DEVELOPMENT NEWS: Mad Fox Brews Root Beer Too

By FALLS CHURCH CITY ECONOMIC DEVELOPMENT OFFICE

September 2, 2010

Mixed Use Project News

Spectrum retail – Mad Fox Brewery can hardly keep up with the thirsty “Little City”!  Brewmaster Bill Madden reports brewing 32 batches = 480 barrels =960 kegs of beer as of August 27.  They have also introduced their own root beer that is brewed in house.  So far, most of that is flowing just as quickly.  You can get your taste of the new root beer at the Taste of Falls Church on September 11. Sorry, no beer allowed on public property for the Taste.

Spectrum residential condos – 59 units settled, 36 Pathway to Homeownership and 4 ratified contracts – of 189 units.

Spectrum office condos – No changes reported.  $310 per square foot to purchase includes “warm dark shell” and $15 per square foot tenant improvement allowance; $33 per square foot plus electric and cleaning to lease.

Pearson Square Apartments – 94% occupied.

Pearson Square retail – Brokers for the space are planning a broker’s event at Pizzeria Orso in September to entice commercial brokers to visit the site to see the retail space they are marketing.  EDO staff continues to try to work with Transwestern brokers and Pearson owners to attract businesses to the space. A letter of intent for one space is pending.

Byron – Delays in filling space continue due to market conditions and technical issues that apply to zoning/occupancy of the vacant spaces.

800 West Broad – Sfizi Café (http://www.sfizi.com/) now has their building permit and work on the space should begin soon.  Hoping to see a late fall opening.

Broadway – A letter of intent for a 3,000 SF retail space is being considered.

Northgate – Hekemian is working on final site plan approval and a site plan amendment to incorporate the approved North Washington Street Streetscape design.  Demolition date for the old Pearson Funeral Home is not yet known.

Shopping Center News:

Original House of Pancakes – Two letters of intent have been submitted for what will be the “old OHOP” space.  OHOP owners have advised that they are still experiencing permit delays for their new space in Fairfax County; they hope to be able remain at Broaddale until the end of October. (Lease technically ended August 31; Broaddale management to decide on extending). Broaddale Management is analyzing letters of intent for compatibility with other tenants, parking and other issues.

BB &T (at Falls Plaza/former Chicken Out) – No new news on when a site plan submission will be submitted, so that a Planning Commission hearing date can be scheduled. .

Real Estate and other News:

Syms site – New lease not yet signed but is now anticipated “very, very soon.”

350/360 S. Washington/510 W. Annandale: All three buildings are posted on Co-Star and the City’s on-line commercial space database as for sale.  500 W. Annandale has recently been updated with new paint, carpet, etc. and will soon be occupied by Educational Options, Tom Sawner’s company.  Strong tenant interest has reportedly also been received for 510 W. Annandale, so that building could also be leased up and then sold.  EDO staff has made multiple referrals to brokers and prospective buyers for all of the buildings.

BJ’s Wholesale Club– October 16 is the anticipated grand opening date; soft opening on the 9^th.  They hope to begin on-site employee training and “around the clock” store stocking soon.

306 Hillwood/old Taco Laredo – new restaurant (Lesly Restaurant Bar & Grill) has applied for an ABC license and has received a business license.

New Businesses in the City – Commissioner of the Revenue’s staff reports 16 new business licenses in the City with issue dates between July 2 and August 30, including three meals tax generating ventures, the new NVS Kitchen and Bath store in 800 W. Broad, three medical professionals, two retail online businesses, three new Eden Center businesses, a music lesson business and a music instrument sales business, a delivery business and BJ’s.

City’s 24/7 commercial space database:  www.fallschurchva.gov/Content/Docs/CommercialDatabase.pdf?cnlid=2713

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 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.

