Washington Biz Journal Cites Northgate Project

The Washington Business Journal recently highlighted the Northgate real estate development scheduled for construction on North Washington Street in Falls Church.  The article discusses the steps required of developer Hekemian Co. of Hackensack, NJ to get approval for the project, and also mentions Falls Church officials’ goals of expanding the city’s commercial tax base.

The full article is available at ttp://washington.bizjournals.com/washington/stories/2009/01/26/story11.html

Huge Difference in Condo Occupancies

Occupancy rates for the Byron Condominium, on the south side of Broad Street, versus the neighboring Spectrum Condo on the north side, support the adage that “the early bird gets the worm.”

According to the Falls Church Economic Development Office, the Byron just sold the last of its 90 residential units. One ground-floor commercial space is still looking for an occupant (next to Penzeys Spices), and commercial space remains available on the 2nd floor. The Byron was completed in 2006.

But across the street at the Spectrum, not finished until last year, occupancy rates remain dismal. Of a total 189 residential and commercial units, only 24 of the residential units have come to settlement – and that figure includes the 8 subsidized “affordable dwelling units.” Only two units reached settlement during the past two months.

On the retail side of the Spectrum, “no news is bad news,” with the EDO reporting “no new progress or news.” Last December, the EDO reported that arrangements to locate a restaurant to be called “Foster’s Grille” in the Spectrum were “99.9 percent complete.” Two months later there is no news of the missing 0.1 percent.
Another would-be Spectrum restaurant, “Not Your Average Joe’s,” lingers on only in the papered-over windows, since the EDO reported last December that “Joe’s” had bailed. Read more

Planning Chair Raises Questions re ‘Perrier Jouét’ Building

Some aspects of recent development have been questioned by Falls Church Planning Commission Chair John Lawrence.  His memo to the City Planning Department follows.

Memorandum

From:             John D. Lawrence
To:                  Planning Department
Subject:         The “Perrier Jouét” Building at 800 W. Broad

I have received numerous notes and comments from people about the building at 800 West Broad.  Please see the pictures below as I presume that this building will be named (much like a stadium) after a corporate sponsor that appears to be Perrier Jouét champagne.  Given its appearance, I feel the need to ask some important questions concerning this structure.

1.       Did the City Arborist approve the type of vegetation displayed?  Is this a native plant?

2.      Is it an invasive species that might end up on the 706 building as a result of the shared parking agreement?  Need opinion of the ESC’s Invasive Species Task Force.

3.      Is it deciduous in winter?  If not, how will it provide adequate screening?

4.      If deciduous, does DES have equipment large enough to collect and dispose of the leaves?

5.      If swept to the curb for fall leaf collection, will this impede westbound traffic on West Broad Street? Read more

City Center Design Changes Revealed

The Falls Church City Council met in closed and public work sessions on Thursday night to view and discuss Atlantic Realty’s proposed design changes for the City Center.

Facing increased construction costs Atlantic is planning to reduce the height of two of the buildings and significantly change the design of the complex’s primary structure, generally referred to as the Harris-Teeter Building (HTB), which will occupy the current Bowl America site at the corner of Maple Avenue and Annandale Road.

This building, whose name derives from its primary prospective tenant, will be reduced to 68 feet (6.5 floors) on the Annandale side and to 84 feet (8 floors)  on the Gibson Street side.   The building’s interior courts will be increased from 2 to 3; however, the new courts will be considerably smaller than those shown in the original plan.

Although the building will have fewer floors, the number of residences will remain the same under the new design — 413 apartments and 16 townhomes.    This will be achieved primarily by changing setbacks, most significantly on the Gibson Street side where the setback will be reduced to less than 5 feet in some areas, compared to the 30 feet as originally designed.

The facade facing Shirley Street will maintain its original setback of 30 feet above the proposed townhomes; however, there will no longer be openings into the courtyards.  Instead, these breaks in the facade will, in effect, be filled in with units to a height of 7 stories, creating a continuous frontage.

Atlantic now is planning to use wood construction on the upper, residential floors.  The lower, mostly commercial base floors will be primarily concrete.  Ceiling heights will remain unchanged throughout.

The overall effect is a design which is denser and more uniform throughout.  For example, there will be no variations in the roof line, the differences in height being due to the slope of Maple Avenue.

Atlantic plans to lower the active adult building from 11 floors to 7.  No design details were available concerning this structure other than that the number of residences would be reduced from 134 to 90.

City Attorney John Foster stated that the prospective design changes would not require an amendment to the current special exception ordinance due to the revisions being in “general accordance” with the final legislation approved by the Council.  Given that decision and the Council’s concurrence, the changes will be forwarded to the Planning Commission for review in January.

