Pearson Square Seeks City OK For 230 Units
With construction well underway of the largest mixed-use project yet approved for the City of Falls Church, the developer approached the City Council Monday asking for permission to convert all of its 230 residential units from condos to rentals.
The Pearson Square project, on the 4.6 acre site of the former duckpin bowling alley on S. Maple St., is the first of the recent years’ approvals for new mixed use construction to come to City Hall crying “uncle” under pressure of the region’s collapsed condo sales market.
Reflecting national housing trends, condo sales in the wider Washington, D.C., metro region have ground to a virtual halt, and no one is predicting exactly when it will rebound.
Last year, a condo project called The Easton approved for construction in North Arlington on 19th Street just beyond the City of Falls Church borders, was abruptly stopped for the same reason, and despite its proximity to the East Falls Church Metro. While no construction had begun, it had started advertising for sale of condo units when it was scuttled. The project has only recently been restarted, but with the aim to build rental apartments there, instead.
Other developers with projects out of the ground in Falls Church are facing similar woes, including The Byron, which is virtually completed but has a number of large condo units still unsold, and The Spectrum, which is speeding toward completion but has also at least temporarily stopped all efforts to sell its residential units as condos.
Adam Shulman of Atlantic Realty, the company that won “special exception” approval from the City to build Pearson Square, came to a work session of the City Council Monday with an appeal to revise the terms of the agreement. He said that the 230 units, including 15 designated as “affordable,” will retain the size and amenities of condos while being rented as “luxury apartments.”
That will enable them to be put on the market as condos when the market rebounds, he said.
The Council will have to vote on a formal revision of the “special exception” ruling at a future business meeting.
Technically, Atlantic Realty is no longer the owner of the residential units, having sold them to Carr Homes. Now, Carr has a preliminary deal with the Trans-Western Company to sell them, but it is conditional on them being converted to rental units.
Should the Council not agree to the revision, Carr will be left holding the unsold condos until a market recovery, which could take years.
The market for rentals in this area is hot, on the other hand. Chances of filling all 230 units are strong, Shulman told the Council.
Rick Goff, the chief economic development official at City Hall, presented a report indicating the transfer of the units from condos to rentals would be “revenue neutral” to the City.
That was met with some skepticism by at least one member of the Council present, however, as well as observers in the audience. Using a City-developed economic forecast model, Goff said that, since projected tax revenue income from the project in 2004 is the same as what is projected to be the case for rentals in 2007, the result is “no negative impact.”
However, he did not compare the projected tax revenue from rental use of the units in 2007 to what it would be if they were kept as condos, and assessed at 2007 values accordingly.
“We are not trying to beat the system or do a bait-and-switch with this,” Shulman told the Council Monday. He noted that since his company, on an entirely different track, is now seeking approval for the first phase of a massive City Center redevelopment plan, “We clearly want to be in the good graces of the City.”
“If ‘for sale’ condos don’t sell, or do only at half price, this does not help the City,” he noted. If allowed to convert to rentals, they will become “the highest-end apartments in the City,” with units averaging 1,200 square feet. Keeping them at that size “will make conversion back to condos at a later date easier and cheaper,” he added.
“We don’t want to see them sitting there empty,” noted Vice Mayor Lindy Hockenberry, who presided over Monday’s work session.