West Virginia May Allow a Third County to Use Sales Tax Increment Financing for Economic Development

After approving the use of sales tax increment financing (STIF) in two economic opportunity development districts located in Ohio County and Harrison County, the 2013 West Virginia legislature may consider approving a third economic opportunity development district in Monongalia County.

Compared to traditional property tax increment financing, STIF is used less frequently in West Virginia. West Virginia collects a 6% State sales tax on retail sales throughout the State. Current West Virginia Statutes provide that counties and municipalities may create economic opportunity development districts with State legislature approval and use State sales tax increment for up to 30 years to finance certain development costs. In order for the State legislature to consider approving the establishment of an economic opportunity development district, the proposed project must include capital investment of at least $25 Million within two years after district designation unless environmental remediation activities are required, in which case developers have up to four years to meet the minimum capital investment requirement.

In 2003, Ohio County established West Virginia’s first economic opportunity development district and in 2006, $99 Million worth of STIF bonds were issued, supported by sales tax increment generated by approximately 60 businesses located in the approximately 300 acre district. The District includes a 1,100,000 square foot Cabela’s distribution center, a 175,000 square foot Cabela’s retail store, a movie theater and several other big box stores. In 2012, the State legislature approved the Charles Pointe Economic Opportunity Development District in Harrison County, only the second economic opportunity development district in West Virginia. With approximately 300,000 square feet of commercial/office space, 200 hotel rooms and a 15,000 square foot conference center already constructed, when completed, the Charles Pointe development is expected to generate sufficient tax increment to support up to $400 Million bonds with bond proceeds to be used for certain development costs.

Developers in Monongalia County intend to construct a multi-use development in a 1,400 acre area, including a new baseball stadium in the greater Morgantown area.  Both the County and the State approved the property tax increment financing in 2012.  The State legislature will debate approval of the STIF agreement during the 2013 legislative session. If approved, project proponents anticipate that approximately $15 Million in STIF bonds would be issued to pay for certain development costs.

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