Tag: Economic Development Authority

On having a cake and eating it, too

(Reading time: 7 minutes)

Staunton has a coming-of-age problem. Like a teenager who desires to be one of the cool kids by hanging out with a fast crowd, while simultaneously being repelled or frightened by what that might entail, city leaders are tying themselves up in knots over just what they should do about data centers. And as anyone familiar with teenage angst can tell you, getting all wobbly about core values usually doesn’t end well.

Here’s where we are right now:

Just shy of eight years ago—on Nov. 8, 2018—a group of 30 city and business leaders was convened by the  Timmons Group, a civil engineering consulting firm, to come up with a plan for developing a 300-acre economic development site on the east end of Staunton. After a second, similar meeting that tweaked the results of the first, a resulting master plan for Staunton Crossing was approved by city council. The plan envisioned a mix of advanced manufacturing, office, and small retail use—and, yes, a data center.

Eight years later, the master plan remains unchanged even as data centers have fallen into public disfavor, their size and numbers exploding across the American landscape. As loud, voracious consumers of electricity and water, such centers have become widely stigmatized as an environmental burden that exists primarily to serve an artificial intelligence industry viewed with even greater public apprehension. And while the primary purpose of Staunton Crossing ostensibly is to create well-paying jobs, data centers require shockingly few employees once they’re up and running, which begs the question of why the city is pursuing them in the first place.

To be fair, little of that was understood in 2018, when data centers still enjoyed a reputation as a clean industry. But as they’ve proliferated and their hidden costs have become better understood, public concern and opposition have grown nationally and locally. Alarms have sounded, red flags raised. Although the plan for Staunton Crossing contemplates a data center of less than a million square feet, or just a fraction of the size of hyperscale centers capturing today’s headlines elsewhere, that’s still a lot of stress on a city with an aging water infrastructure and on an electric utility with dependability problems. (See here for a good overview of Dominion Energy.) So why even go there?

Moreover, this isn’t a one-and-done. Newly recognized problems associated with data centers keep cropping up, such as the recently announced results of an Arizona State University study that found that the cooling plumes emitted by data centers can raise surrounding community temperatures by four degrees. Or consider industry efforts to deal with the cooling issue by going to two-stage heat exchangers that use far less water—by relying on Pfas “forever chemical” gases. Although the gases are contained in closed-loop systems with no direct emissions, fugitive emissions and the possibility of industrial accidents resulting in environmental releases are raising numerous legal challenges.

Within that context, Staunton’s approach to data centers has been downright two-faced. On the one hand, the city’s marketing materials continue to promote Staunton Crossing as “a prime location for data centers” because of the city’s low risk of natural disasters, as well as the availability of “low-cost and reliable electrical service” from Dominion Energy”—which may come as a surprise to the folks at the Central Shenandoah Planning District, who recently updated  the local hazard mitigation plan and noted just how unreliable electric service has become in our area.

On the other hand, city officials repeatedly try to soothe public concerns by observing—correctly, but misleadingly—that the city’s zoning code doesn’t include data centers as a permissible use in its light industrial and general business areas, which is how Staunton Crossing is zoned. So, for all you nervous nellies out there—no reason to worry. Right?

How weirdly passive-aggressive is that? The city recruits data centers for Staunton Crossing—but placates local concerns about data centers by noting that such uses aren’t allowed at Staunton Crossing.

Such reassurances are obviously superficial, since zoning limitations can be undone by amending the code or via a special use variance. But by clinging to such a hollow rationale for maintaining the status quo, city leaders maintain a “having our cake and eating it, too” position, leaving open the possibility that a data center might fall into their laps without their having to take a position on whether that’s actually a good idea. Were that to happen the zoning issue would then have to be addressed, of course, which would mean public hearings and passionate arguments and lots of hard feelings, but with all that sturm und drang overshadowed by the dangling bait of a multi-million-dollar development proposal that the city itself had solicited.

That sounds an awful lot like a strategy ripped from a teenager’s playbook—the one about begging for forgiveness rather than asking for permission,.

