screened in order to preserve the rural character of the corridor.

2) Consider using overlay zones to better regulate the look of commercial development.

Contact the Planning Department with your thoughts and suggestions:

https://www.hanovercounty.gov/DocumentCenter/View/2114

 

Comp Plan community meetings starting: let your voice be heard!

Public workshops for the 2017 Comprehensive Plan update have been scheduled. Four community meetings will take place at schools across the county.

Now is the time for citizens to express their hopes, wishes, suggestions and concerns regarding a vision for Hanover’s growth. Speak from your experience in your immediate neighborhood to your area of the county to the entire county. What is worth preserving? What could be improved? How can we realize that vision?

All meetings are 6:30-8:30 pm. See dates and locations:

Thursday, July 27 – Elmont Elementary School

Monday, July 31 – Chickahominy Middle School

Wednesday, August 9 – Patrick Henry High School

Thursday, August 10 – Lee-Davis High School

Click link to full meeting notice at county website:

https://www.hanovercounty.gov/DocumentCenter/View/2108

Primer for 2017 Comp Plan update: check out the information

The Citizen Engagement Committee made a number of recommendations in its final report. Those recommendations were appended to the May 24 presentation by the Planning Department to the joint meeting of Supervisors, Planning Commissioners and Economic Development staff. Read here:

Citizen Cmte recs

The May 24 PowerPoint presentation in its entirety may be viewed here:

https://www.hanovercounty.gov/DocumentCenter/View/1923

In its June 15 meeting the Planning Commission, having considered the Citizen Engagement Committee’s report, laid out a structure for the 2017 Comp Plan review and update process. Read here:

https://www.hanovercounty.gov/DocumentCenter/View/2060

The Planning Department has a dedicated page for the 2017 Comp Plan update on the county’s website. Navigate to get to all of the above information, to view videos of meetings and to contact the Planning office:

https://www.hanovercounty.gov/704/Comprehensive-Plan-Update-2017

Citizen Engagement Advisory Committee part of launch

At its April 12, 2017 meeting, the Hanover County Board of Supervisors authorized the creation of a Comprehensive Plan Citizen Engagement Advisory Committee “to assist with the development of a public input process to gather representative perspectives of Hanover residents and businesses countywide related to the comprehensive plan update.” (See the agenda item here: http://hanovercounty.granicus.com/MetaViewer.php?view_id=8&clip_id=271&meta_id=24722)

Hanover County’s Comprehensive Plan is the guideline for future rezoning, growth, economic development, green infrastructure, public facilities and more. The committee was formed in April and May 2017. One citizen from each magisterial district was appointed as well as three additional members representing the business community and civic organizations. The members were:

Ashland District: Web Stokes

Beaverdam District: Martha Wingfield

Chickahominy District: Jim Ellis

Cold Harbor District: Larnie Allgood

Henry District: Graham Kirby

Mechanicsville District: Dan Widner

South Anna District: Mary Butler Eggleston

Hanover Chamber of Commerce: Ben Meredith

Coalition for Hanover’s Future: Pattie Bland

Hanover County faith-based organizations: Annie Baker

 

See http://www.richmond.com/news/local/hanover/hanover-forms-citizens-committee-for-help-on-future-of-county/article_9729cfff-c725-548f-b4ab-d1a784e99166.html for more.