EDA Commentary

A primary responsibility of the Falls Church Economic Development Authority (EDA) is to understand the facts about market conditions and redevelopment opportunities, and to articulate them clearly to the community. This commentary discusses economic development progress in the City over the past several years and how it is progressing as we move into the future. The Broadway opens for occupancy next month and the Byron and Spectrum have received special exception approval and proceeding through site plan review. An evolving public and private effort has brought the City to the threshold of important economic revitalization. Here is how it happened and what it means.

Our Economic Development Turning Point in 1994

Through the early 1990's Falls Church made a few attempts to understand the development market and attract new business into the City. Included were several economic development studies and community visioning processes. However, citizens seemed content with our village life style and we made no serious efforts to attract developers. At the same time, Arlington County initiated a strong business and redevelopment program in large part focused around the Metro stations in Ballston and Rosslyn. The economic market was passing us by as developers looked outside our borders for investment opportunities.

Fiscal pressure focused serious City Council attention on new revenue sources in 1994. It sold the Whittier site for a residential and extended stay hotel project that year, established the EDA and used some of the Whittier proceeds to fund a professional development staff to support it. The EDA and City staff took the lead in attracting developers to the City and learning about the development market. It has taken several years to understand market forces, the pros and cons of alternative types of development and to convince developers to stop jumping over us and consider investing in Falls Church. Now, we know how to assess development alternatives and get the highest and best use for our developable property.

Tax Revenues: The top three revenue generators, net of city and school costs, are full-service hotels, Class A office buildings and high-end condo-mixed use projects such as the Broadway, Byron and Spectrum. These types of mixed-use projects generate from $250,000 to $400,000 per acre in annual net taxes depending on site-specific conditions. In our region, recent data show that high-end condos surged past most commercial alternatives as the top revenue generators per square foot of floor space. That means the three new projects on Broad Street will generate more taxes than would most offices or hotels on those sites.

The least attractive alternatives are single story (pad) commercial development. Drug stores, for example, generate about $70,000 per acre and fast food restaurants about $50,000 per acre. A key factor in generating taxes is the density of the development. That is why the three new projects are projected to add nearly $2 million in annual net revenue to the City coffers once they are complete. Moreover, the City is receiving $4 million in infrastructure upgrades and other proffers from the developers. Commercial development such as Class A office is unlikely in this part of Broad Street because of the distance to a metro stop as well as lot size constraints and over capacity in the Northern Virginia area. From a revenue standpoint, high-end mixed-use is the highest and best use of the property in the middle section of Broad Street.

Life Style: Mixed-use development is also consistent with our village life style. Far from making Broad Street a "condo canyon", the three new developments can turn a connector section of the City into a more vibrant area to live, shop and dine. My office is in Clarendon across the street from the new Market Square mixed-use development. Over the past two years, I have watched the transformation of this connector section of Arlington into a magnet of all day activity extending into the nighttime. The restaurants and shops bustle, and the well-lit street is lined with people when I leave work. That life style is coming to the 400 and 500 blocks of Broad Street in Falls Church.

City Impacts: New condominium construction has a small impact on school populations. City research shows that families move into the single-family homes that empty nesters leave. Single-family homes are attractive to families and condos are attractive to retirees, young married couples and singles. The 80 new Broadway condo units will reportedly produce only one school age child and net about $400,000 a year in taxes from the two acre parcel and probably more with the new assessments. On average, eight single-family homes also take up two acres but produce 4 kids while currently generating only $48,000 gross revenues, not accounting for city and school costs. We clearly need all types of residential alternatives in the City for our citizens. Each work day, 25,000 cars travel through Falls Church to other destinations. Traffic studies show that the new condos will only marginally increase that traffic flow. We looked hard but could not find much negative impact from the new developments.

Our Economic Development Future: The Falls Church economic development buzz is about to shift from the three mixed-use developments to the City Center project. This is the proposal conceived for the blocks around Broad and Maple. The concept is a center for destination retail, office, and residential anchored by a public and open space area. After three years of study, the City is negotiating a general development agreement with the Akridge Company to act as master developer to work with property owners and businesses in those blocks to turn that concept into realty. As part of the agreement, Akridge will seek public and stakeholder input as the City Center plan is finalized.

One of many attractive elements of the Akridge proposal is that no City investment is required. The contract obligates the City to work cooperatively with the developer, but Akridge takes on the responsibility for land consolidation, financing and site development. Another is the positive contribution to City revenues as the project is phased into development over the next several years. Importantly, the plan for the first phase is primarily retail.

The City Center conceptually links with the three new projects on Broad Street improving opportunities for redevelopment investment in between. Accordingly, our economic development focus will turn to other sites in the City, such as the gateway areas with Arlington and Fairfax. Market forces are different in those areas then in the center of the City and highest and best use will likely be different as well. We envision a blend of land uses radiating from the City Center.

The City's Economic Development Strategy: Council has approved projects that make the City much more attractive to many types of new development along the Board and Washington Street corridors -- not only mixed use but hotels, offices and other commercial developments. The three Broad Street mixed-use projects have provided the support system and density to open up commercial development possibilities previously unavailable to us. Council strategy is to take advantage of attractive current market development opportunities while keeping other sites available for evolving market phases. I am seeing it working. Falls Church has matured from an after thought several years ago to a priority for many developers.

Over the next 18 months, the three new mixed-use projects will be completed and contribute nearly two million dollars annually in needed new revenue sources. That will begin to ease the tax impact on current residents as well as improve our financial flexibility to better meet a variety of our citizen's needs such as open space for recreation and affordable housing. That is why it is critical that we elect City Council members who understand the total economic development picture and can continue to implement a comprehensive revitalization strategy. At this point in time, we need the economic development rudder kept firmly in the water.