Just such juggling was on display at this past Thursday’s meeting of the Economic Development Authority, which had been expected to include a presentation by the Timmons Group of an updated Staunton Crossing business plan. Such an update was teased in early April, when Tim Davey, the group’s director of economic development, conceded to city council that much had changed since the plan was first approved and that it was long overdue for a face lift. But while he acknowledged that data centers have become enormously controversial, Davey nevertheless urged city leaders to leave the basic marketing mix unchanged, suggesting that there are workarounds for perceived problems—workarounds like, say, a small nuclear reactor to meet data center energy needs.

Davey also assured the city council that a refreshed business plan could be ready in as little as 90 days. Five months later, however, the update won’t be aired before the EDA’s next meeting, on Oct. 8, ostensibly because the Sept. 3 meeting had an overly subscribed agenda. Indeed, the data center question would not have arisen at the meeting at all if not for a short statement read at the end of the public session by authority chairman Billy Vaughn, who opened by acknowledging that there have been “numerous inquiries, comments, and questions regarding the current or potential siting of a data center in Staunton Crossing.”

Without describing those concerns, Vaughn went on to claim that since the business plan and its inclusion of a data center “was prepared after public input, the document should not change until public input has been provided.” Repeating the rationale that Staunton Crossing’s zoning is industrial, “which does not permit data centers,” Vaugh concluded that any zoning change would require “public hearings by the Planning Commission with final decision by City Council.”

In other words, let’s kick this can down the road just a wee bit more.

That this kind of temporizing unnecessarily increases stress and anxiety among those paying attention to such things should be obvious, so here’s an idea: why not seek an amendment to the city’s zoning code now, before civic sensibilities get clouded by high-pressure utility and AI lobbyists promoting a data center already recruited by the city’s economic development staff? Why not make the Staunton Crossing pitch for data centers meaningful by holding public hearings to remove the chief regulatory hurdle such a center must clear before one gets enticed to the city? And if those hearings instead unleash widespread and vociferous opposition to making data centers a permitted use, in business or industrial zones or anywhere else, why not amend Staunton Crossing’s marketing plans accordingly? And. Stop. Wasting. Everyone’s. Time.

Such a preemptive move might require political courage and leadership, but one developmental benchmark that marks the transition from bewildered adolescence to adult maturity is the recognition that everything has a price. That there is no free ride. That a crucial trick to living well comes from divining, as best we can, the true cost of something before taking it on.

West End suffers from city’s ADD

(Reading time: 6 minutes)

Rereading the West End Revitalization Plan, as I did over the past week in preparing my last post, was a stark reminder of how much we suffer an institutional version of attention deficit disorder. Two examples from that document will make my point: the brownfields study, and the tax increment financing district.

The brownfields study has been cited repeatedly in Staunton planning documents as a critical tool for redeveloping the West End. Funded by $300,000 from the EPA, the three-year Brownfields Assessment Grant was intended to “return vacant or underutilized properties to productive reuse” by assessing West End sites for possible environmental hazards. That would be followed by remediation, which, grandly, would “incentivize investment and jumpstart redevelopment and area-wide revitalization.” Study oversight was to be provided by a consortium of nine West End groups and organizations. Monthly and quarterly reports would keep everyone apprised of the progress made.

Or not.

Because as I wrote a year ago, local oversight never occurred because the Brownfields Redevelopment Advisory Group never met, there have been no monthly reports, and the quarterly reports are remarkably repetitive while also being short on detail. The initial three “high priority” sites targeted for assessment became just one, which in fact was developed and now is home to the city’s new court building on West Beverley, but of the other two sites there has been no public accounting.  The good news, if you can call it that, was that at least the grant money was not completely squandered—indeed, so little of it was spent that by the end of the three-year grant period more than half was still available. That led to a requested one-year grant extension—and then to a second.

