THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Thursday, April 20, 1995 TAG: 9504200444
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY TOM SHEAN, STAFF WRITER
DATELINE: HAMPTON LENGTH: Medium: 72 lines
Some cities in Hampton Roads may have greater difficulty bringing in additional tax revenue in coming years, a specialist in the region's economy predicted Wednesday.
John W. Whaley, an economist with the Hampton Roads Planning District Commission, made the prediction in a speech to commissioners. Whaley also sounded a brighter theme about commercial construction in the region.
After recovering slightly during 1994, the dollar value of commercial construction in Hampton Roads probably will continue rising for the rest of the decade, Whaley said.
Turning to the subject of taxes, Whaley said, Norfolk, Portsmouth and a handful of other Hampton Roads cities already have to work harder than most jurisdictions in Virginia at generating tax revenue.
Using calculations that compared tax rates and tax collections for 136 cities and counties in Virginia, Whaley determined that Norfolk and Portsmouth were the least able among 15 jurisdictions in Hampton Roads to generate greater tax revenue.
According to these calculations, James City County and Williamsburg would have the least difficulty bringing in additional tax revenue, Whaley said.
However, 12 of the region's 15 cities and counties, including Gloucester, Southampton and Isleof Wight counties, were working harder at generating tax revenue in 1991-1992 than they did in 1986-1987, Whaley said.
In the speech, Whaley did not reach any conclusions about how the cities should respond to the information in his report.
His research was drawn from an elaborate model widely used by urban planners and researchers. The tax-generating capacity is determined by dividing the amount collected in a municipality by its theoretical capacity for applying five types of taxes, Whaley said. The same methodology, he said, has been used in Virginia since the early 1980s and by researchers elsewhere in the country since the 1970s.
Whaley's calculations prompted questions from members of the planning district commission about ways local cities might share tax revenue with each other.
``I think John Whaley's material is some of the most extraordinarily important material we've seen in some time,'' Norfolk City Manager James B. Oliver Jr. said during the meeting.
In his forecast of construction activity in the region, Whaley recalled that construction of office buildings and other commercial structures came to a near standstill in Hampton Roads during 1993.
But several conditions that depressed commercial construction in the region - including rampant overbuilding and reluctance by financial institutions to extend credit to developers - have eased, Whaley noted.
In 1993, the value of local nonresidential building permits, in constant dollars, sank to $207.92 million. That was a 67 percent decline from a peak value of $648.84 million in 1986.
Last year, the value of nonresidential building permits in Hampton Roads recovered slightly to $230.48 million.
``We think that things are changing, that things are turning around,'' Whaley said.
In coming years, the strongest demand will be for retail structures, because of continued growth in the region's population and income, he predicted. However, demand for office buildings will remain lackluster.
In the office-building sector, vacancy rates in most parts of Hampton Roads ``are still high, but they are coming down,'' Whaley noted. ILLUSTRATION: [Color Photo]
[John W. Whaley]
by CNB