Wilden Affordable Housing Project Reported Dead

By FALLS CHURCH TIMES STAFF

August 5, 2010

The Falls Church News-Press reported Wednesday evening that the Falls Church Housing Corporation (FCHC) has announced an end to its efforts to build a senior affordable housing project, “The Wilden,” on South Washington Street.

According to the News-Press story, FCHC Board President Steve Rogers issued a statement blaming the project’s demise on the Falls Church City Council’s failure to accelerate half of a $2 million loan agreed to in March. Under the terms of the loan agreement, the money was to be provided after funding from other sources was secured, but the parties involved in The Wilden were unable to secure all required funding.

In a four hour session last Thursday night, it became clear that three members of the Council, Mayor Nader Baroukh and Council members Ira Kaylin and Johannah Barry, opposed providing the early money, while three others, Vice Mayor David Snyder and Council members Robin Gardner and Ron Peppe, favored it.  The swing vote, Council member Lawrence Webb, decided to neither approve nor reject the FCHC request, instead sponsoring a motion to delay consideration of the early loan request until August 9.  With Snyder, Gardner and Peppe siding with him, Webb’s motion passed, putting the decision on hold for a week and a half.  Kaylin’s earlier motion to deny the FCHC request, which Webb initially said he would support, failed 3-4 when Webb changed his mind in favor of a delay.  Baroukh and Barry voted for Kaylin’s motion, and Webb, Snyder, Gardner and Peppe opposed it.

The decision to delay, however, seemed too much for the project’s fragile health.  A few days after the vote, City Manager Wyatt Shields told the Falls Church Times that the Virginia Housing Development Authority had recommitted $4 million in federal funding originally dedicated to The Wilden.  Some hope existed that the $4 million could be made up with additional tax credits, but the FCHC’s decision to end the project moots that possibility.

The “dagger” to the project, according to the News-Press, was Councilman Lawrence Webb’s comment on the Falls Church Times web site stating that he had “made it clear to [FCHC] that if they are unable to come up with their own funding source that I would not support moving funding earlier than previously agreed to.”

According to the News-Press article, Rogers said that finding other funding source was not an option, and specifically rejected the idea of  using the Winter Hill Senior Apartments, another FCHC property, as collateral.

The FCHC could face difficult financial circumstances as a result of the project’s failure. According to a document Rogers shared with City officials prior to last week’s vote, the organization has significant bills coming due, with little cash remaining after significant pre-development expenses for The Wilden.

The FCHC did not respond to the Falls Church Times’ request for comment on the loss of the $4 million federal funding.

UPDATE: See our story, ‘FULL TEXT: Why Housing Corporation Gave Up on Wilden.’

Council Session Focuses on ‘The Gateway’ and GEORGE

By GEORGE BROMLEY
Falls Church Times Staff

August 5, 2010

The Falls Church City Council conducted a lengthy work session Monday evening, focusing primarily on The Gateway development and options for the GEORGE bus service.  The Planning Commission participated in the first two topics under discussion.

The Gateway, is an Akridge project proposed for the 500 block of N. Washington Street.  Three office buildings constructed in the mid-1980s occupy the site, just inside the City line.

Under Akridge’s proposal, an office building and an apartment house/condominium would be constructed, with overall proportions of 30% commercial space and 70% residential.   As a mixed use development, the project would require rezoning and special exceptions.

One of the special exceptions would be for height, as the proposed office building would be 73 feet, though commissioners Melissa Teates and Lindy Hockenberry said they could accept even higher structures, given the proximity to the East Falls Church metro station.  The development is expected to generate from $561,000 to $881,000 in tax revenue.  Councilman Ira Kaylin stated that this depended upon whether the units were apartments or condos.

Vice Mayor Dave Snyder advised that the Council’s Economic Development Committee had twice discussed The Gateway with Akridge.  Although stating he was very excited about the project, he noted that the ratio of commercial to residential was generally 50-50 in the Rosslyn/Ballston corridor.  He added that the City’s Economic Development Authority supported that proportion and that he saw “the gap” between 30% and 50% of commercial space as an issue.

