Customers at Peninsula Town Center are getting an unwelcome surprise when they look at the bottom of their receipts.
A .5 percent "VAFAC" charge is listed on purchases at all of the town center's stores and restaurants, including Target, Macy's, Barnes & Noble and Five Guys. Below that notation are the words Facility Charge Transaction Fee.
"I noticed it the next day after I got home," said Rachel Slemp, of Newport News. "When I called Target to ask what it was for, the operator told me as of Jan. 1, all of the stores in Peninsula Town Center were charging the fee."The fee is not a city tax, according to the Hampton Commissioner of Revenue's Office, but rather a fee between Mall Properties, the company that owns the town center, and its tenants. None of the money being recouped goes back to Hampton.
About three years ago, the City Council approved a Community Development Authority to issue bonds for public costs and oversight of special taxes. The .5 percent facilities charge which went into effect at the start of the year is part of the revenue stream being used to raise funds to defray the cost of those bonds, totaling $92.5 million, said Vincent Mastracco Jr., an attorney with the Norfolk office of Kaufman & Canoles. The law firm is helping oversee the redevelopment process at the town center.
Other revenue sources being used to defray the principle interest on the bonds include a portion of the real estate, sales, meals and amusement taxes generated by the town center.
Consumers can expect to see the charge for the foreseeable future, as it's a 30-year bond issue.
"Cards have been given out at businesses in the center to let people know about the charge," said Mastracco. "It tells them that to finance a portion of the costs for public amenities, a facilities charge equal to one-half of one cent of each dollar spent will be applied to all retail sales."
While the charge is something fairly new to Virginia, the benefits of the CDA issuing the bonds to redevelop the infrastructure that was once Coliseum Mall , far outweigh any cons, says Hampton City Council member Randy Gilliland.
"Basically, with the CDA that was put in place, the property owner - Mall Properties - agreed to tax itself," said Gilliland.
"The revenue from that taxation can then be used to repay bonds set up to redevelop the property, so you get the redevelopment you want, but don't place a debt burden on the citizens at large," he said.
Not all customers who've noticed the new fee agree. Several people have called the Hampton Commissioner of the Revenue since the fee began Jan. 1, asking what the charge was for.
"They should have given customers notice of this charge," said Effie Nicosia, a shopper who lives in Hampton. "It just seems really sneaky the way they've handled this."
While some customers say the hidden fee will discourage them from shopping at Peninsula Town Center, others still believe it is more cost efficient to shop closer to where they live.
"Unless I'm already in Newport News, I'm not going to drive all the way over to that Target to do my shopping," said Nicosia. "Gas-wise, it's just not cost effective for me, but if I'm in the area of the other store and have to make a choice, I'd pick the Newport News Target."
An example of the .5 percent fee: a $50 retail purchase would result in a 25 cent transaction charge. An additional $1 would be added to a $200 purchase.
Daniel Meyerson, of Newport News, said he no longer plans to shop at the stores in Peninsula Town Center.
"A lot of people don't pay attention to what's on their receipt, they just ball it up and throw it away, said Meyerson. "I do care, it's a small amount of money, but it's my money, and why should I have to help pay for their new mall?"
Gilliland's response to complaints: "If you don't like it, don't shop there."
"To me these complaints fall under 'no good deed goes unpunished,'" he and said.
"At one point Coliseum Mall was the largest tax generator in the city," he said. "So we had a choice to either sit on our hands and allow it to go away, or take a more proactive approach like we did with setting up the CDA and redeveloping the property."
ABOUT THE CHARGE
* One-half of one cent of each dollar spent, applies to all retail sales and services subject to the Virginia sales and use tax.
* The facilities charge enables the public to use features such as structured parking free of charge.
* The Community Development Authority collects the facilities charge.