EDA Chair Says City Must Revitalize Commercial Areas

By FALLS CHURCH TIMES STAFF

August 24, 2010

The Falls Church Times recently interviewed Economic Development Authority chairman David Tarter regarding his organization’s role and his thoughts on the state of development here.  Tarter’s responses reflect his personal views, not an official position of the EDA.

FCT:  Dave, thanks for taking time to interview with us.  Let’s start with the basics.  What is the EDA?

Tarter:  In general, Economic Development Authorities are created and authorized by state code to perform a number of functions relating to economic development, particularly ones that cities and counties are constrained in doing themselves.  For example, EDAs can buy and sell land, construct and lease buildings, finance projects, grant development incentives, and do so in creative ways that local governments often cannot do directly with taxpayer funds.

An additional function of the Falls Church EDA is to advise the City Council on proposals and issues related to economic development.  Proposed new projects are routinely referred by the City Council to the EDA (and other City boards and commissions) for review and recommendation.  In connection with these proposals, the EDA also examines the estimated net fiscal impact of proposed new projects, the impact on the local business community, and many other factors.

The EDA also generally promotes business within the City.

FCT:  So how does one become a member of the EDA?   And how long is the term?

Tarter:  EDA members are appointed by the City Council.  Member terms are four years, but positions are often filled to complete unexpired terms.   Individuals who reside in the City or an adjoining jurisdiction or who live outside the City but have a business interest in the City of Falls Church may apply to fill an open seat on the seven-member board.  There are currently two openings on the EDA.  The process requires the completion of an application form that is available on the City web site.  Applicants are required to attend at least one board meeting prior to consideration for appointment.  The City Council’s Appointments Committee conducts interviews of EDA applicants and makes recommendations to the City Council for new appointments.

FCT:  How long have you chaired the EDA?

Tarter:  Since 2008.

FCT:  What’s your background?

Tarter:  I was born and raised here in Northern Virginia.  I attended college and law school at the University of Virginia.  I moved to Falls Church almost seven years ago and live here with my wife and three children.  I am a commercial real estate attorney and work mostly with builders and developers primarily in Arlington.  In connection with this work, I have been exposed to high quality planning and development which I think Falls Church can, in many instances, emulate.

FCT:  What kind of activities has the EDA been involved in recently?

Tarter:  The Falls Church EDA has been active on many fronts.  The EDA sponsors a number of events throughout the year designed to attract business and visitors to the City, including First Fridays, Watch Night, Tinner Hill, Creative Cauldron, and the Washington Area Music Association’s annual Wammies award event at the State Theatre, among others.  We also co-sponsored the development and periodic update of the City’s fiscal impact model.  The EDA has hosted numerous “developer forums” to raise community awareness about issues such as Smart Growth principles, the economics of mixed use and commercial development, retail recruitment strategies, “green” development, the Eden Center, the dynamics of the hotel/hospitality industry, affordable housing, among many other public presentations.

Over the past two years, the EDA has also retained a former senior planner with Arlington County as a consultant to provide guidance with the revitalization of some of the key commercial areas of the city.  This effort has led to the involvement of Virginia Tech’s graduate urban planning program in undertaking focused studies of the City’s Eastern Gateway, the N. Washington St./W. Jefferson Corridor, and most recently, the 100 and 200 blocks on the north side of W. Broad Street.  This fall, Virginia Tech students will examine the redevelopment potential of the City’s West End.

FCT:  How is the EDA funded?

Tarter:  Our funding is generally separate and distinct from the City’s general fund and is essentially funded by EDA activities.  At present, our income comes predominantly from administrative fees generated by the EDA’s issuance of Industrial Revenue Bonds.  In the past we have also received money from the rental of EDA owned property, such as the former Two Sisters’ site on Broad Street.  In addition, we have a reserve accumulated from prior surpluses which we use to fund special projects such as the EDA’s Branding Initiative.

