Tomer calls for probe of incentive money for Coleman MarketPlace

City Councilman Adam Tomer is calling for an investigation of a city payment of nearly $500,000 in extra incentive money for Coleman MarketPlace that was not approved by Danville City Council.

“The citizens of Danville need to understand where $500,000 in taxpayer money went without approval of City Council under our former city manager,” Tomer said, reacting to a report on Coleman MarketPlace from City Manager Lyle Lacy during the council’s regular meeting Thursday night.

Tomer called the handout of extra incentive money to pay for utility enhancements for the Coleman MarketPlace “ludicrous” and “wrong.”

“I’d like to see some accountability for it,” he said. 

A telephone message left for former Danville City Manager Jerry Gwaltney — who has worked for North American Properties, the shopping center’s owner — was not returned Friday night.

Lacy’s Oct. 28 report to city council outlined the incentives offered by Danville to NAP as part of the development agreement, which included $6.7 million paid in three fiscal years as the project progressed.

Lacy was asked to draw up a report to council detailing the costs and other aspects of the Coleman MarketPlace project.

Payments also included those for bridge construction adjacent to Piedmont Drive, half the cost of a traffic signal at Central Boulevard and Boxwood, a traffic signal and turn lanes at Lowes and Collins drives, totaling about $1.9 million, with $72,112 of it reimbursed by NAP and $463,069 of the sum provided by a revenue-sharing grant from the Virginia Department of Transportation, according to Lacy’s report. 

However, Gwaltney spent an additional $484,878 in utility costs “over and above what was permitted under current polities and procedures,” Lacy’s report points out. The expenses added up to $8.56 million.

Attempts to reach Lacy on Friday afternoon were unsuccessful. 

Mayor Sherman Saunders, when contacted Friday, said he has received the report and is still reviewing it. Saunders declined to comment further.

Deputy City Manager Joe King said Friday the extra incentive money paid for internal electricity distribution for the project and relocation of electrical lines and fixtures to accommodate the development, items normally paid for by the developer.

King, who was assistant city manager for utilities at the time, said he was on vacation when Gwaltney authorized the $484,000 in incentive money. Also, “it was not my place to tell him (Gwaltney) he was wrong,” King said. 

There were no funds spent that were not appropriated for electricity-related costs for development projects, he said. But the $484,000 was not allocated for Coleman MarketPlace, King said. The city spent a total of about $2 million for electricity for the project. 

In addition, installing infrastructure for Coleman MarketPlace at its location was tricky, entailing lots of earth-moving at tricky elevations and on rough terrain, King said. Large projects always entail a financial give-and-take with developers, and projects can run into unexpected costs, he said.

During Thursday night’s meeting, King told members of City Council that the city code was not explicit on matters like the one involving Coleman MarketPlace.

Lacy’s report also includes a presentation on the project prepared by Gwaltney and then Economic Development Director Ron Bunch entitled “City of Danville — Retail Hub Strategy.” The presentation outlined the incentive package and projected 1,500 jobs at Coleman MarketPlace.

Tomer, who voted against providing the incentive package for Coleman MarketPlace, wondered where the 1,500-job estimate came from, especially since the report states that the center has produced 581 jobs.

“There was no data to back up that job-creation number,” Tomer said.

Lacy, who was deputy city manager at the time of the presentation, told Tomer during Thursday night’s meeting he did not participate in its preparation. He said he did not know the basis of the job-number projection.

Tomer also criticized Coleman MarketPlace for not reaching a predicted goal of $1.3 million in annual sales tax revenue. Instead, it has brought in just $484,000 in annual sales tax revenue.

“It’s not even doing half of what it promised it would do,” Tomer said during an interview Friday. “I’m glad I voted against it. I thought it was a mistake in the beginning.” 

The sales tax revenue doesn’t factor in the shopping center’s “cannibalization” of other businesses, with shoppers bypassing other merchants at the mall to go to Coleman MarketPlace, Tomer said. It will take twice as long as the three to five years promised for the city to get its money back for Coleman MarketPlace, he said.