With the now five-year grant period set of expire this coming Sept. 30, as of the end of April—the most recent available account—the city had yet to spend almost a fourth of the original grant amount. What it might be doing with approximately $70,000 is anyone’s guess. From the skimpy documentation that’s available, city officials in April were still trying to find suitable sites to assess, with four possible candidates lined up—none of which, it bears noting, are actually in the West End, with the possible exception of an old pump station building near the main entrance to Gypsy Hill Park. The others, however, include the former Coca Cola bottling plant on North Augusta Street; a site on Richmond Road [sic]; and the art school at 219 West Beverley Street, adjacent to the Central United Methodist Church.

It’s possible some or all of these sites should be assessed for environmental contamination, although “brownfield” is not the first image that comes to mind when contemplating a park pumphouse or an art school. But whatever the merits of these four candidates as posing environmental hazards, the bottom line is that federal money once touted as a needed economic shot in the arm for the West End is going to be funneled elsewhere, apparently because there are no more environmental hazards to be found in the West End itself.

But let me not quibble. Let’s instead take a look at tax increment financing, which one might think would interest a city council that often cites the Dillon Rule as a major reason why we can’t have nice things. (Without getting too much in the weeds, the Dillon Rule is a governing principle that essentially means city and county governments in Virginia don’t have the authority to do anything that hasn’t been explicitly permitted by the state legislature. Which means, among other things, that the city council can’t just levy whatever taxes it wants.) Yet tax increment financing (TIF) is one of the taxing authorities that the state has given the city, and among the West End Revitalization Plan’s key recommendations is for Staunton to “research and establish a TIF district” in the West End to “finance infrastructure needs and improve public amenities.”

From page 35 of the ignored West End Revitalization Plan

As the revitalization plan explains, TIFs have been used throughout Virginia since 1988, typically to “finance infrastructure improvements in blighted and disinvested areas.” Here’s how they work: a “TIF district” is established via a city ordinance, in this case encompassing much of the West End, from which property tax revenue to the city is capped at existing levels for the life of city-issued bonds. Revenue from those bonds pays for eligible projects in the TIF district, including public infrastructure like streets, sidewalks, and sewer and water lines, as well as land acquisition and demolition, structured parking or plazas and, yes, brownfield remediation. As new buildings are constructed and renovations occur, property values in the district rise, as does the amount of property taxes collected—but the difference between the capped tax revenue and the increased revenue due to improvements is used to retire the bonds that funded them. This difference is the “increment,” hence the name.

Such a self-financing mechanism would address one of the biggest obstacles to Staunton’s efforts at revitalization, which is its lack of financial reserves. It’s also, despite being explored at some length in the revitalization plan, a concept quite foreign to city planners and officials. The Staunton Housing Strategy Group, for example, despite reviewing literally dozens of possible funding mechanisms as it laid the groundwork for what is now the city’s Housing Commission, never once considered TIFs. The city’s Economic Development Authority likewise never examined the possibility. It’s not as though city officials considered the pros and cons of such an approach to the West End’s needs and reached a reasoned conclusion—they just ignored the concept altogether.

None of this is to say that TIF is a panacea. While creating such a district in the West End could short-circuit the on-again, off-again piecemeal approach to revitalizing the area that has characterized Staunton’s efforts to date, it would tie up incremental revenue increases to pay off the bonds instead of using that money for other critical public services, some of which would face increased demand precisely because of TIF-enabled growth. Yet it scarcely needs to be pointed out that without the TIF approach that growth is less likely to occur in the first place, and with it a growth in jobs and in the long-term tax base.

More to the point, the lack of discussion about TIF districts raises the question of why efforts like the Revitalization Plan are undertaken in the first place. Staunton hardly needs more dust-catchers, which is the fate that awaits ignored plans and recommendations (take heed, those of you laboring on the Comprehensive Plan update). City councilman Jeff Overholtzer, the council’s liaison to the Economic Development Authority, said in response to my questions that he will “start a conversation” with that body about a possible TIF approach, which is certainly overdue more than 18 months after the city council signed off on the Revitalization Plan. But then again, given the city’s track record with its brownfields grant spending, maybe we shouldn’t expect too much even now.