FCT:  Interesting.  Property in Falls Church City does not come cheap.  Where did the EDA get the money to buy the property?  And how much property does the EDA own?

Tarter: The EDA owns the former Podolnick (Two Sisters) property at 255 W. Broad Street, which contains about three-quarters of an acre of land.   The City provided the funds for the purchase of the property in 2000 and then transferred ownership to the EDA to land bank and hold for future redevelopment.

FCT:  Is the EDA taxpayer funded or not?  Are the administrative fees on Industrial Revenue Bonds paid by the taxpayers?

Tarter:  The EDA is generally not funded by City taxpayers.  There may be occasional instances where the City provides funds to the EDA, but usually the EDA finances its own activities as I described previously. Industrial Revenue Bond fees are not paid by taxpayers but are ultimately borne by the borrower.  By the way, IRBs are authorized by state law and are attractive because they receive favorable tax treatment, but are not guaranteed or otherwise “backed” by the EDA, the City or the state.

FCT:  What is your annual budget generally?

Tarter:  Our budget is surprisingly small.  Last year, EDA expenditures were approximately $35,000.

FCT:  What’s the difference between the EDA and the EDO [Economic Development Office]?

Tarter:  The EDA is a volunteer group of residents, while the EDO is the City’s full time professional staff.  We work closely with each other.  The EDO currently has two staff persons, Rick Goff and Becky Witsman, who provide a broad range of services for the City and the EDA, including the day-to-day, in-the-trench work of business assistance and development support.

Business assistance is directed at attracting new businesses and retaining and expanding existing ones.  This entails reaching out to prospective businesses, providing information about available space and other opportunities, hosting business development workshops such as the Franchise and Entrepreneur Express, preparing regular reports on the City’s business and commercial leasing and sales activity, preparing business attraction materials such as the City’s restaurant guide, and general business development visits and follow-up work.

Development support involves assistance and promotion of new ventures such as BJs Wholesale Club, the Mad Fox Brewpub, and financing of the Tax Analysts Building.  EDO staff analyzes the potential impact and, later, the performance of new City developments in terms of tax generation, fiscal impact, and other criteria.

FCT:  Does EDA have any authority over EDO employees or functions?  Or are you strictly an advisory organization?

Tarter:  The EDO staff assists the EDA, but are City employees and report directly to the City Manager.

FCT:  What is the EDO’s annual budget?

Tarter:  The EDO’s 2011 budget is approximately $345,000, a 16% decline from FY 2010.

FCT:  One recent EDA project was the development of a city motto, which ultimately resulted in “The Little City.”  Are you happy with the process and result?

Tarter:  I am.  The project entailed much more than the creation of a motto, however.  The Branding Initiative was generated by a comment at a business roundtable co-hosted several years ago by the EDA and City.  The initiative seeks to establish a more distinct identity for the City of Falls Church from the broader Fairfax County area of Falls Church.  We retained the Falls Church firm of Smith Gifford to assist us with the effort.  We have one of the most affluent and educated communities in America with market demographics that appeal to many retailers and other businesses, yet most people do not realize we are a separate jurisdiction and community.  In many ways the wonderful community we have here is one of the area’s best kept secrets.  The initiative has also included the creation of a restaurant guide and publicity in connection with a number of City events.  I believe the branding effort is catching on and will continue to do so as people become more familiar with it.  It is, and remains, a work in progress.  I would like to see additional implementation by the City government itself.  The branding effort is a small piece in the puzzle.

FCT:  What, in your view, is the most pressing problem facing Falls Church City?

