Where’s the $2 Million? (Part IV)

By STAN FENDLEY
Falls Church Times Staff

March 16, 2010

Since July of last year, the Falls Church Times has followed the status of the City’s 2008 $2 million no-interest loan to Falls Church Housing Corporation for a purchase option on property at 360 S. Washington Street.  That purchase option expired unexercised in December 2009, triggering a repayment requirement by the property owner and the Housing Corporation by the end of January, 2010.

Presently, $531,174 of the $2 million loan remains outstanding.  City officials say they expect the balance to be paid later this month.

The purpose of the 2008 loan was to help the Housing Corporation purchase 360 S. Washington Street in order to make it part of a 174-unit affordable housing project covering 350, 360 and 370 S. Washington.  That plan died in 2009 for lack of adequate funding.

Now the Housing Corporation has reduced the size of the project, called “The Wilden,” focusing on a 66-unit facility for senior citizens.  The Housing Corporation requested another $2 million loan to support the smaller project, which the Falls Church City Council approved on March 8 on a 6-1 vote.  Councilman Nader Baroukh cast the lone opposing vote.

The City Council is expected to vote on final approval for The Wilden on March 22.

Development Authority Split over Affordable Housing Project

By STAN FENDLEY
and
STEPHEN SIEGEL
Falls Church Times Staff

March 2, 2010

The City of Falls Church’s Economic Development Authority split tonight in its consideration of  the affordable housing project and related office building proposed for 350 and 360 S. Washington Street.

The Falls Church Housing Corporation (FCHC) and “Flower Building” developer Bob Young presented their latest plan for coordinated redevelopment of the two properties at the meeting, hoping to win the EDA’s support.  After tough questioning, however, EDA members appeared divided over the issue, and Chairman David Tarter ruled that the body should simply supply comments on the projects to the City Council.

EDA members Bob Butchko, Phil Duncan and  Ed Saltzberg voiced support for the redevelopment, with Butchko and Saltzberg noting that the proposed projects “would be better than what is there now.”  By contrast, EDA members Ira Kaylin and Mike Novotny clearly opposed the projects, while Andy Rankin voiced mixed feelings.  EDA Chairman David Tarter abstained from taking a position because of his previous work as City Attorney.

The EDA is a seven-member body created to advise the City Council in economic development issues and projects.

Kaylin has been an outspoken critic of the Housing Corporation’s request for a $2 million City loan for the affordable housing project, stating that the loan terms are unduly favorable.  The housing organization borrowed the same amount interest-free from the City in 2008, but was forced to begin repaying that loan when other funding could not be secured for a larger version of the affordable housing project.

Originally, the earlier loan was due for repayment in December 2009, but a substantial balance was carried over to 2010.

Novotny also has taken issue with the combined projects proposed by FCHC and Young, suggesting instead that a larger office and commercial complex would generate greater revenue for the City.  Novotny revisited his proposal for S. Washington Street at last night’s EDA meeting, contrasting his ideas with those of FCHC and Young.

If the City provides the $2 million loan to FCHC, financing for the affordable housing project presumably would be in place.  The housing organization won federal low-income housing tax credits for the project last summer, which will be provided to the project builder in order to lower the cost of construction.

Even with the housing credits and a City loan, however, the affordable housing project hit a roadblock via objections from the then-owner of the adjacent property at 360 S. Washington.  That roadblock potentially was removed when Young purchased the property and pledged to work with the Housing Corporation in a coordinated effort.

A question remains, however, whether Young can find the financial commitments to fund his part of the arrangement, originally envisioned as a 28,000 square foot office building over a three-story parking garage.  Last month Young proposed that the City help fund the effort by making an equity investment in the office building and pre-leasing a large amount of the space.  City officials declined that proposal, as well as a second idea relating to industrial development bonds.

Last night, Young indicated that he was seeking federal or state grant money to build the garage, as well as federal “intermodal” transportation dollars dedicated to the City.  To finance the office building, Young will seek to pre-lease office space.

In response to a question from Rankin, Assistant City Manager Cindy Mester stated that the City would not pre-lease space in the project.

