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At its July 20 meeting, Lexington City Council voted to hold a public hearing on extending the city’s portion of the Virginia Horse Center’s discretionary lodging tax, explicitly for the purposes of retiring debt that the horse center owes to CornerStone Bank. The hearing will be held at Council’s regular business meeting on Oct. 5.
The issue of extending the tax was brought to Council at its Dec. 15, 2022, meeting. Virginia Horse Center CFO Sandra Thomas presented the request to City Council that the extra 1 percent from the lodging tax be extended through July 31, 2029. Currently, the extra funding is set to expire at the end of July 2024.
The horse center receives 2 percent of the discretionary lodging tax from the city and county, and in 2014 requested an additional 1 percent to help pay off delinquent debt to the United States Department of Agriculture, and has since been used to help bridge the gap between the $604,555 the horse center pays to the USDA annually and the amount received from the 2 percent of the lodging tax.
Should the funds be extended, it will be the second time that the city and county have done so. In 2017, the city reapproved the additional percentage, but capped the amount the horse center receives from the city at $61,000. The horse center is currently looking to refinance in order to lock in a flat rate for the debt payments, which are set to balloon in 2026. With the restructuring of the loan payments, the debt should be retired in 2029.
At the July meeting, City Manager Jim Halasz recommended to Council that it extend the tax with the express purpose of the funds being used to retire the debt, and once the debt is paid, the city would no longer extend the extra 1 percent, whether the debt is paid off in 2029 or before. After that, a conversation could be had between the city and the horse center about securing additional funding to be put toward capital improvements.
“My expectation is that both the county and the city’s 1 percent would be used to pay off the debt as quickly as possible, and if our economy is still good in a year, year and a half, it won’t take that long,” he said.
The Rockbridge County Board of Supervisors approved extending the county’s one percent in January, with the proviso that the city also voted to extend the tax.
Council member Leslie Straughan moved to hold the public hearing at the Oct. 5 meeting and Nicholas Betts provided the second. The motion passed unanimously.