Tarter:  In my opinion, the most significant challenge for the City is how to revitalize and transform our aging and underperforming commercial areas into vibrant, attractive, income producing ones.  Many of the buildings in our commercial areas and main streets are fifty plus years old and auto centered, such as car lots and dealerships, repair shops, car washes, u-haul and other rental, etc.  Nearly a million cars pass through Falls Church a month, yet only a small percentage of them stop to patronize our businesses.  As a result our tax base is heavily skewed to the residential tax base.  We have two Metro stations with our name on them, yet we have not effectively connected and used them for our economic benefit.  If the City is to remain economically viable and independent we must create a better balance to the City’s tax base, with the ultimate goal of a balanced commercial and residential tax base.  I believe that the first step in this effort is for the City to clearly articulate its own long range vision for these areas and the City as a whole.  This requires the City to engage in more detailed long range planning of its commercial areas than has been done to date.  The best way to get desired development is to let the development community know what you want.

FCT:  So you’re referring to “sector planning”?  How does that work?

Tarter:  Yes.  A sector plan – or an “area plan” — is a detailed long-range plan with a design framework and revitalization/redevelopment plan for a particular area.  It generally involves establishing building heights and mass, uses such as mixes of office, retail, hotel, or residential uses, and a myriad of other details such as locations of crosswalks, on-street parking, loading docks, open space, and building setbacks.  Sector plans have been used successfully by many communities.  Growing up in this area, I have seen Arlington use them to transform areas such as Clarendon, Shirlington, and Ballston from industrial, suburban, and/or auto-oriented areas to walkable, urban villages, which in turn have generated the revenue to provide excellent schools and other services with substantially lower property taxes.

Sector planning does not necessarily mean tall high rise buildings.  Quite the contrary, this form of planning requires context and sensitivity to existing neighborhoods.  I would argue that there are few places in the City where buildings taller than 5 or 6 storeys would be appropriate.

Good sector planning starts with substantial community involvement to set the economic and redevelopment goals for the area’s future.  It is a collaborative effort that includes the Planning Commission, City staff, and others, and may also include changes to the Zoning Ordinance to facilitate and encourage desired development.  Once the community vision for an area has been established, and the plan approved, the City Council needs to hold its ground and wait for redevelopment to occur in the prescribed manner.  Falls Church will not and should not redevelop overnight.  The redevelopment of areas such as Shirlington and Clarendon each took 20+ years.  At times we may need to pass up new development that is inconsistent with long-term goals.  For example, some years ago, the Arlington County Board rejected a Home Depot that would have brought in immediate tax dollars in order to achieve what are now the Clarendon Market Commons, Whole Foods, and related development.

FCT:  Which areas of Falls Church City should be our focus for property development?  Which single area would you start with?

Tarter:  I believe that there are a number of nodes where redevelopment can occur and provide substantial fiscal benefit to the City and yet have a limited impact on the immediate neighbors.  One such area is the Eastern gateway to the City, including the Syms and Koon’s sites.  The area is close to transportation such as Route 50, Wilson Boulevard and the East Falls Church Metro station and a portion of this area is buffered from the residential neighborhood by the adjacent cemetery.  However, the nearly 7 acres currently occupied by the car dealership generates relatively little per acre tax revenue to the City because almost all sales tax revenue from the sale of cars is sent directly to Richmond.  By contrast, the twin First Virginia Bank towers located just outside the City’s boundary would generate approximately 1.2 million dollars in tax revenues, or the equivalent of approximately four cents on the City property tax rate if located within the City.  It is unclear whether this type of development would work on any of these sites, but certainly this area could support more intense development.

FCT:  What else should Falls Church City be doing to improve its economic development?

Tarter:  I talked about sector planning. That’s only a start to the long term revitalization of our commercial core.  Without Metro stops immediately within our City, high quality commercial redevelopment is more difficult to attain than it is for some of our neighbors.  This means that the City needs to be more creative and nimble than others, but we can do that.  The tax sharing agreement with the BJ’s Warehouse Club developer, in which the EDA played a major role, is a good example.  The EDA participated in its negotiation and acts as a conduit for the distribution of tax proceeds.  The BJ’s deal ended up being the second largest (by square footage) retail transaction in the Washington, DC Metropolitan Area in 2009. The return to the City on its investment is tremendous and is expected to increase the City’s sales tax by ten percent.  The City also has a Technology Zone tax abatement program that approximately 60 businesses have utilized.   Many of our immediate neighbors including Fairfax County do not provide direct financial incentives for business, which can also give us an advantage.  New incentives also could include a popular tool used frequently around the nation – tax increment financing – to help pay for special public improvements such as a parking deck financed with the incremental increase in tax revenue from new development investment.