If the redevelopment goes forward, it will require a “Special Exception” ordinance to City zoning laws, as well as a real property tax exemption.  The City Council is expected to vote on those requests on March 22.  The City Planning Commission will consider technical aspects of the proposals prior to Council action.

The meeting featured a lively give-and-take between the EDA critics of the proposal on the one hand, and Carol Jackson, head of the Housing Corporation, Housing Corporation Attorney Dave Lasso, and City Council candidate (and former City Council member) Lindy Hockenberry on the other.

Novotny authored a presentation suggesting that the city would take on significant risk by approving the affordable housing project — risk in the form of a loss of revenue.

He suggested that a more comprehensive redevelopment of the S. Washington Street corridor for commercial uses could ultimately yield a revenue bonanza.

“The Wilden (affordable housing) project will eliminate future opportunities for land consolidation and preclude larger and higher quality commercial development in this area, which could generate substantial net positive revenue for the City,” he wrote in an email he circulated prior to the meeting.

It was that fear of the revenue loss that motivated other opponents as well. Kaylin, also a candidate for City Council, said the project “is a net drain on the City. We have to try our very best to maximize revenue.”

But developer Young, who has ridden in like a white knight to salvage the affordable housing project with his proposal to include an adjacent office building, suggested this is the best the City’s likely to get, and he said it also may jump-start development in the area.

Falls Church Rejects Use of Public Funds for Office Building

By STAN FENDLEY
Falls Church Times Staff

February 18, 2010

Earlier today, the Falls Church City Council decided against using City monies to support redevelopment at 360 S. Washington Street, as was proposed by McLean-based Jefferson One LLC last week and reported in the Falls Church Times yesterday.

The following statement was received by a City spokesperson this morning following a meeting of the Economic Development Committee of the City Council:  

“[City] Council determined that public funds will not be committed to  support the redevelopment on 360 S. Washington St. (proposed office building). The Council’s Economic Development Committee continues to work with the developer to explore alternative options.”

 

New Wilden/Office Plan to Include $2.5 Million Equity from City, 10-Year Lease, $500K Grant

By STAN FENDLEY
Falls Church Times Staff

February 17, 2010

[NOTE FEB. 18 UPDATE AT BOTTOM OF THIS STORY]

“Flower Building” developer Bob Young of McLean-based Jefferson One LLC has proposed to City officials a financing arrangement in which the City would pay $2.5 million in equity plus other monies to help with the development of a proposed new office building at 360 S. Washington Street.

 Young’s presentation, made to the Economic Development Committee of the City Council Friday morning, envisions redeveloping 360 S. Washington Street in coordination with the construction of the “The Wilden” affordable housing project at 350 S. Washington Street.  The Wilden project will be built by the Falls Church Housing Corporation, which is requesting another $2 million loan from the City for the affordable housing project.  Falls Church Housing Corporation participated with Young in Friday’s presentation.

A City-supplied outline of Young’s concept contains the following bullet points characterizing elements of his plan regarding the proposed office building:
o       $2.5M equity investment by the City along with $780,000 from the Wilden Partnership LLC;
o       50% of the total office building to be pre-leased by the City
o       Proposed lease term of 10 years;
o       Office building reverts to City ownership or designee at end of mortgage;  value is estimated at $10M
o       Dividend of $100k per year per life of mortgage (i.e. 25 years) equates to $2.5M
o       Public parking for S. Washington St. redevelopment stimulated with approximately $500k +/- of  Intermodal funds (25%) for day/evening/ weekend public parking spaces along with transit resources such as bike racks, designated Zip car space, kiosk, bus shelter

According to meeting attendees, Young’s presentation envisions that the City monies would come primarily from the City water fund, and that water employees would lease 15,000 square feet of space at $29.50 per square foot ($442,500 annually).  The $500,000 contribution for the garage would be monies awarded to the  City via federal appropriation for  intermodal transportation.

Young’s project would be a 27,000-square-foot office building with three floors of office space above three floors of parking, which would include public parking.  Parking would be shared with The Wilden senior affordable housing complex.

Young successfully used the model of leasing to government entities at the “Flower Building,” where he secured both City school administrative offices and the U.S. Post Office as renters.