However, commissioner Michael Kearney characterized the corridor as actually five sub-markets and said that it was “misguided” to see the 50-50 ratio as typical in all sections.  Commissioner Rob Meeks concurred and described the City’s environment as “more Columbia Pike than Rosslyn/Ballston.”

Ms. Hockenberry asked if there was any possibility that the project could “die in [the Economic Development] Committee.”  Mr. Snyder stated that the EDC did not have that authority.   The development, first proposed in 2006 but delayed due to the recession, will involve further negotiations with Akridge before the site plan process begins.

Following The Gateway discussion the Council and the Commission were briefed by Parks Director Howard Herman and City Engineer Bill Hicks on plans to improve the Coe Branch stream flowing through the Hamlett/Rees Park to Tripps Run.  Much of the stream now flows underground through pipes.  In order to reduce downstream flooding and improve the aesthetics of the park, the City first must approve the purchase of 2,900 square feet of land behind Sherrow Avenue before beginning the process of “daylighting” the stream.  The cost of the project is expected to be $590,000, funded primarily through state and federal grants.

The Council alone then reviewed options for GEORGE.  Gary LaPorta of the Greater Falls Church Chamber of Commerce briefed the Council on a survey of Chamber members.  Most of those who responded did not see GEORGE service as having a significant impact on their business.  He felt that the service probably was initiated “too early, before Falls Church reached [its economic] potential.”

There was no support for continuing the present level of two loop service, but most members still seemed reluctant to terminate GEORGE.   The most likely options, if service is retained, would be to discontinue the 26W route while retaining 26E (an annual cost of $63,490) or to discontinue 26W and reduce the hours of 26E ($49,560).   The final decision will be made at the next Council session on August 9.

Acting Chief Financial Officer Melissa Ryman reported on City finances.   Real estate tax receipts are expected to be less than previously projected.  The end of year fund balance now is projected at $4,150,081, or $29,000 below the projection made on July 1.

City manager Wyatt Shields advised that an appeal had been filed against a decision of the Historic Architecture Review Board concerning the tearing down of a house on Grove Avenue.  As a result the Council might have to hold a special meeting before September, although it is scheduled to be in recess until after Labor Day.

A Council retreat was tentatively scheduled for the weekend of September 24-26.

$4 Million in Federal Funds Withdrawn From Affordable Housing Project

By FALLS CHURCH TIMES STAFF

August 3, 2010

Last Friday, July 31, the Virginia Housing Development Authority (VHDA) informed Falls Church city manager Wyatt Shields that $4 million in Treasury Credit Assistance Program (TCAP) funds were being taken away from The Wilden affordable housing project at 350 S. Washington and assigned to a different development.  The reallocation was consistent with the VHDA’s prior advice to the City.  The VHDA notified Mr. Shields that they would defer re-assignment of any of the low income tax credits for the moment and would continue to work with The Wilden Partnership to determine if any other tax credits could be assigned to the project to replace the TCAP funds.

The TCAP funds were an integral part of the development’s financing.  On Thursday, July 29, the City Council met in special session to consider a request from The Wilden Partners to change the terms of a $2 million City loan for the project.  The Partners, the Falls Church Housing Corporation (FCHC) and The Community Builders, asked for the immediate release of  half of these funds in order to finance construction of a garage at an adjacent office building intended for 360 S. Washington, which would provide the required parking for The Wilden.  Approval of the revised loan was necessary by the end of July to assure retention of the TCAP funds.  However, the Council could not reach a decision on the matter and deferred action until Monday, August 9, its final session prior to a recess until after Labor Day.  

TCAP funds were authorized to states in 2009 as part of the American Recovery and Reinvestment Act (ARRA).  Originally enacted under the 1987 Tax Reform Act, the program provides a means to leverage private capital into construction or rehabilitation of affordable housing.  The 2009 Act provided for $2.25 billion in TCAP assistance, $44.25 million of which was allocated to VHDA.

