Bristol Va. amends two contracts related to The Falls development
By Tammy Childress and Jeff Keeling
A contractor preparing The Falls retail site has agreed to accept delayed payments as the City of Bristol, Va. works toward securing additional funds through revenue bonds, and the anchor tenant, Cabela’s, has accepted a lower incentive amount.
Bristol’s Industrial Development Authority (IDA) and Economic Development Committee (EDC) met Friday morning in called session regarding the changes to the 140-acre retail development off Exit 5 of Interstate 81. They approved amendments to agreements with W-L Construction, of Chilhowie, Va., and with outdoor retailer Cabela’s.
After unanimously approving a third modification agreement with W-L, the boards approved a revised contract with Cabela’s that reduces its incentive from a maximum $20 million to a maximum $17.5 million.
The Cabela’s revision, approved unanimously, also allows the city to delay improvements to Lee Highway that initially were to be completed by the time the store opened.
“We have been chipping away at revising the Cabela’s document for quite some time.” Bristol City Attorney Pete Curcio said.
Bristol Mayor and IDA member Guy Odum said the fact Cabela’s sent the city the revised contract showed the retailer’s commitment to anchoring The Falls. The incentive from the city will fund construction of Cabela’s building up to the now-$17.5 million maximum.
The retailer has conceded that the improvements to the front of the project will not need to be completed at the opening of store but rather those improvements will coincide with the construction of Phase III.
“Cabela’s has essentially agreed to renew the contract, so hopefully the rumor mill that Cabela’s is backing out will stop,” Odum said. “It was their idea to do this agreement.”
“We can’t stress enough how cooperative Cabela’s has been,” Odum added. “We hear rumors all the time but the reality is we are in contact with Cabela’s almost daily, at least two to three times a week. We have a good relationship. They have an unwavering desire to make sure this project moves forward and they are excited to be a part of it.”
Odum did not have a firm date on when Cabela’s will begin construction, but said Bristol would soon turn the deed for their parcel over to the outdoor retailer. He said the pad for the store will need to be recertified, having sat through a winter.
The plan for funding both Cabela’s incentive and the remaining $6.3 million of expenses for W-L’s site work is to issue revenue bonds sometime this fall, Odum said. Those bonds will be backed by 3.5 percent of sales tax collected in the site, thanks to state legislation. Each $1 million in taxable retail sales inside The Falls will generate $35,000.
W-L agreed to accept a $4 million payment at the end of September, and the final payment of $2.3 million no earlier than March, after its utility infrastructure and finish work is completed. Bristol already has paid W-L $12 million for its work on the project.
Odum said the payment delay gives the city time to go to the bond market and sell revenue bonds. Bristol earlier borrowed $25 million in general obligation bonds (backed by city tax revenues), which funded purchase of the Falls land and some initial infrastructure work. It borrowed an additional $15 million through which it has paid the first portion of W-L’s costs, putting its indebtedness to date concerning the project at $40 million.
“We hope that we can sell enough revenue bonds to not only fund the Cabela’s incentive, but to pay off some of the short-term (general obligation) bonds,” Odum said, noting that outcome would reduce the city’s debt exposure and increase its ability to borrow for routine municipal needs.
Were the city to issue $40 million in 20-year revenue bonds at 4 percent interest, the annual payment would be just over $2.9 million. To cover that payment, the retail site would need to generate an average of $83 million in sales annually.