Community Comment: Falls Church Can’t Afford Project

Read more

Planning Commission Rejects Affordable Housing Site Plan

On Monday, December 1, the Falls Church Planning Commission by a vote of 6-1 rejected the site plan and subdivision for the proposed affordable housing project at City Center, also known as the City Center South Apartments (CCSA).    

Commissioners cited inadequate parking space as their primary reason for the rejection.  The site plan allows for 239 spaces.  However, under a strict application of the current zoning code, 418 spaces should be provided, leaving a shortfall of 179.  Attention was drawn to a recent memorandum by Falls Church Zoning Administrator John Boyle in which he wrote ”It is difficult to imagine how such a parking plan [as proposed] can function.”

Advocates of the proposal explained that the project would use what they termed as ”shared parking.”   However the commissioners were not persuaded.  Commissioner Melissa Teates expressed concerns that businesses in the immediate area that already are under parking pressure likely would suffer if the project went forward. 

Objections were not limited solely to the parking issue.  Commission Chair Maureen Budetti stated that the current plan placed too much on one site and that she felt the City staff recommendations for approval were “lukewarm.”

Commissioner Christine Sanders noted that her objections were ”about basic health and safety” as she cited concerns about increased traffic.  Ms. Sanders also pointed out that the CCSA site plan is closely tied to the Center Center development. which she referred to as in a state of flux, and that she was unsure if the proposed affordable units were still in keeping with the scale of the adjacent project.   

The Commissions’ rejection of the site plan threatens Virginia’s financial contribution to the project as  the application deadline for state funding occurs in early 2009, leaving insufficient time to develop an alternative plan and have it approved. 

The Commission also rejected by a vote of 5-2 City staff recommendations to commit Falls Church to long-term financing for the project and to grant a real estate tax exemption to the CCSA for the purpose of affordable housing. 

Commissioners John Lawrence, Suzanne Fauber, Ruth Rodgers, Budetti, Sanders, and Teates voted to turn down the CCSA site plan and the related application to combine the three lots on the site into two.  Former City Council member Lindy Hockenberry cast the sole vote in favor.  Ms. Hockenberry  was joined by Ms. Teates in casting the only votes in support of the staff recommendations on tax exemptions and financing.

Design of City Center South Changing

Atlantic Realty, the developer of City Center South, is planning changes in the project’s design due to rising construction costs. Sara Fitzgerald, speaking in behalf of the League of Women Voters (LWV), raised concerns about the changes at the November 24 session of the Falls Church City Council.

According to Ms. Fitzgerald the new plan is significantly different from the one approved as a special exception. She stated her understanding is that under such circumstances the process is re-opened and the proposal re-evaluated under the guidance of the special exception ordinance. She urged that to insure a proper review of the design revisions the Council, the Planning Commission, and other involved parties hold open meetings with ample public notice and that revised site plans be made available at the library and on the City website.

In response City Manager Wyatt Shields acknowledged that he had recently noted Atlantic Realty’s intentions when speaking to the League and the Village Preservation and Improvement Society. He stated that the building intended for the current Bowl America site could be lowered by two floors in certain places and that the setbacks on both the Gibson and Maple Street sides of the building may be changed.

Mr Shields further stated that Atlantic Realty also has discussed reducing the size of the City Center’s active adult building and that the company was still in the process of recruiting a hotel chain for the site. He maintained that by and large the planned use of the buildings remains within the concept as approved by the Council and that the changes were essentially aesthetic.

Mayor Gardner declined to open this topic to debate. She stated that it would be discussed publicly at the Council’s Economic Development Committee meeting on November 25 and at a Council work session on December 4.

Councilman Maller suggested that a closed meeting also be held on this issue as it may present what he termed a negotiating situation which would be inappropriate to discuss in public. He stated that advice may be required from the city manager, city attorney, and other staff to determine how to respond to Atlantic’s potential changes.

City Proposal to Attract BJ’s Wholesale Club to Noland Site

Proposal for City Council Review and Comment

Brief Background

• Following purchase of the Noland site by JBG Rosenfeld Retail in February 2008, CarMax was brought forward as the developer’s proposed tenant evidenced by a letter of intent to lease the site for 20 years at a market rental rate. The city expressed its concern that this use would be highly underproductive from a tax yield perspective. The city encouraged the developer to pursue a big box retail alternative, potentially with city participation through tax sharing, if justified to make the use economically feasible.

