CHRISTIANSBURG — The Virginia Tech Foundation is awaiting Montgomery County approval on the issuance of more than $100 million in bonds to finance a multitude of real estate projects in Blacksburg, Roanoke and other parts of the state.
The county’s board of supervisors was slated to vote on a request Monday to let its Economic Development Authority issue up to $104.1 million in revenue bonds for the Foundation.
The board, however, voted 6-0 to table the matter until its Aug. 12 meeting due to some concerns related to the taxability of Tech affiliated properties.
The Foundation handles private donations made to Tech, but the organization is also significantly involved in real estate.
The Foundation’s nonprofit status allows the tenants of the organization’s buildings to not pay 100% in local real estate taxes.
Supervisor Chris Tuck told some Tech and Foundation officials on Monday that he wants to see documented commitment that one of the Blacksburg-based projects covered by the bond issuance will aim to provide minimum five-year leases.
Tuck voiced his understanding that tenants of the Foundation’s longer-term leases pay more in local real estate taxes.
“I’m concerned that the Foundation continues to acquire more and more real estate,” he said, adding that the county also faces challenges due to the fact that the Jefferson National Forest covers part of the locality’s land. “I’m a developer across the street, how I am I supposed to compete with someone who’s not paying real estate tax?”
The exact project Tuck was addressing is a plan to build a 236,000-square-foot and five-story mixed use building at the corner of Turner and Gilbert streets in downtown Blacksburg.
The mixed-use project has prompted a separate request to Blacksburg to change its zoning for downtown building heights and classroom space.
Carrie Woodring, the Foundation’s director of real estate, said the supervisors’ request on the minimum five-year leases was reasonable. In fact, she told supervisors that most of the leases she oversees are longer than five years and that it makes little sense for retail leases to go for shorter periods.
The Gilbert Street project is expected to include retail tenants, according to plans filed with Blacksburg.
“Our office is going for the longer-term leases,” Woodring said. “When I do a lease, I’m looking to do a five-year lease.”
The bonds themselves will cover just under 20 projects, the bulk of which are to be located in Roanoke and Blacksburg.
For example, a few of the projects involve the Virginia Tech Corporate Research Center, a Blacksburg-based office park comprised of more than 30 stand-alone buildings and home to a variety of tenants involved in science, research and technology.
One of the CRC projects is the construction of a two-story and 44,552-square-foot building that will be located at 1311 Research Center Drive. That building will be owned by the Foundation and leased to the Virginia Tech Office of Research and Innovation and other third parties, according to documents provided to the board of supervisors.
Another project involves the development of property at 1255 Williamson Road in Roanoke that will be used to support the Virginia Tech Carilion Medical School campus.
Projects outside of Southwest Virginia include the development of a 15,000-square-foot Seafood Agricultural Research and Extension Center in Hampton.
The state allows Montgomery County’s EDA to issue bonds on behalf of the Foundation. The EDA, however, is simply serving as a conduit, which means the county is not on the hook for the Foundation’s debt.
The Foundation is requesting the EDA to issue bonds due to the fact that the former can’t issue tax-exempt bonds, said Michael Walsh, Tech’s assistant treasurer who joined Woodring to speak with supervisors on Monday.
The Foundation, Walsh said, is seeking tax-exempt bonds due to the fact that several of the projects will be tax exempt.
“In this instance, [neither] the EDA, nor Montgomery County, are liable for the bonds being issued,” county spokeswoman Jennifer Harris wrote in an email Monday.
That means the bond issuance has no bearing on the county’s debt capacity, which has been limited in recent years due to a package of past school capital projects. The bond issuance also has no bearing on the EDA’s debt capacity, Harris said.
Harris did say that the Foundation’s request is one of the biggest bond issuances through the EDA in the past decade.