Economic Development Development Authority member Mike Novotny, who attended Friday’s meeting, previously presented an economic analysis on The Wilden to the EDA.  In that study, he reported that 350, 360 and 370 S. Washington  properties currently generate $59,000 in net revenue to the City, but that total revenue would decrease to $51,000 if Young’s proposed building at 360 S. Washington Street were 50% pre-leased to the City as Young has proposed.

Subsequent to Friday’s meeting Novotny asked City staff for a list of existing office buildings in the City which could provide space for the water employees.  The City Economic Development Office prepared the list below, showing a number of properties offering space at less than Young’s suggested $29.50 per square foot.  According to the list, lease rates at other buildings are available as low as $20 square foot.

City officials declined to respond to a question regarding whether the use of water funds to support Young’s project would conflict with restrictions recently placed on the City in litigation with Fairfax County Water Authority.  In that litigation, the judge ruled that the City could not return profits from Fairfax County customers to the City’s general fund.

According to City spokesperson Barbara Gordon, Young’s plan is now under review by City staff.

The City’s list of available office space follows.  (Click on “Full” at the bottom of the viewing window to see the document in full screen.)

 

UPDATE, NOON THURSDAY FEB. 18 -   The following statement was received today from Falls Church City officials following a meeting this morning of the Economic Development Committee of the City Council:

“[City] Council determined that public funds will not be committed to  support the redevelopment on 360 S. Washington St. (proposed office building). The Council’s Economic Development Committee continues to work with the developer to explore alternative options.”

Washington Street Property Could Sell, Paving Way for Affordable Housing Project

By STAN FENDLEY
Falls Church Times Staff

January 29, 2010

An existing roadblock to “The Wilden” affordable housing project on South Washington Street could fall away through a change of ownership of property adjacent to The Wilden site, according to information communicated to City officials today.

In a memorandum written today, Assistant City Manager Cindy Mester informed the Falls Church City Council and Planning Commission that McLean-based Jefferson One, owned by “Flower Building” developer Bob Young, is in final negotiations to purchase property at 360 South Washington Street, next to The Wilden’s 350 South Washington Street location.  According to Mester, Young has stated a willingness to work with The Wilden partners on a consolidated site plan.  Young’s cooperation could remove existing barriers to the project that exist because of current owner Thomas Sawner’s unhappiness with effect of The Wilden’s design on his property.

At a recent City Council-Planning Commission joint session, Sawner told City officials that the plan for The Wilden would be unfavorable to his property, making his property an “orphan.”   Sawner has leverage in the matter, however, because of easements he holds which would be violated by the current design of The Wilden.  Failure to resolve the easement matter to Sawner’s satisfaction would likely make it impossible for The Wilden to proceed to construction.   (Video of Sawner’s statement, and the preceding debate between Mayor Robin Gardner and Planning Commission Chairman John Lawrence over whether to let Sawner speak, is available here.)

Young’s pledge to develop a plan jointly with The Wilden partners presumably would remove this barrier.    According to Mester’s memo, Young would develop a “by-right” commercial building with structured parking.  No diagrams or drawings of the joint site plan are publicly available at this time.

Partners in The Wilden are the Falls Church Housing Corporation (“FCHC”) and Boston-based The Community Builders.  The project, previously known as City Center South Senior Apartments, was renamed after long-time City resident Bob Wilden, who died last year.

Because of the possible ownership change at 360 South Washington Street, The Wilden partners have asked the City Council and Planning Commission to postpone further consideration of the project until mid-March.  In a Jan. 28 memorandum to City officials, Falls Church Housing Corporation executive director Carol Jackson notes on the basis of “some early draft concept work” with Young, The Wilden partners “are requesting a short delay in the timeline currently in place to ensure that we deliver critical outcomes” outlined by the City.

Currently, the City Council has scheduled a Feb. 22 vote on “second reading” of a Special Exception ordinance to allow The Wilden to proceed, but Jackson asked that the vote be moved to Mar. 22.  Similarly Jackson requested the city Planning Commission to defer until Mar. 15 two meetings on the project, now planned for Feb. 1 and 16.

