A 47-year marriage between Pulaski County and the city of Radford is now on the rocks because of their shared-custody child, the community of Fairlawn.
It was a shotgun arrangement to begin with.
In the 1970s, some residents and business owners in Fairlawn, located in Pulaski County just across the New River from Radford, wanted to be annexed into the city. At the time, state law allowed cities to initiate annexation petitions for contiguous land in neighboring counties.
Threatened by this loss of commercial land and revenue, Pulaski County worked through the General Assembly in 1978 to pass a law to give Radford and Pulaski County the authority to enter into an agreement in which Pulaski County would pay Radford a portion of sales tax revenue from Fairlawn businesses.
In November 1978, the two governments signed a contract that set that portion at 28% of the 1-cent sales tax — around $70,000 at the time for Radford’s budget.
At the time, Pulaski County Commonwealth’s Attorney Dow Owens told The Roanoke Times: “We felt if this agreement had not been reached we would lose the whole works — and pretty soon.”
Added board of supervisors chairman Archa Vaughan, “This is the only thing I see that protects us at all.”
However, decades later and just three years shy of their golden anniversary, Pulaski County is now seeking a divorce and refusing to pay any of the approximately $200,000 that the sales tax is budgeted in 2025-26 to generate for Radford.
In August, the board of supervisors filed a lawsuit against Radford alleging that the 1978 General Assembly statute was unconstitutional because it placed a “debt” on Pulaski County in the form of the sales tax payment, which a jurisdiction can’t legally incur without a voter referendum.
“It’s appropriate for every board of supervisors to be asking questions about the way taxpayer money is being spent and about the basis for those payments,” said Pulaski County Attorney Tim Kirtner. “When they ask those questions and they get answers to those questions, then they have decisions to make based upon those answers and that’s the process this board followed.”
Radford is already struggling. In 2023, it took out a $4 million loan that it hadn’t even begun to repay as of May, and earlier this year fell $6.5 million behind in payments to American Electric Power. This year’s $78 million budget includes no raises for city workers, a hiring freeze, a 10% cut in council members’ pay, and increases in real estate, personal property, meals and lodging taxes.
Complicating its woes is the fact that Radford has scarce land for business development. As far back as 1992, officials noted in a report that “only 17.1% (1,051 acres) of the City’s total land area remains vacant and undeveloped. Moreover, of this total vacant land, 926 acres are located on slopes exceeding 10%, situated within the 100-year floodplain, or restricted in their development potential due to limited accessibility, adjacent land use, or the absence of public utilities. Consequently, only 125 acres, or 2.0% of the City’s total area, are located on vacant land ideally suited for commercial or industrial development.”
Radford is fighting the attempted breakup both in Pulaski County Circuit Court and the court of public opinion.
In its response, Radford City Attorney Michael Bedsaul noted that by allowing Fairlawn to remain part of Pulaski County, “the County has received millions in tax dollars … not just sales tax revenues, but also revenues from real estate and other taxes. Had the City pursued annexation, it is plausible the City would have made ‘millions’ in tax revenue. Instead, the County was able to secure this revenue within its own borders for a song.”
Furthermore, in a demand letter posted to the city’s website, Bedsaul wrote: “The current financial challenges faced by the City have been well publicized. Furthermore, the revenues the City receives in connection with the Agreement are used to fund its operations and meet the City’s obligations to the public. The County has had 47 years to challenge the Agreement. Why, after this period of years, would the County select this moment to unilaterally cease revenue sharing? The City can only conclude that this decision was made in an effort to intentionally inflict irreparable harm to the City.”
While the two sides have traded court filings, no hearings have been scheduled yet.
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The relationship began back in the 1970s when Kroger sought to expand from its downtown Radford store.
Just across Memorial Bridge beckoned Fairlawn, but officials say Pulaski County didn’t have the infrastructure to support the expansion, which in part led to conversations about annexation and the subsequent revenue-sharing agreement.
Since Kroger’s relocation to what is today Fairlawn Plaza, the Pulaski County community has experienced substantial commercial growth. What it continues to receive from Radford in exchange for the 28% is debatable.
“I’m not aware of anything,” said Pulaski County Administrator Jonathan Sweet. “There is no direct return from the funds that are sent to Radford. Indirectly we have mutual aid agreements but as far as anything being received for that $200,000 a year, there’s nothing I’m aware of.”
For its part, Radford insists it would have enjoyed millions of dollars in sales tax revenue since 1978 had it just annexed Fairlawn as it had the right to do. (Annexation laws have since changed to make it more difficult, if not impossible.)