• JBG proceeded to market the site for big box and other retail uses during a time of declining industry sales and waning interest in new store construction. BJ’s Wholesale Club emerged as the only big box retailer with immediate interest in the Noland site. A number of other prospects, including Costco, passed on this opportunity to locate in Falls Church.

• In addition to big box retail, many other uses can be conducted by right on the Noland site, which is zoned for light industrial use. There is a significant delta between market rent that the owner can obtain for leasing the site and the rent that BJ’s can pay to make their ground lease economically feasible. There are extraordinary site preparation and related costs associated with transforming the site for retail use. Tax sharing between the city and the owner to incentivize a big box use is necessary, therefore, for the deal with BJ’s to proceed.

• Staff has consulted Eric Smart of Bolan Smart and Heather Arnold of Retail Compass to receive their feedback and recommendations regarding these negotiations and representations by the developer of investment goals and assumptions. Staff has also undertaken considerable independent research, including direct discussions with BJ’s and other industry insiders to gather data and verify facts. A tour of BJ’s Fairfax City store is scheduled for October 21 for city officials, hosted by the company’s corporate representatives.

The Justification for City Participation in the Deal

• Extraordinary site preparation costs

• • Site infill and retaining walls
  • Streetscape and landscape
  • Traffic signalization upgrade

• Risk sharing that minimizes the city’s exposure

• • No upfront cost to the city (PAYGO approach)
  • No effect on city’s bond capacity or credit rating
  • No additional tax burden on city taxpayers

• Strong upside reward potential from new tax revenue

Range of Projected Tax Yields from 87,800 Square Foot BJ’s

Sales Per Square Foot	Real Property Taxes	Sales Taxes	BPOL Taxes	All Other Taxes	Gross Tax Revenue
$477	$271,000	$418,939	$79,000	$70,000	$838,939
$900	$271,000	$790,452	$149,000	$70,000	$1,280,452

• Public purposes

• • Improved storm water retention
  • Improved appearance of the site
  • Some reserved public parking
  • Additional items to be negotiated

• Tax base diversification

• • 100% commercial development
  • $550,000 in new sales tax (a conservative estimate) would increase total city revenue from this source by about 12% over FY 2007 sales and use tax revenue levels

• Lost opportunity without city involvement

• • Deals in the current retail market are few and retailers are highly selective of new sites.
  • At 8.4 acres, the site is too big and too important to the city’s fiscal future not to get involved.

• Development agreement can protect city interests (to be negotiated)

• Insist on clawback provisions in the event of early termination of store operations.
  • No city liability for tax sharing if performance thresholds are not achieved.
  • Other protections

• Developer’s return on investment goals are commercially competitive and prevailing by industry standards based on our consultant’s review

Economic Development Committee Review

• Following extensive discussions between staff and JBG, City Council’s Economic Development Committee met on October 16 to receive a detailed background briefing, review the progress of the discussions on tax sharing, and advise the city manager on key issues and parameters for framing a deal acceptable to the city.

• The EDC requested independent review of cost estimations that JB’s civil engineers have provided regarding site preparation and infrastructure expenses related to big box use of the Noland site. The city engineer has reviewed the cost estimates and finds them to be generally consistent with industry standards.

• Guidance from the EDC and further negotiations enabled staff to reach a tentative agreement of terms with JBG on October 17. That proposed agreement subject to City Council review and approval is outlined below.

Tentative Agreement between JBG and City Manager

Annual Gross Tax Revenue                  Distribution   City Share                              Developer Share

$0 to $450,000	100% to City	$450,000	$0
$450,001 to $950,000	50% to City 50% to Developer	Up to $250,000	Up to $250,000
Over $950,000	100% to City	Unlimited	$0

• This deal is proposed for 12 years maximum beginning at the start of the first fiscal year following the opening of the BJ’s store.

• If $950,000 in minimum gross tax revenue is generated on the Noland site during each of the first 12 years, the city would receive a total of $8.4 million and the developer $3 million over that period. All tax revenues in Year 13 and beyond would flow to the city.

• The threshold for sharing taxes with the developer would be receipt by the city of $450,000 in gross revenue each year. The city would then share with the developer one half of each tax dollar received in the band between $450,001 and $950,000 in gross annual tax receipts, with a cap at $250,000. Gross tax revenues greater than $950,000 in any year would flow exclusively to the city.

• At present the Noland site produces less than $250,000 per year in gross tax revenue to the city.

• EDA would serve as the city’s agent for this tax sharing agreement. Council would pre-approve the terms of the agreement, and appropriate the necessary funds through the budget process.

Noland proposal and report, 101708

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