More broadly and longer term, the City should invest in its own infrastructure to make our commercial areas more attractive and accessible, including improvements to the streetscape, pedestrian and bicycle access, and undergrounding utilities, particularly through grants or in connection with new development.  Even longer term, the City should plan for and seek to participate in regional transportation improvements such as the streetcar service which is already being planned through Arlington to Skyline.  Expansion of this service from Baileys Crossroads to Tysons Corner or to the East and West Falls Church Metro stations seems a natural extension and could provide the catalyst for substantial economic development on a scale appropriate for the City.

FCT:  How about business recruitment?  How are we doing there?

Tarter:  I believe we are doing pretty well in that area but it is obviously a challenging economic time.  In addition to the previously mentioned BJs deal, I would point out that the Economic Development Office had a major role in attracting the Mad Fox Brewery which looks like it is going to be a major business success story.   Back in 2008, EDO staff came across an article in the Washington Business Journal about a brew master who was seeking to open his own brewpub and restaurant somewhere in Northern Virginia.  Staff acted quickly to bring this prospect to the attention of the commercial broker for the Spectrum, who, in turn, began aggressively pursuing the lead.

The EDO assisted in interpreting parking requirements for the proposed use and provided important demographic, traffic count and other site-specific information that helped persuade the business owner of the desirability of this Falls Church location.  The City Manager reiterated the City’s interest in the business and let the owner know that the City would cooperative in making the proposed use work in the building.  This was an important point in Mad Fox’s site location decision.

Despite the difficult economic climate, Mad Fox signed a long term lease for the prime commercial space that they now occupy.  The City estimates that gross tax revenue from this popular new business will exceed $350,000 per year, which is more than the entire annual budget of the EDO, or the equivalent of more than one cent on the City’s property tax rate.

FCT:  You’ve given us a lot of information.  We appreciate it and look forward to following these issues.  Thank you very much for taking the time.

By
August 24, 2010 

Comments

13 Responses to “EDA Chair Says City Must Revitalize Commercial Areas”

  1. barb cram on August 24th, 2010 9:56 am

    This interview provided not only an explanation of the framework of our economic development leadership, its focus, ideas and gratefully its successes. All of the ideas
    on the table and the “sector” development planning make sense to me. I would like
    to know what the citizens can look forward to as far as the “next steps” and when
    and where we can become involved in the process. Good interview!

    Clearly timing, creative thinking and persistence were key in the recruitment of BJ’s and Mad Fox Brewery–congratulations!

  2. Barry Buschow on August 24th, 2010 2:24 pm

    All of the candidates in the last election ran based on a need and desire to take the “Next Step” (including myself); however no one elected on the Council so far has even dared to suggest the “Next Step”. I believe we need to hire an urban architect, one experienced in the re-vitalization of older cities and start to develop our area plans and have something on the table to discuss with developers. Until that happens we are still just in the mode of dealing with whatever comes in the door……

  3. Mike Smith on August 24th, 2010 3:43 pm

    I agree the next step needs to be a comprehensive vsion for the City. Thus far we have been reactive, and not very good at that. BJ’s was a real win, especially compared to the CarMaxx that was proposed for that site. I don’t know what we did to get Mad Fox, but that is a perfect example of what is right for the City (and the double IPA is nectar of the Gods!) City Center was a fiasco and I am way too smart to weigh in on the Wilden project.

    The slowdown in the economy, while difficult, gives us some breathing room to determine what the Little City wants to be when it grows up. We only have one chance, let’s use it wisely.

  4. Sally Phillips on August 24th, 2010 6:55 pm

    Allow me, please, to play devil’s advocate or Negative Nellie here! I’ve been around a long time and my hair is almost white and if I were male, my beard would be down to my knees!!!

