We, the conferees, appointed by the respective bodies to consider and report upon the disagreeing vote on House Bill No. 1294, report as follows:

A. We recommend that the Senate Amendment in the Nature of a Substitute be rejected.

B. We recommend that the Conference Amendment in the Nature of a Substitute be accepted to resolve the matters under disagreement.

C. House Bill No. 1294 will authorize the Haymarket Transportation Program Bond Issue 9(d) for $49.1 million. The bonds are 20-year bonds with an assumed interest rate of 5.06% which equals a level debt service amount of $3.8 million annually. State sales and use tax collections within the Disney's America theme park will offset the debt service; however, beginning in the first full calendar year of operation of Disney's America, Disney's America guarantees sales and use tax receipts of $3.8 million annually for the life of the bonds.

If less than $3.8 million is collected from the state sales and use tax within Disney's America theme park, Disney will make up the difference by paying such amount to the Haymarket Transportation Program Fund. To account for sales tax paid on all construction material, etc., used in the construction and use of Disney's America, Disney's America will receive a credit for such debt service equal to two years of debt service which can be used anytime during the first five years of operation of the park. After such period of time, any such unused credit shall expire.

After such five year period, if state sales and use tax collections within the confines of Disney's America is less than $3.8 million, Disney can use excess collections for the next three years, with no interest, to offset such shortfall.

Prior to financing this bond issue, the following must occur:

• Rezoning of an area of at least 2,000 acres which includes a theme park contiguous to the proposed interchange for a project which proffers a capital investment of at least $400 million.

• Walt Disney Company must maintain a net worth of at least $1 billion. If net worth drops below such amount, a surety bond is required.

• The guarantee for the $3.8 million continues to be between the Commonwealth and the corporate parent (Walt Disney Company).

• No interest or specific credit is given for sales tax on construction or excess collections in future years except as specified above.

• The $10.4 million for signage (in the four years during the 1994-96 and 1996-98 bienniums) shall be paid from the following:

• Prince William secondary road funds;

• payment agreement between Prince William County and Commonwealth Transportation Board;

• excess bond proceeds, if any; and

• Northern Virginia Transportation District road funds.

• Walt Disney Company will provide land at no cost for a state built and operated visitors center located at the main gate to Disney's America. There is guaranteed access to the public at no charge.

3. The Commonwealth shall provide dedicated workforce training of $600,000 annually and will be made available for fiscal years 1997-98, 1998-99, and 1999-2000, and participation in statewide programs thereafter.

4. A cooperative advertising program of $13 million shall be established for the 1996-98 biennium with a 50/50 match, to be administered by the Virginia Department of Economic Development, Division of Tourism. An industry-wide cooperative advertising program shall be available under House Bill No. 1291 of the 1994 Session.

5. The written agreement between the Commonwealth and the Walt Disney Company shall be signed by the Auditor of Public Accounts and the terms of such agreement shall be reported to the Speaker of the House, the President Pro Tempore of the Senate, and the three money committee chairmen prior to execution.

D. Statement of Policy Regarding the Use of Incentives. The Conference Committee report on House Bill 1294 and Senate Bill 500, as well as the provisions of House Bill 1291, which is not before the conferees, attempts to reflect a policy regarding the use of incentives for the purpose of attracting new industry in Virginia, while not discriminating against existing industry.

Accordingly, the agreement reached with the Walt Disney Company establishes a public/private and state/local partnership and links monetary incentives to performance expectations that secure the state's investment.

The Conference Committee made every effort to negotiate a balanced agreement that could provide a framework for future incentive packages. The Committee's work was complicated by the absence of any coherence state policy on the use of financial incentives for attracting new businesses or expanding current businesses.

For this reason, the Conference Committee recommends that the Secretary of Commerce and Trade include in the comprehensive economic development policy that the Administration is required to develop during 1994 under § 2.1-51.39:1A an explicit set of policies governing the use of incentives in future business transactions.

Because the Code requires the economic development policy written under this section to be submitted to the General Assembly, the Committee strongly urges the Secretary to work with the cognizant committees of the House and Senate, under House Rule 23 and Senate Rule 20F, in developing this policy.

We look forward to working with more companies interested in making major capital investments in Virginia. But, as proposals for further incentive-related developments are presented in the future, we must apply a coherent and consistent incentives policy to all such proposals, rather than be driven only by special case situations.