TCAP funds must be used for capital investment.  State agencies (e.g., VHDA) may sub-grant the funds, but the agencies remain primarily liable for compliance with the TCAP requirements.  The funds cannot be disbursed until after there is a written agreement with the project owner and cannot be placed in escrow.

Council Defers Vote on Affordable Housing Project Financing

By GEORGE BROMLEY
Falls Church Times Staff

July 30, 2010

Thursday evening the Falls Church City Council voted 4-3 to defer a final decision on a resolution which would change the terms of  the City’s financial commitment to the Wilden affordable housing project.   Vice Mayor Dave Snyder, former mayor Robin Gardner and councilmen Ron Peppe and Lawrence Webb voted in favor of the motion to postpone a vote until August 9.  Mayor Nader Baroukh and new Council members Johannah Barry and Ira Kaylin were opposed.

The vote came after over four hours of debate and discussion during which City Manager Wyatt Shields and City Attorney John Foster both recommended against the proposal to immediately loan $1 million to the Falls Church Housing Corporation (FCHC) and its partner in the project, The Community Builders (TCB).  These entities, collectively now part of what FCHC representative Carol Jackson referred to as the Wilden Partnership, have requested that half of the previously approved $2 million City loan be extended now, lest essential tax credits from the Virginia Housing Development Authority (VHDA) be lost.

Prior to the vote to postpone, the Council voted down a motion by Mr. Kaylin to deny the resolution to accelerate the payment.  Here the mayor, Ms. Barry, and Mr. Kaylin approved, but the other four members were opposed.

After that vote, Mr. Webb stated that although he had not supported Mr. Kaylin’s motion, he would not vote for the resolution to approve the revised financing.   He then moved to postpone the vote on the measure to the Council’s next scheduled meeting.  This motion was seconded by Ms. Gardner and subsequently approved.

DECIDING NOT TO DECIDE: Councilman Ira Kaylin, right, argues against early funding of $1 million for the housing project. Councilman Lawrence Webb, third from left, provided the evening's drama, twice announcing his support for Kaylin's motion, then visibly wavering, then, after a long pause, voting against it. Holding the decisive vote, Webb sponsored a motion to delay the Council decision to August 9. Webb's motion passed 4-3.

The final effect of the deliberations is that the loan agreement originally approved by the Council on March 22 remains in place, but the City has not consented to the quick release of the funds as requested by FCHC and TCB.  Between now and August 9 those parties will endeavor to obtain additional financing for the complex project, which involves both construction of the 66 unit senior affordable housing project (The Wilden at 350 S. Washington) and an adjacent office building (The McKeever at 360 S. Washington), which will provide garage parking for residents of the apartments.

TCB vice president Rob Fossey began the meeting with a presentation which argued that the requested revisions to the loan agreement were minor and represented only a limited risk to the City.   The funds are needed to allow purchase of the building currently at 360 S. Washington from the estate of Thomas Sawner.  The Wilden partners must close on this purchase in order to assure receipt of the VHDA tax credits.

Mr. Shields stated that when the project was approved he believed that FCHC and TCB would be able to obtain the necessary private financing to allow this transaction.  The anticipation then was that Falls Church would not have to release any funds until after the start of construction.

He expressed concern that the City might have to reduce its fund balance at a time when it is under significant financial stress.  He noted that if the Virginia Supreme Court turns down Falls Church’s appeal of the water litigation decision it will have three days to move $2.2 million from its general fund to the water fund.  [Note: Mr. Shields informed us subsequently that he meant to say 30 days, not three days.] Mr. Shields warned that if  this were to happen when the fund balance is already low the City will have a cashflow problem.

Mr. Foster did not detail his reasons for recommending against passage of the resolution but noted he had submitted a memo to the Council Wednesday which set forth his reasoning.

