EDA: Discussion of Affordable Housing, Future of Eden Center, and More

The affordable housing project at Center City South Apartments (CCSA) has been an unending topic of conversation in Falls Church for the last few months, not only with the City Council and Planning Commission, but also within the Falls Church Economic Development Authority. Below are insightful minutes from the EDA’s December 2 meeting, discussing the affordable housing project and other topics.

Below that appears notice of a developer forum planned for the EDA’s January 6 meeting on the future of the Eden Center, followed by other items on that evening’s agenda.

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City of Falls Church

Economic Development Authority

DRAFT Minutes

Tuesday, December 2, 2008 – 6:30 p.m.

Falls Church City Hall

Training Center – G Level

300 Park Avenue, Falls Church, VA 22046

I. Call to Order – the meeting was called to order at 6:33 p.m.

EDA Board Members: A.C. Miller, David Tarter, Ed Saltzberg, Warren Cohen, Barry Buschow, Bruce Swenson

Excused: Bob Butchko

ED Staff: Richard Goff, Becky Witsman, Lovey Testa

Public: Cindy Mester (Assistant City Manager); Lindy Hockenberry (Planning Commission); John Metya (resident); Ira Kaylen (resident); Mark Kaye (resident); Bernadette Fancuberta (resident); Lisa Miller (resident)

II. Petitions from the Public (5 minutes per petitioner) – none

III. Petitions from the Board (5 minutes per petitioner) – none

IV. Approval of November 4 and November 18, 2008 minutes – approved

V. New Business

a. Falls Church Housing Corp./City Center South Apartments

1. Deferred Payment Loan

2. Real Estate Tax Exemption

3. Utility Connection Fee Waivers

Assistant City Manager Cindy Mester reported on the status of the Falls Church Housing Corp./City Center South Apartments (CCSA). She referred to staff reports previously submitted to City Council. Ms. Mester also elaborated on some vital points of the financial package. She said that the CCSA is asking the city to leverage the $2 million CIP affordable housing fund, as well as to grant tax exemptions and waivers on water and sewer utility fees. She added that the majority of the funding would come from Virginia Housing Development Authority (VHDA) through tax exempt bonds and tax credits. Ms. Mester also discussed the sources and uses of funds document and said that the real estate tax exemption is a stand alone item. She also said that the state code has eight criteria that need to be met in order for CCSA to be considered, e.g., provide affordable housing, transitional job training, etc. She explained that 360 S. Washington is not part of the tax exemption deal. It is currently bringing in $31,000 in taxes; projections indicate that with the new office component, total tax revenues would jump to $85,000 on the 360 S. Washington property.

With regard to Winter Hill, the plan is to convert and sell the properties, similar to the ADU program, since Winter Hill is currently losing HUD money. Once Winter Hill is sold, the money goes back to affordable housing. Bruce Swenson expressed his concerns about the cost of government services to CCSA and that tax revenues would not be able to cover the costs of the project. Ms. Mester said that the 174 residential units would benefit those in the workforce who earn $41,000-$60,000 per year. Richard Goff, Economic Development Director, added that school costs would be the biggest expense to the city if there are families with school-age children. Ms. Mester explained that the $2 million loan is part of a long-term financing agreement to be paid in 15 years with a 15 year bond. She added that the money to pay for the debt service will come from the affordable housing fund.

Ms. Mester also explained the annual budget impact covering a five-year period. She said that the financing will not close until October 2009. The city will continue to collect taxes; tax exemption will start upon occupancy of the units. EDA Chairman Dave Tarter wanted to know how Atlantic Realty’s cash contribution fits in the scenario. Ms. Mester said that there is a $4.2 million cash proffer from Atlantic Realty and that depending on the timing of the project, the funds should be available for use. In addition, FC Housing Corp. will take out a loan from the equity of the Winter Hill project. Warren Cohen wanted to know the chances of getting the VHDA grant and what exactly is the EDA board supposed to comment on. Ms. Mester admitted that competition is tight and that several key criteria need to be met by the applicant, e.g., site plan approval, source of funds, per unit cost, etc. She clarified that the EDA is being requested to comment on the financing aspect of the project as stated in the staff reports, either on a detailed or broad level. Using a spreadsheet that compares the mixed-use projects already built in the city, Mr. Swenson observed that the city would be giving up around $400,000 per year in revenues given that the projected revenue of the CCSA would be around $320,000 versus the projected revenue generated by the Spectrum valued at $700,000. Ms. Mester clarified that condominiums are assessed higher than rentals. John Metya, a resident, requested Ms. Mester to further clarify what “permanent loan” means on the reports. He said that it sounds more like a grant and wanted to know what the real purpose of the loan is. Ms. Mester replied that the $2 million is a long-term financing loan in which the terms require that it be paid in 15 years with interest, through a deferred payment schedule with a lien. If FC Housing Corp./CCSA default, the city has security of over $2 million and a second lien position. She added that the VHDA can also cure the default. Otherwise, if all else fails, the properties would go to foreclosure.