The Wilden represents Falls Church Housing Corporation’s third attempt in recent years to construct an affordable housing project in the City.  Previous efforts focused on a location at the west end of the City and a second off North Washington Street near the State Theater.  The planned “City Center” project provided momentum for a third effort aimed at consolidating 350, 360 and 370 South Washington Street.  To support that 174-unit effort, the City Council approved a $2 million interest-free loan to FCHC as a “purchase option” on Sawner’s property.  Other financing for the project failed, however, and as a result FCHC never exercised the purchase option, resulting in Sawner’s requirement to repay $1.9 million to the City and FCHC’s requirement to repay the remaining $100,000.

Last summer, the State of Virginia granted FCHC federal low-income housing tax credits for the current 66-unit project, now known as The Wilden.  Whereas the earlier project would have housed both senior citizens and families, The Wilden is intended only for seniors.  FCHC is again requesting a $2 million City loan to support the project, although it is significantly smaller than the previous iteration.

City officials have been actively attempting to resolve the impasse with Sawner for weeks.  Earlier this month,  City Council members and other officials met with Sawner in an early morning session following the Council’s preliminary approval of The Wilden, but walked away with no resolution at that time.  Young’s involvement offers a potential roadmap to construction.  The path may not be easy, however, because as Jackson states in her memo, postponing City Council and Planning Commission consideration is “potentially risking the VHDA imposed June 30 construction start deadline which continues to be the end date driving The Wilden’s pre-construction deadline.”

The Wilden’s full timeline is available in Jackson’s memo.   Detailed information on the project is provided in a lengthy City staff background memo.

GMHS Student Paper Gets the Scoop on Chipotle

January 26, 2010

George Mason High School’s student newspaper, The Lasso, reported January 25 that Chipotle restaurant would be locating in the former Duron paint store in the Broaddale Shopping Center. Reporter Josh Asadi got the scoop by going straight to Chipotle. The Falls Church Times has been making inquiries with City authorities about Chipotle for a while now, but the City would neither confirm nor deny Chipotle rumors. So for the latest information, we refer readers to The Lasso, found at http://www.fccps.org/lassoj/index.php?option=com_content&view=article&id=860:truth-about-chipotle-rumors-unwrap&catid=1:latest-news&Itemid=67.

Falls Church Cabinetry Vacates Broad Street Space

First of two parts

By STEPHEN SIEGEL
Falls Church Times Staff

January 9, 2009

The Falls Church Cabinetry Company closed its doors for good this week, the victim of an apparent cash crunch and a housing market still suffering a hangover after years of building and rehabbing sated the demand for high-end cabinets.

The company, which manufactured its cabinets in the rear of its showroom at 1001 W. Broad Street, disappeared abruptly on Tuesday. Signs saying “For lease” now hang in the windows of the 10,500 foot building, and the locks have been changed.

Information about the company’s disappearance was hard to come by; its phone has been disconnected, and the person who answered the phone number posted on the “For lease” signs would say only that they’re looking for a new tenant.

But conversations with industry insiders suggest the company was struggling for some time.

The cabinet business is down significantly in the last two years — the only two years in which Falls Church Cabinetry was open. It was started in 2007 in the location of a former rug store. And the high-end cabinet business has probably suffered even more, as the luxury end of the housing market has been more sluggish than the more-affordable end.

The company also was facing an investigation from the Virginia Department of Environmental Quality (DEQ) related to the noxious odors emitted from their paint booth, where they sprayed paint on the cabinets.

The paint booth employed toxic volatile organic compounds such as toluene, the DEQ investigation found. Chemical experts say workers applying toluene need to wear a full body protective suit and respirator; absorbing it in sufficient quantities, either through the skin or the lungs, can be fatal.

The DEQ investigation was begun after complaints from neighbors about the odors from the facility. While the investigation was not yet complete, DEQ had determined in December that the company would be required to obtain a permit, and was in the process of preparing a certified letter to the company stating that. They had yet to determine if the odors violated state law, however.

State air quality law is a bit nebulous; there’s no absolute limit on emissions. Instead, the law requires DEQ to engage in a “sniff test” in a subjective attempt to determine if a person with normal sensitivities would be bothered by the smell.