Following extensive comments from City residents and a brief recess, Mr. Snyder suggested that the Council go into a closed session to discuss “financially sensitive information”  and “contract negotiations” withFCHC, but Mr. Foster advised against the move on FOIA grounds.   Ms. Gardner suggested members meet with Ms. Jackson and Mr. Fossey “two by two”, but the mayor vetoed the idea.

Council recessed again to enable Ms. Jackson and Mr. Fossey to briefly explain their interests to Mr. Foster, but he concluded there were insufficient grounds under Virginia code to allow a closed session.  The Council then engaged in questions and debate.

Ms. Gardner suggested two changes to the resolution, but Ms. Barry was opposed “to anything written on the dias.”  Mr. Webb stated the decision was one of the most difficult he had faced and expressed concern about the possible impact on the fund balance.

Mr. Peppe, recalling his experience as a bond lawyer, saw the arrangement as “pretty clean as these deals go” and considered the proposal ‘the best chance we have to get the commercial development we need and affordable housing.”  Vice Mayor Snyder, who spoke most passionately in support of the resolution, felt that the proposal still served the long-term best interests of the City.

Mr. Kaylin saw the City “in very dire financial condition” and not in a position to assume the additional risk.  Mayor Baroukh regarded dipping into the fund balance as “imprudent financial management.”

Prior to the debate nineteen people addressed the Council.  Eleven spoke against the resolution and eight in favor.  A number of past and present City officials expressed their views, the active members stressing they were speaking as private citizens, not as representatives of their commissions or boards.

Planning Commission chairman John Lawrence stated that he was shocked that the request had been made and saw no reason to believe that other outside financing would be forthcoming.   Richard Sommerfield, a member of the Long Range Financial Working Group, reiterated comments published in the Falls Church Times and questioned FCHC’s solvency.   Former Economic Development Authority member Bruce Swenson saw approval as an abandonment of the Council’s fiduciary responsibility.

Eric Hoffman, a former chairman of the Falls Church Housing Commission felt that the request to advance the funds was not significant and only reflected a change in timing.  Former mayor Dan Gardner saw the project as a unique opportunity and argued that “community values” were at risk if it were not approved.  Former councilman Dan Maller, calling some of the recent rhetoric “overheated”, urged the Council to take a long term view and support a “reasonable risk.”   Bob Loftus-Thun, chairman of the Environmental Services Council called the project “a defining moment for our community and a good investment.”  School Board member Kieran Sharpe stated that the City’s record of supporting affordable housing was not as good as Fairfax’s or Arlington’s and that the financial commitment to the project would not jeopardize local schools.

The Council will hold a work session next Monday, August 2.  The August 9th meeting is the Council’s last scheduled session until September.  The fate of the GEORGE bus system is among the items scheduled for a discussion and vote that evening.

City Releases Documents on Housing Corp $1 Million Request

By FALLS CHURCH TIMES STAFF

July 27, 2010

Today the City of Falls Church released a number of documents relating to the Falls Church Housing Corporation’s emergency request for release of $1 million of the $2 million loan the City Council agreed to in March.

Among the documents released is a draft resolution prepared by City staff for approval of the Falls Church Housing Corporation’s (FCHC) request.  The resolution will be considered Thursday night when the City Council meets in special session for the sole purpose of considering the request.  The draft resolution provides confirmation that the FCHC and its partner plan to use the $1 million “as a part of the funding necessary to acquire 360 S. Washington Street (360) from Mr. [Thomas] Sawner’s estate.”

The FCHC’s purchase of the property at 360 S. Washington Street would represent a significant change in its earlier plan.  Under the earlier plan, “Flower Building” owner Bob Young would acquire the 360 S. Washington property and construct the “McKeever” office building and parking garage there, while FCHC and its partner would develop “The Wilden” affordable housing project at the adjacent property at 350 S. Washington Street.  Young and the Wilden partners would build the two projects under a unified site plan, according to the proposal approved in March.