    I have done comprehensive plan re-do’s. I have done master-plan redo’s. I have done charettes. I have done visioning. I’ve done it all, again and again. I’m sure lots of my brethern feel the same way. We always say we want a good French restaurant (t’would probably be Indian now), a good bookstore (t’would probably now be some kindle-tech shop that I don’t even know how to describe), and a really good bakery. But we never get what we want because it doesn’t work financially in the current market.

    So how do we change that dynamic? How do we design a vision/plan/node-focus that we can absolutely, stubbornly insist to developers that we want? We’ve told developers again and again what we want. We did with the City Center. That’s probably not a good example, because the recession took that project down.

    My point is — after 40 or 50 years of trying to get what we want, how do we do it differently this time? Or should we grab whatever walks into town and be glad we have it?

    Sorry to be so negative! I really want you, David Tartar and others, to tell me why I’m wrong. I’ll be glad to hear it. I want to get things going here.

    Sally Phillips

  5. Andy Rankin (Falls Church) on August 24th, 2010 8:33 pm

    Sally, I haven’t been around the City long enough to have been exposed to past plans but I’ve heard a lot of stories similar to yours. For me, one big difference in the planning we should do this time and what we’ve apparently done in the past is not be too specific in terms of what we want.

    I’d like us to focus on planning for office buildings, some residential, and general areas of retail space. Plans that can show how the various components would work together, how the transportation would work, things like that. I think it’s fairly pointless to put together plans for things as specific as a French restaurant and good bakery – but we can put together plans that have enough density and mixture of uses to encourage various retail options. With luck those will include some of the specific things we want.

    I don’t think we’ll be able to plan exactly what we want and then get exactly that – but the plans have to be specific enough for developers to know that if they’re willing to build what we’re looking for then they won’t have trouble getting the approvals they need. Hopefully our planning will include creative incentives to encourage developers to build here.

    I know a lot of folks who have been in the City for years are skeptical of planning as a solution to the current economic problems in the City. I think one aspect of our planning should be to compare it to what has done previously to make sure we’re not going down the same paths we’ve been down before. There are many examples in the region and around the county where planning has worked – we just need to figure out the right formula.

    (I’m not sure it matters but since this article is about the EDA I will mention that I’m currently a member of the EDA.)

  6. Barry Buschow on August 25th, 2010 9:46 am

    Sally, the planning and design work would dictate the type and size of development that we want in the different sectors of our city. Where density will work, where mix development will work, etc….Developers can then be approached. There is no guarantee what kind of stores will come but with the right incentives and marketing (look what Bob Young has done to fill his buildings) we can slowly chip away at our shopping list. There is no quick fix, this will take years and we need to start now while the market is still slow……

  7. David Tarter, City of Falls Church on August 25th, 2010 5:15 pm

    Sally,

    I understand your frustration at the pace of redevelopment. None-the-less, it is important that the City maintain and further articulate its vision for redevelopment and stick with it. Haphazard redevelopment will beget more haphazard development. I am encouraged by the fact that there is developer interest in the City in the midst of one of the worst economic periods in modern times (the Akridge Gateway proposal and the Hilton Garden Inn, for example). As many areas such as Clarendon and Ballston become fully developed, I believe developers will seek out new areas such as Falls Church for new projects. Completion of the Silver Line to Dulles will also spur interest in the area around the East Falls Church Metro. To encourage redevelopment, the City may need to take a more proactive role, by means such as reexamination of the zoning ordinance to provide for reduction in required parking in certain instances, for example, bonus density, tax or other incentives for important projects, and public investment where appropriate (Shirlington has both a public library and theater). Redevelopment will take considerable time but with good planning, patience, and creativity, I believe that the City will achieve high quality redevelopment.

