BLACKSBURG — The town is delaying a decision on a request to allow the Virginia Tech Foundation to build a multi-story structure that would substantially exceed the currently allowed building height in downtown.

The foundation needs Blacksburg to adjust its downtown commercial district — and issue a conditional use permit — to allow for a roughly 236,000-square-foot, five-story building on the existing retail site just off the corner of Prices Fork Road and North Main Street that includes the structure that once housed Buffalo Wild Wings.

Blacksburg Town Council members, however, have requested more information on the exact taxability of the building and have asked to strike a section of the proposal that calls for the allowance of “limited instructional classrooms” in the downtown commercial district.

Earlier this week, council requested to move an Aug. 13 public hearing on the proposal to Sept. 10.

Council asked to strike the classrooms section due to difficulties with establishing limits on such uses.

Town Manager Marc Verniel said there is a concern about classroom spaces downtown opening the door to influxes of student traffic.

“It’s not wanting the educational pieces of campus to spill off campus,” he said.

The town expects the building to still house some academic functions, such as professors using conference rooms to meet with graduate students, Verniel said. For that, the ordinance doesn’t need to be changed.

Town council joins the Montgomery County Board of Supervisors in raising questions about how the project would contribute to local tax rolls.

The foundation is a tax-exempt entity, a status that allows its properties’ occupants to pay a reduced amount in local real estate taxes. Exactly how much the Foundation’s tenants pay depends on the duration of their leases.

The board of supervisors has a hand in the approval of the foundation’s proposed downtown Blacksburg building. The foundation needs supervisors’ approval on the issuance of up to $104.1 million in bonds by the county’s Economic Development Authority. Among the projects to be financed by those bonds is the downtown Blacksburg building.

Supervisors also delayed their move on the foundation’s request due to seeking documented reassurance that the downtown Blacksburg building’s leases would guarantee at least some tax revenue.

The foundation has since sent a letter to supervisors informing them of the organization’s “customary practice” to negotiate an initial 10-year lease with two five-year renewal options.

“We expect this trend to continue as we enter into negotiations for the proposed new building at North End in Blacksburg (the ‘Gilbert Street Project’),” Foundation President John Dooley wrote in the letter.

Foundation tenants are at a minimum taxed at 15%, which is applied to one- to seven-year leases, according to information from Montgomery County. Ten-year leases are taxed at 20%.

If a lease is for five years and has, for example, five one-year automatic renewal options, then the tenant is taxed on a term of 10 years — or taxed at 20%.

Several supervisors and Blacksburg council members — while voicing appreciation of Tech’s economic impact — say they are raising tax revenue questions because some of the privileges given to Tech-affiliated properties can complicate how the two localities manage the growth driven by the university.

“It would be nice for me just to have some scenarios,” Blacksburg Councilwoman Susan Anderson said during a Tuesday meeting.

Anderson, who’s a math instructor at Tech, said she’s appreciative of the career the university has provided her over the years.

But “I also love my town, and I don’t want us to be harmed,” she said.

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