Another document released by the City is a letter from FCHC partner, Boston-based The Community Builders, asking the City Council “to very modestly amend City Loan Terms of Agreement . . . modifying the timing of the release of one half of the City funds, $1 million, to facilitate construction start for The Wilden, specifically related to acquisition/construction start for the project’s structured parking at the attached McKeever 360 site.”

A third document consists of talking points used by FCHC President Steve Rogers in conversations with City officials last week.  Rogers’ document states that FCHC is using $2 million in existing cash to purchase the 360 S. Washington property, thereby creating a need for an additional $1 million to purchase parking spaces for The Wilden in the adjacent “McKeever” parking garage.  Rogers goes on to say that FCHC will recoup its investment in the 360 S. Washington property” when the McKeever office building is fully developed and sold out.

Rogers also provides a long list of “Consequences of Saying No,” including that the 350 and 360 S. Washington properties will revert to existing use, that $8.2 million in federal monies will be returned, that FCHC likely will have to sell 350 S. Washington at a loss, and that FCHC will have to merge with a larger entity “If yet attractive enough after huge assets loss.”

None of the documents appear to answer the question of how FCHC will fully fund The Wilden project after $1 million currently dedicated for that projected is diverted for another use.  [Ed.  See comment below from Carol Jackson, FCHC Executive Director, on this point, stating that the use of  the initial $1 million would not be a diversion of funds away from The Wilden.]

In total, the following documents have been released regarding the FCHC request.

1)      Draft resolution to approve the FCHC request, to be considered by the Falls Church City Council on Thursday, July 29 – Thursday July 29 agenda, TR 10-30

2)      Letter from The Community Builders to Falls Church City Council dated July 26, 2010 – Thursday July 29 agenda, TR 10-30 attachment 1

3)      Previous City Council resolution from March 2010, approving $2 million City loan for The Wilden affordable housing project – Thursday July 29 agenda, TR 10-30 attachment 2

4)      March 2010 pro-forma financial showing projected financial impact and community benefit of The Wilden affordable housing and The McKeever office building projects – Thursday July 29 agenda, TR 10-30 attachment 2a

5)      FCHC President Steve Rogers talking points presented to City officials last week – document appears below.

6)      An undated FCHC financial statement presented to public officials last week showing The Wilden TW Total Development Sources and Assets: Wilden Assets

——–

FCHC Chairman Steve Rogers talking points presented to Falls Church City Officials July 21-23, 2010

7-21-10: Critical Path Background and Issues for 350-360 Deals:

1. All Sources for The Wilden (TW) and McKeever (360) groundbreaking are at the ready; including financing for constructing the McKeever garage

2. Cash flow timing for both projects is critical to accomplish 350-360 intertwined demolition and construction phases

3. Mr. Sawner’s widow has made it clear from her accountant and attorney that she is interested and will do all possible to complete the sale of 360 property on timetable suitable for TW settlement on all sources of funding

4. The McKeever garage has commitment for commercial bank construction loan.  Subsequently the bank requires that 360 land be free and clear to be used as collateral for the construction financing the City requires as a condition of its $2 mil Loan Signing Settlement

5. FCHC cash has been used for costly Wilden pre-development, @$1.2 mil

6. the remainder of all FCHC cash assets now must be used to invest, @$2 mil, in 360 land purchase.  There is no other way to get 360 garage financed.

7.  The other source of cash for 360 property purchase is TW Parking Spaces purchase, $1 mil

8. The only eligible Sources (according to federal govt regs) for TW Parking Purchase are FCHC and City Loan $$.

9. Since FCHC’s cash is NOW going to 360 property purchase instead of TW parking, City must release one half of the City’s loan at closing, $1 mil

10. If release occurs all will proceed as planned to break ground on both 350 and 360 properties in early September.

11. FCHC will recoup its investment in 360 property when McKeever Office is fully developed and sold out

Needed from Council Leadership by July 23

1. Agree $1 million of Council-approved Loan funds can be used for TW Parking purchase available at settlement August 2010 to get 360 garage construction underway

2. Stated and demonstrated support to City Manager and Staff to finish all legal and permitting work timely to meet The Wilden Settlement and construction deadlines.

