A judge has ordered the Spotsylvania County Industrial Development Authority to name the corporation for which it tentatively has approved a $7 million low-interest bond.
Spotsylvania Circuit Court Judge John A. Jamison issued the order Tuesday after The Fredericksburg Free Lance-Star had filed suit charging that the authority had violated Virginia's Freedom of Information Act by refusingf to name the corporation.
The authority scheduled an emergency meeting for today, apparently to decide how it would comply with the judge's order.
The authority issued a resolution of inducement last March 3 that would permit the unnamed corporation to get low-interest, industrial-revenue-bond financing through a bank. Authority Secretary-Treasurer Steven T. Foster, who is also administer of Spotsylvania County, said naming the company at that point "could jeopardize the whole arrangement" under which the firm was planning to establish an operation in Spotsylvania.
Foster said the company hasn't yet secured a site and could encounter problems finding one at a reasonable price if everyone knows who is doing the looking.
Even stronger language was used by Richmond attorney Alfred Schilling, an IRB-financing expert who assisted the Spotsylvania authority's counsel in the court case.
"It's an unfortunate decision," said Schilling, who is sometimes called Mr. Bond Counsel. "It's going to have a lot of people up in arms. It will unquestionably be harmful and make the job of attracting industry to Virginia that much more difficult."
Schilling explained why a company might want to keep its relocation plans secret until the last minute:
"Suppose you have a company coming down from New York or Massachusetts and it's heavily unionized. Word gets back about a planned move, and the union throws a strike at them, smashes equipment or causes bodily hamr to the officers. It has happened."
Authorities in Virginia have become energetic issuers of industrial revenue bonds. The taxpayer-subsidized bonds have become a popular method of financing in these times of record-high interest rates. Under bond financing, the lender does not have to pay federal and state income taxes on his loan and therefore can offer the borrower a lower interest rate. The losers, if there are any, are the U.S. Treasury and the state involved, which collect lower income taxes.
Foster said the agency's decision not to name the company that would get the $7 million bond was based on language in the state Freedom of Information Act which said an authority that passes a resolution in closed session must "give reasonable identification of the resolution" in public.
Foster acknowledged that the authority never previously had withheld the name of a company that had been given a resolution of inducement for bond financing.
Foster said Spotsylvania was trying to bring the unidentified firm to the county, which is 50 miles south of Washington, as part of an intensive economic development campaign that began when the FMC cellophane plant, the biggest employer, closed three years ago. The shutdown left 1,100 people without jobs.
Since that time, the county has attracted a $50 million General Motors Corp. Delco-Morain Division that employs 200 persons in the production of transmission components.
In public action, the county, with seven-to-one voter approval, has purchased the old FMC plant (1 million square feet on 236 acres) for $6 million and is offering it to companies piecemeal as industrial condominiums.
Foster also said that, in other action the industrial development authority has approved industrial-revenue-bonds resolutions and bonds totaling $20 million (including the $7 million resolution last March 3).
"They [the IRBs] have been an important factor in our economic growth," he said.