A Fairfax County government report released yesterday endorsed the policies of the county's Economic Development Authority, which has used its tax-free bonding authority to help arrange financing for several controversial commercial projects.
But a member of the Fairfax Board of Supervisors, who requested the report, immediately called it inadequate. "That's not what we wanted to hear," said Supervisor Sandra L. Duckworth (D-Mount Vernon), who called for the study last fall after a furor developed over the agency's financing of a large furniture store-warehouse.
"I'll have a lot of questions on Monday," when the supervisors will get a presentation from authority officials, Duckworth said.
The study came after disclosure that the agency, despite a prohibition barring it from assisting retail businesses, had approved financing for a large Marlo Furniture Co. warehouse-showroom off Shirley Highway. The supervisors were also troubled that the authority was assisting direct mail wizard Richard Viguerie, a political figure, in securing financing for a new office building in the county.
The long-awaited county report found no major weaknesses in the virtually independent authority's policies. Developed by Deputy County Executive James P. McDonald, the study essentially accepted the conclusions of an earlier review conducted by the authority's own staff.
"The financial review conducted by the EDA is sufficient to ensure beyond a reasonable doubt that the firm approved for borrowing is qualified and that further review by the county or the county's financial counsultant is unnecessary," McDonald's study said.
The only new action proposed by the study was that the authority provide the supervisors with a tally of the industrial revenue bonds it has approved. The bonds that the agency is empowered to issue carry lower interest rates than companies can obtain commercially because interest earned on these loans is exempted from state and federal income taxes, an exemption that gives the approved companies large savings.
With the authority's approval Marlo Furniture was able to go to American Security Bank in 1979 and get a loan for $5.8 million at the interest of 6 1/4 percent, well below the current market rates. With the money, Marlo built what some of its officials have called "the biggest retail furniture store in the metropolitan areas."
Although state law expressly bars the Farifax authority from issuing revenue bonds for retail operations, both Marlow and authority officials defended their decision, saying that the retail sales at the complex in Springfield are incidental to the building's overall operations, which include a warehouse, assembly area and corporate offices.
According to the Fairfax authority, it had issues 24 bonds worth $44.6 million and has pending another 42 transactions worth $75.4 million as of Oct. 31.