BLACKSBURG — The town plans to pay an estimated $9.1 million for a parking garage as part of an agreement that would finally settle the future of the downtown old middle school site.
The town would use a special services district applied to the entire property to help pay for it. That would mean property owners — of either commercial or residential real estate built on the site — would pay as much as 20 cents more in real estate tax over a number of years until the parking garage is paid off.
In addition to real estate, revenue from meals and lodging taxes on the site will contribute to the parking garage.
That parking garage cost — once a sticking point in the talks to redevelop the roughly 20-acre site — was among several details Town Manager Marc Verniel highlighted in a presentation of the tentative agreement Tuesday.
That agreement, which town council is set to vote on next month, is a key part of the site’s long-awaited redevelopment plans as it dictates exactly which parts of the property the town will develop, finance and own.
Midtown Redevelopment Partners, the private firm spearheading the project, plans to transform the currently vacant land into an ambitious mixture of downtown commercial and residential developments that will include a hotel, office spaces, townhomes and condominiums.
The desired project, however, hinges on factors that include the approval of the development agreement and a rezoning of the land’s use.
Verniel and other senior town staff disclosed some conditions of the agreement last week following more than a year of private discussions. Verniel elaborated even more on those conditions during the Tuesday council meeting.
In addition to the parking garage’s estimated cost, other new details include the structure’s overall debt payment timeline.
The 20 cents that would be tied to the special services district would be added to the 26-cent rate that all Blacksburg property owners currently pay.
The parking garage debt includes $6.6 million that the town will pay with the site’s new tax revenues. The town will pay the remaining $2.5 million specifically with revenue from the special tax district.
The town anticipates paying off the $6.6 million within 16 years and the $2.5 million within 19 years, according to a development agreement fact sheet.
“The town will issue bonds for the financing of the parking garage … the town will borrow the full amount for the garage,” Verniel wrote in an email Wednesday. “The debt payments will be structured to align with anticipated revenues from the project. We will provide more detailed information regarding revenue estimates and the financing structure later this month at a council work session.”
The parking garage will also be built in conjunction with a new police station, for which the town has already started setting aside money. A small percentage of the parking garage’s spaces will be reserved for the police station.
The town has so far budgeted $16.5 million for the police station, Verniel said.
The town plans to lease at least 200 of the parking garage’s spaces to Midtown for an initial period. He said such an agreement helps the office building owners to attract tenants.
The length of the initial period is still being discussed, Verniel said.
“The parking utilization agreement guarantees that the new commercial and office tenants in the OBMS development have access to the parking garage,” he wrote. “The lease of spaces also provides revenue to the town to offset the costs of operating the garage.”
While the lease rates have not been set yet, Verniel said the town will charge a rate consistent with the market for parking in downtown Blacksburg.
Current plans call for a parking garage with 327 spaces, according to the development agreement.
The parking garage does not change plans for a similar structure that the town plans to build on nearby Progress Street, Verniel said.
“It [Progress Street garage] will be financed with general fund revenues, unlike the OBMS garage, which will be financed with new tax revenues from the OBMS site,” Verniel wrote.
While the agreement significantly addresses the terms of the parking garage, the contract also issues conditions for the housing slated to be built on the site’s rear half.
Student housing, a contentious point in Blacksburg, will be discouraged through a variety of conditions that include the barring of four-bedroom and four-bathroom units, a common setup for off-campus apartments.
“By-the-bedroom” leases will also be prohibited and proof of sufficient income to lease property “without a guarantor” will be required.
Further, the housing for sale will be required to be part of a homeowners association mandating that buyers affirm their intentions to live in the unit and not acquire the property for use as a rental.
The land’s rezoning can’t occur without the approval of the development agreement, which was behind some of the project’s recent delays.
Unsettled talks over the agreement was one reason town council earlier this year couldn’t move forward on the rezoning within a required period and therefore sent the proposal back to its advisory body.
Another setback on the project occurred last year when a potential anchor tenant — the 1901 Group — announced plans to expand elsewhere in Montgomery County.
Vacant since 2002, the site spent years in limbo due significantly to disagreement among local governing bodies over its future. Up until now, no proposals for the site have been successful.
A request to Montgomery County to potentially aid with the parking garage has also been made, but details of that remain unclear.
The county, which previously owned the site, sold the land over two separate deals in 2016 and 2017 to firms partnered by developer Jeanne Stosser. The sales totaled $4.25 million.
The 2017 sale involved Midtown, of which Blacksburg attorney Jim Cowan is also a partner.