So, what’s the deal here? The City loaned the FCHC $2M (interest free) for some period of time. The FCHC gave that $2M to the owner of 360 S Washington Street to reserve the right to buy the property – which in theory they would do if/when the FCHC got more money from the state. If the FCHC decides not to buy 360 S Washington then the owner of 360 S Washington has to give back $1.9M and the FCHC has to give $2M back to the City. I’m not sure if that’s right, but that’s how the above article makes it sound.

Now, it sounds like earlier this year the FCHC decided not to buy 360 S Washington. And I guess that’s why the owner of 360 S Washington is now putting the property up for sale. However, it sounds like the FCHC hasn’t formally withdrawn their option to buy the building (otherwise they would already have gotten the $1.9M back, right?). Does that mean the owner of 360 S Washington can’t actually sell it yet? If he can, what was the $2M for?

If/when the FCHC withdraws their option to purchase 360 S Washington will they have to give the $2M back to the City right away or can they sit on it longer? Can they use the $2M for another purpose (buy a different building, for example)?

Regardless of the specific terms of the agreement between the City, the FCHC, and the owner of 360 S Washington, in the spirit of us all working together, if the $2M isn’t going to be used for it’s original intended purpose (to purchase 360 S Washington) shouldn’t we just get the money put back in the City coffers and then figure out what to do next?

I’m not too worried about the interest (as Dan said, these days there’s not tons of interest to be had – maybe $60k on $2M for a year?) – but the $100k the owner of 360 S Washington will get for sitting on his property for 6 months or so is a pretty sweet deal (and presumably he is also getting whatever interest he can get on the $2M). Who owns 360 S Washington?

Maybe I’m wrong about all of the above? I wasn’t too involved when this project got put together but now that it seems to be falling apart I think I’ll try to better understand things.

To the FCHC circumstance, the loan is secured (it’s in Tom’s “house,” or Carol’s “house,” etc.) and the City retains adequate cash on hand, so the Wonderful Life scene is not really apropos, but like I said the throng of interested citizens is nevertheless entitled to the answer to the question, and I will see that we all get answers.

The loan was designed to support the proposed FCHC project and to incentivize participation of the neighboring property owner in a complex project that would have increased the commercial tax revenue from the property as well as leveraged tens of millions of dollars to create new affordable housing units. Obviously this project did not bear fruit, but personally I have no regrets in the effort. The cost interest on $2M in today’s market, while not zero, is a small price to have paid for a calculated risk that was very well briefed, debated and understood. I am certain the $100k risk to the FCHC was also willingly assumed by the FCHC with a very full understanding of the implications.

There are always lessons to be learned, more of course from failure than success, and I will work to see that a full accounting is provided of the fiscal and other issues. I will also work every way I can to take responsible risks to seek to achieve community goals.

Of course I’m being a bit sarcastic here – I’m pretty sure the issue was raised and I’m pretty sure the CC and staff understood the implications. I don’t think getting more advice on the matter would have changed their decision.

I think you’re right that they probably thought this was all a done deal and didn’t think it was a risk. I don’t think someone pointing out the risk would have mattered – but maybe I’m wrong about that!

I’m not sure when or how this deal got worked out (I moved into the City about a year ago and didn’t start paying attention to things until about 4-5 months after that) but in retrospect it sure does seem like a bad idea. If getting more advice would help us avoid something like this in the future then I’m all for it (I’m just not convinced it would).

Maybe a Fiscal Affairs Committee comprised of non-partisan volunteers could have directed the Council’s attention to the interest-free aspect of the loan. Or perhaps the Council thought that the project as envisioned by the FCHC was a done deal and never really considered the real risk that project would fall through. I think the City always needs to be careful how they spend the tax dollars and even more so in a tough economic environment.

The News Press editorial speaks more to the budgeting process and I don’t have any conclusions on this. But as I have watched the FC City Council deal with developers and the water company, all of whom are sophisticated at what they do, I think the City should use all available resources and expertise out there to try to level the playing field.

“An ostensibly detached “fiscal review” approach to the Falls Church budget, devoid of key community priorities and values, would find ways to lower costs at the expense of those core values, and would run the risk of fueling a “revolt” among citizens who don’t share those values, either, and simply want cost-cutting and lower taxes. While the recommendations of such a body would, of course, have only the power of advisement, such recommendations could be used by contrarian political forces to foment political mischief that could do serious harm to the City’s public school system and overall quality of life.”

I’m just curious and a relatively new citizen here in Falls Church. I don’t know the politics around here. What are your thoughts the proposed financial affairs committee? Would a financial affairs committee have saved taxpayers anything in terms of the $2M loan? Perhaps advised different terms?