$10 Million per Acre Rates are Stalling Efforts
The City of Falls Church’s Acting City Manager Wyatt Shields conceded that asking prices are as high as $10 million an acre for commercial property in the downtown corridor of the City of Falls Church targeted for development as a new City Center.
In remarks to the monthly luncheon of the Greater Falls Church Chamber of Commerce, Shields that the high prices have effectively ground City Center plans to a halt for now, at least on the north side of the two blocks of W. Broad to the west of N. Washington.
“There is going to have to be a market check to bring down prices there,” he told the business audience in his first major public address since taking over as city manager over the summer. Currently, he said, the asking prices are “putting a damper on possibilities” and that, as a result, progress on the City Center will have to be “on a phased basis.”
A major task on the north side of W. Broad is the need to assemble a large number of commercially-zoned properties held by a number of different owners. Centex Homes, which was given the green light by the City last year to try to put the pieces together there, faces an impasse, and Shields did not even mention the company’s name in his remarks.
On the other hand, the story may be different on the south side of the same two blocks. That segment, with Atlantic Realty is the prime mover and major property owners, could produce some concrete plans soon, Shields said.
“It may be that when property owners on the north side of W. Broad see what’s going up on the south side, they may start to reconsider their own positions,” he said.
In the meantime, he noted, the City Center redevelopment will “be on a phased basis, until the signals get right and it eventually gets built.”
In a related development, the Falls Church City Council included in its requests of the state legislature that it reviewed Monday night a policy that “opposes any reduction of the eminent domain authority that is currently established in the Virginia Constitution and State Code,” citing its City Center plans in particular.
“The City is concerned about potential adverse effects on future projects (of a reduction of the authority) under the Public Private Education facilities and Infrastructure Act and Public Private Transportation Act, and in the areas of affordable housing redevelopment and transportation and public uses related to its City Center plans,” the policy position reads.
With this policy statement, in the form of a recommendation to the state legislature, the City Council is signaling that it wants to “keep its powder dry” regarding the potential use of its powers of eminent domain to force the sale of properties at fair market value where bona fide public use needs dictate it.
The Council is concerned to curtail efforts in the state legislature to further limit the currently-permitted uses of eminent domain as part of a state reaction against the controversial U.S. Supreme Court decision last year allowing for the application of eminent domain for economic development purposes.
Shields stressed the importance of economic development for the well-being of Falls Church, noting that while residential real estate values are expected to be flat, growing at the most only 1%, for the next fiscal year, overall real estate values will climb a modest 3% due almost entirely to the new construction in the commercially-zoned corridors of the City now going on. Currently, four large mixed use buildings are under construction: the Bryon (nearing completion), the Spectrum, the Read Building and Pearson Square.
Shields acknowledged that the Jefferson Group will be coming forward with a plan for an all-commercial building in the 800 block of W. Broad, while the Akridge Company has made its plans known, initially, for a commercial parcel it has acquired on N. Washington St. and talks between City officials and officials in the Hekemian Company regarding its hopes for redevelopment of the old Pearson Funeral Home site on N. Washington continue.
“It’s important for the City’s taxpayers to know the impact of these projects in ameliorating their residential real estate taxes,” Shields told the Chamber audience. He noted that the overall revenue flow to the City’s coffers will grow by only 3.5% for the upcoming fiscal year, a growth rate significantly lower than in recent years. His recommended budget and the School Board’s recommended budgets will come to the City Council for consideration next spring, when pressures on spending and tax rates will come to a head.
Shields remarked that he did not believe the ultra-bearish forecast of the Moody group, calling for double-digit declines in the value of real estate in the metropolitan Washington, D.C., region, will apply to Falls Church or its environs.
“It may apply to parts of Prince William and Loudoun counties, but not here,” he said. He cited the rosier forecast of George Mason University’s Dr. Stephen Fuller, who predicts that robust growth will continue in Northern Virginia, although unevenly.
Shields’ comments were videotaped for future airing on Falls Church Cable television.