“Pulaski received the benefit when the city helped develop that corridor,” said Radford Mayor David Horton. “The city continues to be an outstanding partner. My hope is that that continues in the future. I’m disappointed it went in this direction. We’re disappointed they’re not honoring their agreement.”
Neither side will speak much beyond the statements made in court filings. Though Pulaski County is challenging the constitutionality of the 1978 General Assembly legislation that authorized the tax-sharing contract, it is not seeking restitution on past payments, said Kirtner.
Nor has the controversy generated much public comment. Most shoppers leaving Kroger on a recent weekday morning had no idea that 28% of their sales taxes goes back across the river to Radford’s coffers.
But they do have opinions about Radford.
As he pushed a cart of pumpkins and other fall decorations he’d bought for his church, Radford resident Ryan Cox looked confused when told about the 28%. “Why? Why does it do that?” he asked. “In my mind I don’t know why Radford is a city anyway.”
Waiting for a prescription from the Kroger pharmacy, Scott Herrmann said, “I live in Radford, but most everything I do is on this side of the bridge. Ever since I moved to Radford, I mean, I’ve not seen them do anything to expand business in Radford. All the business expansions happen over here in Fairlawn and either that’s because of what Pulaski is doing or has done. There’s a reason why they chose this side of the bridge and not that side of the bridge.”
At the nearby Fairlawn Tobacco and Vape, manager Kevin Steele says that even though Fairlawn is part of Pulaski County, he supports Radford getting some of the sales tax revenue.
“Fairlawn is next to Radford and everything else [in Pulaski County] is so far away,” Steele said. “We always consider this part of Radford. If anything it should be like 75-25 with 75 [percent] going to Radford and 25 the other way. If you break all the math down and the percentages for the area and the total distance … it would make a lot more sense for it to be that way, right?”
Seated inside Cunningham Real Estate, located in Fairlawn Plaza just a stone’s throw from the Kroger that his father helped facilitate in the 1970s, developer Bill Cunningham said, “I think the timing, because of Radford’s situation, is maybe a little unfortunate because it’s perceived that the county may be trying to pick on Radford a little bit.”
The sales tax split doesn’t impact the marketability of Fairlawn’s commercial properties, Cunningham said. But as a businessman who grew up in Radford and maintains deep ties to both places, he worries about the ruptured relationship between the local governments.
“I’m a big advocate of working with your neighbors on marketing and everything else, and trying to rent property that’s adjacent to where you are,” he said. “If I don’t have a space that’s available, I hope that they go somewhere close because it strengthens the community as a whole.”
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The sales tax issue is actually the second cord that’s been cut this year between Fairlawn and Radford. Long sharing the same ZIP code with the city, Fairlawn will soon get a unique identifier thanks to federal legislation.
“Recently, we were dismayed to find that Fairlawn residents facing loss and catastrophe after Hurricane Helene could not access individual assistance through FEMA’s online portal simply because they possessed a Radford ZIP code,” said U.S. Sens. Mark Warner and Tim Kaine and U.S. Rep. Morgan Griffith in a news release. “We are proud to introduce this legislation to give Fairlawn its own ZIP code and avoid further confusion and stress for this community.”
Watching this debate is Montgomery County, which entered into a similar arrangement with Radford in 1992. Under a revenue-sharing agreement to avoid annexation of the Virginia 177 corridor around Interstate 81, Montgomery County agreed to extend water and sewer services for the future home of Carilion New River Valley Medical Center and pay 27.5% of all revenue generated in the zone. This year the budgeted amount is $227,000.
“Changes to the Route 177 Corridor Agreement have not been discussed by the Montgomery County Board of Supervisors,” said Jennifer Tatum Harris, the county’s public relations and community engagement director.
Meanwhile, whether they’re allowed to legally separate or not, Pulaski County hopes it can still be Radford’s friend.
“These guys are our neighbors and they’re always going to be our neighbors,” said Sweet, the county administrator. “I love the city of Radford, we partner with them on so many different things and we’re going to continue to partner with them on things. So we’re trying, to the best of our ability, to settle a dispute with our neighbor, and when we’re done with this still have a strong working relationship with them. I know it’s difficult. It’ll be very difficult for them, and you know if we lose it will be difficult for us as well, but nevertheless, we value the city of Radford and the citizens of Radford.”
Rather than talk of winning and losing, Cunningham hopes a compromise can be reached “to where both parties feel good about it, because I think that helps the situation with your neighbors. You know, good fences make good neighbors right? But I’d like to be able to talk to my neighbor and not have to look at a fence all the time.”