EDA Chairman David Tarter suggested that each board member provide their comments.

Mr. Swenson said that he will remain consistent with his minority position. He reiterated his concern that there is a need to examine how much this project will cost the city.

Mr. Cohen said that if City Council has already decided that they want affordable housing, then government should do its part to take care of its citizens. He added that if the city turns down this project, the city may not see another project of this nature for a long time.

Ed Saltzberg said that from an economic standpoint, the project has negative implications. However, he also pointed out that it has positive social merits. He added that the primary economic benefits should not be the sole concern since they are not easily quantifiable, and suggested to instead examine the secondary economic benefits of the project.

Mr. Tarter agreed that it is more of a social question, and that the EDA’s role is to examine the financial aspect, but not to re-hash the issues. He added that while the city needs affordable housing, his primary concern is that all the ADU’s would be located in one building. He said that it would be better if these were dispersed throughout the community, which would thereby not stigmatize the area and those who live there.

Barry Buschow commented that this is all about political will and that he wishes City Council well. He added that while he has been for affordable housing, he does not really see the project as contributing to the city’s economic development.

A.C. Miller wondered if the CCSA project would survive if City Center falls apart, particularly since the former will generate lower tax revenues because of their lower tax assessments. However, he likes the idea of having affordable housing as part of the city’s social fabric because he thinks it will serve the city’s economic development interests.

b. Pearson Square Special Exception Amendment (ITEM DEFERRED)

Mr. Goff explained that during the November 10 City Council public meeting, the applicant requested a Special Exception Amendment for the Pearson Square building at 410 S. Maple Avenue so that some of its retail space can be used for service uses. City Council requested more information and referred the application to the Planning Commission and EDA for recommendation. However, the applicant has now requested a deferral of its application so they can regroup in order to give a better presentation.

c. Approval of 2009 meeting calendar (item included right before the meeting started) –

Unanimously approved by the board. For the January meeting, Mr. Tarter said that he has invited Alan Frank, a representative of Eden Center, as a guest speaker.

d. Appointment of an EDA Board member to the FC Arts and Culture Task Force (item included right before the meeting started)

Ms. Mester explained that on behalf of FC Arts/Creative Cauldron, City Council is requesting various groups in the city to appoint a representative to a taskforce that will analyze and determine whether the city should designate an “arts and culture district.” Recommendations from the task force should be submitted to City Council by February or March 2009. A.C. Miller volunteered to serve on the task force, as long as the objectives are met by March since he plans to resign from the board soon thereafter.

VI.Old Business

a. Branding and Marketing Initiative status

Mr. Goff reported that the city received two proposals and has selected SmithGifford. He will work on drafting a contract.

b. October 16 Roundtable Follow Up Work

ED staff plans to contact the roundtable participants again and offer to continue a dialogue with them. They also plan to report back on some of the initiatives undertaken resulting from the survey responses received, e.g., posting an ad in The Hill; pursuing the branding/marketing initiative; working on putting a traffic light at Broad Street/Pennsylvania Avenue; shifting streetscape funds for utility undergrounding; providing key funding for Watch Night; etc.

VII.Staff Reports

a. Development Projects

b. Business Assistance Activities

c. Upcoming Meetings/Events:

1. December 4 City Council Special Session: City Center Update (TENTATIVE)

Mr. Goff said that Atlantic Realty is looking forward to having its site plan approved. Atlantic Realty is seeking to do some revisions on its site plan, such as reducing the height of the Harris Teeter building and the potential down-sizing of the hotel. Mr. Swenson was concerned that the current state of the economy could hamper further development in the project and wanted to know if the city should just wait until the economy improves, and if there was a way to get a guarantee from Atlantic Realty. Mr. Goff pointed out the issue of land control and that the agreement with Bowl America has a deadline. Mr. Cohen added that the lowering of the building height should be considered a positive change considering the previous citizens’ objections on the building height. Mr. Goff also said that the number of residential units to the Harris Teeter building will remain the same.