Consequences of Saying No

• Contract Developers of both properties will stop and let go their land purchase deals; 350 and 360 will revert to existing use (both now vacant office needing investment to attract tenants). Existing Site Plans and boundaries in conflict with denser redevelopment by any single owner of each property.
• Wilden partners will return to VHDA $4 mil Federal Tax Credit Assistance Program (TCAP) “Stimulus” funding and $4.2 tax credit investments
• Partners will lose unrecoverable fees, $750,000 pre-development expenses currently advanced 100% by FCHC + addt’l $400,000 in 350 carrying costs/legal fees which will be permanently written off on FCHC balance sheet
• VHDA will write off City of Falls Church for all future deals and potentially for soft funds for homeowner programs
• 350 Short Term Note Payoff, $2.7 mil, is due August 5.  FCHC will need to sell 350, very likely at a loss, to pay off debt 
• Tom Sawner’s estate will probably do the same
• City’s reputation will be harmed, making it politically more difficult to get favorable hearings for City issues. Congressman Moran will be incensed by our failure to perform. Regardless of who is responsible the City will face the consequences
• Opportunities for the addition and possibly preservation of affordable housing units will be lost for foreseeable future
• If yet attractive enough after huge assets loss, FCHC will merge with a larger entity
• After 10 years of failure to provide additional affordable housing, and faced with the loss of existing affordable housing stock, the City’s Vision will need to be truthfully amended to remove diversity as a stated priority

Housing Corp Emergency Request for $1 Million Dominates City Council Meeting

By GEORGE BROMLEY
Falls Church Times Staff

July 27, 2010

An item not on the published agenda became the highlight of last night’s meeting of the Falls Church City Council – the Falls Church Housing Corporation’s  request for immediate access to $1 million to save the “McKeever” office building and parking garage, which in turn is necessary for “The Wilden” affordable housing project.  

According to those in attendance at last night’s meeting, financing is still lacking for the McKeever project four days before a crucial July 31 deadline.   

The McKeever and Wilden projects were approved in March by the previous City Council as a joint package.  Because of their close ties, if one project fails, the other likely also will fail.  The Falls Church Housing Corporation (FCHC) has told the City Council that unless financing for both projects is secured by the end of this month, the housing organization will miss out on essential federal and state affordable housing monies intended for the Wilden.     

Originally, the Wilden was to be built by the FCHC and its partner The Community Builders, and the McKeever was to be built by “Flower Building” owner Bob Young.  According to discussions last night, however, Young’s  project appears to lack necessary funding, putting both projects at risk.  To avoid missing its July 31 deadline, FCHC has proposed that it buy the property upon which Young’s building would stand, relieving Young of that obligation and allowing the  McKeever project – and hence the Wilden project – to go forward.  To allow it to buy the property underlying the McKeever project, FCHC is asking the City Council to let it use $1 million of a $2 million loan intended for the Wilden, and to provide the $1 million immediately. 

The FCHC currently owns the site of the Wilden project at 350 S. Washington Street.  The McKeever project is planned for the adjacent property at 360 S. Washington, currently owned by the estate of local businessman Thomas Sawner, who died last week.  Young signed documents earlier this year indicating his intent to purchase the Sawner property, but the sale has not been finalized.