  8. Charlie Anderson, Falls Church on August 25th, 2010 9:33 pm

    Mr. Tarter, since you are now on the blog, can you please enlighten us on how the tax sharing with BJ’s works and what “tax sharing” actually means – it sounds like I will be helping to pay BJ’s taxes by doing more than just shopping there. How long will we be tax sharing?

    On the planning front, if there really needs to be any more planning, the City had better get hopping. As the recession leaves, the developers will be back (I think they already are after hearing about the Northgate project). This City needs to be acting now, not thinking about planning. I strongly suspect that there is a lot of meat in the previous plans that Sally mentions above that could be dusted off and used right now. The City doesn’t need to re-invent the wheel.

  9. Joe Fire on August 25th, 2010 10:15 pm

    Transportation connecting the commercial areas within and adjacent to the city is the solution. Unfortunately much of the prime commercial areas in the city are not on top of the metro like in Arlington. Therefore, the street car idea between Baileys, Tysons, and the metro stops is essential to make it work. It won’t be easy to implement, but that is type of bold and smart vision the city needs.

  10. David Tarter, City of Falls Church on August 26th, 2010 1:46 pm

    Mr. Anderson,

    The BJ’s tax sharing agreement works as follows: The City retains 100% of the first $450,000 in annual tax revenue (of all kinds) associated with the BJs site. For any tax revenue generated above $450,000, but below $950,000, the annual payout to the developer is 50% of these increased tax revenues (so the developer could receive up to $250,000). Any tax revenue above $950,000 would go solely to the City. By way of comparison, the Nolan site previously generated approximately $250,000 per year in total tax revenue. The Falls Church EDO estimates that the BJs’s store will result in excess of $1,000,000 in total tax revenues each year (subject to the previously mentioned maximum $250,000 payout to the developer). The BJs lease is a 20 year lease with options for another 20 years. The agreement runs for 12 years at which time all tax revenues would go to the City.

  11. Charlie Anderson, Falls Church on August 26th, 2010 2:54 pm

    Thank you Mr. Tarter. The tax “shared” equals $3 million over the 12 year period. Is this a standard deal to get a retailer in town? Do other municipalities structure similar deals over similar time frames?

  12. David Tarter, City of Falls Church on August 27th, 2010 10:49 am

    There are no standard deals of this nature. If, however, $3 million in tax revenue is shared over the 12 year period, then it means that the City has received at least $8.4 million in tax revenue (after the $3 million tax share), or approximately $5.4 million more than the prior use would have generated.

  13. Jodi Nicholson, City of Falls Church on September 3, 2010 on September 3rd, 2010 9:01 pm

    Let me first say that the Falls Church Times rocks! Being able to read about daily happenings in the City and everyone’s timely, current comments is priceless.

    Briefly, I moved to Virginia from New York in 1980 with Mobil Oil.
    Have lived in Merrifield, Arlington, Alexandria City and then Falls Church City.

    In 1980 Merrrifled was kind of scarey, Ballston was kind of slummy, Clarendon didn’t exist as it does today and Shirlington was run down, at best,

    Look at them now. Top notch retail incorporated with charming residential and plenty of parking.

    Why isn’t anyone paying attention to what’s going on all around The Little City?!? not relevant to politics, (Mayberry Redeux might’ve been more appropriate-ha!).

    Barry Buschow’s timely statement that an ‘urban architect’ is needed is THE only thing that needs saying at this point, in my humble opinion.

    Planning? More ‘mixed used’ behemoths?

    The longer we keep doin’ what we did, the longer we’ll keep gettin’ what we got.
    (“we” is everyone involved in saving Falls Church City; all residents, officials, etc.)

    Is it necessary to work so hard to try to reinvent the wheel?

    Look to the genuises all around Falls Church City, take a page out of their book. Hire, at least consult with, urban architects, planners from Arlington.

    It seems this could only be a win-win situation.

    Thank you for the opportunity to speak my mind.

Feel free to leave a comment. Please increase the credibility of your post by including your FULL NAME and CITY. All comments are subject to editing for courtesy and content.