DEVELOPMENT NEWS: Economy Bites Restaurants

By GEORGE SOUTHERN
Falls Church Times Staff

January 7, 2010

Starting up a restaurant requires financial means, dreams, and often schemes. Even in the best of times, frequently it doesn’t all come together. So in this challenging economy it’s not too surprising that some restaurateurs’ dreams have been dashed.

The City’s Economic Development Office reports that Foster’s Grill, planned to open in the Spectrum Building, is “out of the picture, as the franchisee ran into unexpected personal financial problems that made it impossible to proceed toward construction and an opening.”

Ironically, the Spectrum recently installed a multi-listing sign on Broad Street, and Foster’s Grill was the first listing on the sign.  Meanwhile, For Eyes Optical and Leonard Larson Optometrist have been open in the Spectrum for a year now, but so far haven’t made the sign.

Mad Fox Brewery, whose anticipated opening at the Spectrum has slid from April to May, still has nothing tangible to show for itself, but work is ensuing behind the scenes. “Mad Fox’s building permit is under review by the City, they’ve chosen their general contractor, and they hope to get under construction very soon,” reports the EDO.

Across town at Pearson Square’s Tax Analysts office building, the imported Italian wood-burning oven still sits forlornly in the empty shell that was to be Pizzeria Orso. But “they’re still paying the rent,” says the EDO.

The much-loved and acclaimed Kasha’s Kitchen, hidden in Kennedy’s Natural Foods in West End Plaza on Broad Street, is expected  to be “imminently sold” by owner Kasha Neam, who has run the deli and health food store for 20 years. The prospective new owner expects to continue business as usual but add new merchandise, says the EDO, adding that the name of the business may eventually change to Nourish Market.

Down the street, El Zunzal Restaurant is being  “aggressively marketed, as the owner is highly motivated to sell soon and will entertain reasonable offers.”

How about some good news? Commissioner of the Revenue Tom Clinton’s staff reports two new restaurants opening. That’s about all we know, other than that one of them will be in Eden Center. Babylon Market is coming to West End Plaza. Meanwhile, over at the Flower Building, “three prospective restaurants are vying for the remaining ground floor retail space,” says the EDO. The Young Group hopes a lease will be signed in a couple of weeks.

Condo Countdown

Time for our regular update on occupancy at the Spectrum, the City’s emptiest new building. As of last October, 44 of the condominium’s 189 residential units had been sold. Now the figure is 46, with another five units under contract. A further 30 units are occupied under a “rent to own” program – up from 26 last October. Around back, the office condos remain at 60 percent sold – no movement from last October. “All reasonable purchase/lease offers are being considered.” (Is there ever a time when reasonable offers are not considered?)

From SYMS to GYMS?

We reported in November that efforts to remove the SYMS sign from the Seven Corners building were foiled by the paint scheme. Well, if you can’t remove the whole name, why not just change the first letter and make it GYMS? It’s still very hush-hush, but a gym representative is considering a lease on the building. All our source would say is that “it’s not Gold’s.”

Changing the building from meeting the needs of Syms’ “Why Wait” ad campaign to a gym’s “why weight” appeal would require a major gut of the two-level retail building, so it might be more cost-effective  to knock it down and start over. That would solve the paint problem.

This and That . . .

BJ’s Wholesale Club Update: Infrastructure and sewer work is ongoing.

Planning Commission “Chickens Out”? Not at all. BB&T had requested to replace the burned-out Chicken Out freestanding building in the Falls Plaza parking lot with a drive-in bank. The City Planning Commission voted unanimously to recommend that the Board of Zoning Appeals deny the application due to lack of handicapped parking/access and concerns about adding to the congestion on Broad Street. BB&T has an existing branch at Falls Plaza, but no drive-through. The nearest BB&T drive-through is little more than 1,000 yards away, at 191 West Broad. (UPDATE: See Planning Commission Chairman John Lawrence’s comment below.)

Pearson Square Update: With still not a single one of the retail storefronts occupied (other than ArtSpace, subsidized by the developer), a new real estate broker is being sought. There was also hope that new awnings for retail space might help. The awnings have been delayed, “but are expected soon.”

(DEVELOPMENT NEWS is sourced from reports by the City of Falls Church Economic Development Office.)

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