Last night Mayor Nader Baroukh began the discussion of the FCHC’s request for early payment of  $1 million with a number of questions to City staff.  Included among Baroukh’s questions was why there now is a shortage of $1 million, where funds to cover the gap would come from, why the FCHC was facing a July 31 deadline, and what would be the potential financial impact on the City if it approves the FCHC’s request but the McKeever project is not built concurrently with The Wilden.  He also inquired regarding the status of $2 million in Capital Improvements Program funds set aside for affordable housing and asked for a report on the potential risk to the City, given revised financing arrangements.  

Answers to the mayor’s questions weren’t immediately available, but other Council members were not hesitant to express their opinions on the topic.

Former mayor Robin Gardner, who advised that she had learned of FCHC’s concerns only last Wednesday night, viewed the proposed change in the loan agreement as essentially an amendment to the previously approved resolution; i.e., that instead of funding the $2 million at a later point the City would fund half of the money sooner. 

New members Ira Kaylin and Johannah Barry saw things differently.  Mr. Kaylin called the change ”a new proposal, in terms of its financial complexity.”  Ms. Barry concurred, stating “This lack of financial planning is not our crisis.  Though it looks as if we’re shifting distribution dates, in fact this puts the City at a much higher financial risk, instead of the third or fourth contributor to this process we’ve become capital investors, the first in line.” 

Vice Mayor Dave Snyder referenced a statement from The Community Builders, the FCHC’s partner in the project, which claimed that the risk to the City had not increased.  He observed that although there are risks to the City in proceeding, there are also risks in not doing so.  Councilman Ron Peppe agreed with Mr. Snyder and pointed out that the Council had previously endorsed the project by a 6-1 vote.  

Mayor Baroukh, who cast the lone negative vote in the Council’s March 6-1 approval of the Wilden, stated that he did not know why the matter was being raised ”at the 11th hour” and said the change was not what he would call a minor amendment.  “This has some significant implications on some text that took hours upon hours to work through, but now we’re only going to have a few days to fully assess this.”  

One key question will be how the diversion of $1 million from the Wilden to the McKeever project would affect construction of the Wilden, and whether FCHC has identified a source for replacement of the $1 million. 

At press time only the agenda for Thursday’s meeting had been posted on the City’s website.  The primary documents regarding the FCHC’s request were not available.  A link will be added to this story when the documents are posted.  

Late Monday night Councilmen Lawrence Webb and Ron Peppe each told the Falls Church Times by email that they were awaiting more information before forming a position on FCHC’s request.  Councilwoman Gardner said she did know her position, but due to the lateness of the hour, would provide that information along with a comment on the matter on Tuesday.   

Inquiries to FCHC and Young regarding the matter were sent late Monday night after the City Council meeting concluded.  Information received will be made available when received.  

At the request of Gardner and Pepper, the Council has schedule a special meeting Thursday night for consideration of the FCHC request.  The Council is expected to vote at that time on whether to grant the FCHC’s request for early receipt of $1 million. 

On a separate matter, the GEORGE bus service, which was the primary item on last night’s Council agenda, did not receive a lengthy discussion.  Two residents spoke in support of the system and one in favor of its termination.  Mayor Baroukh asked the public to offer their views via email before the Council’s work session next Monday. 

Five options for GEORGE have been under consideration.  Mr. Snyder suggested adding an option of reducing service hours on 26E, while still retaining some rush hour trips on 26W.  The vice mayor also encouraged Gary LaPorta of the Chamber of Commerce, who spoke in favor of the service, to offer recommendations as to how the bus could be used as an economic development tool.  

The Council unanimously approved second reading of a change in the City code to allow the use of photo monitoring systems to enforce traffic light signals.  Police Chief Harry Reitze stated that the department was still pushing for installation of two enforcement systems by early fall but could not offer a specific date. 

Ms. Gardner reported that she and City Manager Wyatt Shields had attended Monday’s memorial service for local developer Thomas Sawner.  She expressed regret that Falls Church had only known him for a short time and praised “the amount of giving he gave to his community.”

In his report to the Council Mr. Shields stated that 130 people dropped off hazardous materials during last Saturday’s collection event.

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