2. December 8 City Council Regular Meeting: JBG Final Agreement on BJ’s; City Center South Apartments

BJ’s – a draft agreement was presented to City Council during its December 1 work session. It is expected to move forward for Council approval on December 8. Mr. Goff suggested that a member of the EDA board attend the upcoming meeting since the EDA is included in the three-party agreement with JBG. The draft agreement addresses some of the board members’ concerns expressed during the November 18 Special EDA board meeting. With regard to the issue of assignability of leases/sub-lease, there will be language included in the agreement stating that 50 percent of the space should be leased to a nationally recognized retailer(s). The proposed lease will stipulate that the store open as a BJ’s Wholesale Club Store for at least one day. A wall or barrier will also be constructed between the store and the residential area to mitigate the noise. Likewise, some of the city’s requirements by means of the site plan will be included, e.g., having an upgraded building façade; building innovative technology for storm-water management; practicing energy conservation; and a termination date if BJ’s does not open by January 2013. Mr. Goff added that the City Attorney will go into further deliberations with the developer’s counsel because of concerns expressed by a Council member regarding the terms of agreement.

VIII.EDA Member Reports

IX.Other Business

With reference to the letter submitted by the owners of 2 Sisters Coffee dated November 30, 2008, giving their 30-day notice to terminate their lease of agreement, Mr. Tarter asked ED staff to see if they can find a suitable tenant or to ask 2 Sisters to stay at a reduced rental rate. Business Development Manager Becky Witsman explained that one of the owners will be relocating, and they just want to sell the business.

X.Adjournment –Upon proper motion and unanimous vote, the meeting was adjourned at 8:36 p.m.

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THE EDEN CENTER:

What is the Future for this Unique Regional Hub

of Dining and Shopping Activity?

The City of Falls Church Economic Development Authority Presents:

Developers Forum

Tuesday, January 6, 2009

6:30 p.m.

WHO: Alan B. Frank is the general counsel and senior vice president of Capital Commercial Properties, Inc., owners of the Eden Center on Wilson Boulevard in the Seven Corners area of the City of Falls Church.

WHAT: The Eden Center is Northern Virginia’s premier Asian shopping destination, with over 130 businesses. Its Vietnamese restaurants, eclectic array of shops, vendors and cultural events regularly draw visitors from neighboring states and chartered buses from as far away as Toronto.

Built in 1961as the “Plaza Seven Shopping Center,” the Eden Center emerged and grew rapidly in the mid-1980’s as a Vietnamese-American business hub. Its great location and consistently high commercial occupancy rate make the Eden Center one of the highest performing shopping centers in the Washington, DC area. The recent commitment of BJ’s Wholesale Club to build a “big box” store nearby on Wilson Boulevard creates increased consumer interest and an exciting new dynamic on the commercial east end of the City of Falls Church.

In November National Wholesale Liquidators declared bankruptcy and announced it will close its store at the Eden Center. The property owners are considering new uses for the store’s 78,000 square feet of space or a potential redevelopment of the NWL site.

Hear what the owners have to say about the future of the Eden Center. There will be an opportunity for questions and answers at this timely and informative presentation.

WHEN: Tuesday, January 6, 2009, 6:30 – 8 p.m.

WHERE: Falls Church City Hall Training Room, “G” Level (enter through the Police Station on the east end of the building and take a half-flight of stairs; first room on the right).

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City of Falls Church

Economic Development Authority

Agenda – TENTATIVE

Tuesday, January 6, 2009 – 6:30 p.m.

Falls Church City Hall

Training Center – G Level

300 Park Avenue, Falls Church, VA 22046

I. Call to Order

II. Developers Forum: The Eden Center (Alan Frank, Capital Commercial Properties)

III. Petitions from the Public (5 minutes per petitioner)

IV. Petitions from the Board (5 minutes per petitioner)

V. Approval of December 2, 2008 minutes

VI. New Business

a. Falls Church Education Foundation Sponsorship

VII. Old Business

VIII. Staff Reports

d. Development Projects

e. Business Assistance Activities

IX. EDA Member Reports

a. Recognition of Chairmanship Service of Ed Saltzberg

X. Other Business

XI. Adjournment

By
December 31, 2008 

Comments

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