Local Commentary

Editorial: Deed Over the Arts Space

Howling, as we did loudly in this space last week, against the dubious Falls Church City Hall contention that a conversion from condo sales to rentals at the Pearson Square project, under construction, will be “revenue neutral,” has proven useful. This week, the City Council was provided new documentation showing that, in fact, the conversion of 230 residential units the Pearson Square developers want will cost the City, in terms of tax revenue losses, a net of about $185,000 a year.

While we remain puzzled by the tortured logic that was used earlier to contend the switch-over would be “revenue neutral,” the clear issue is now that the developer, Carr Homes, stands to appreciate a huge financial bailout from the City while the City stands to suffer a considerable loss. $185,000 from this one project is half-a-penny on the tax rate paid by every homeowner in the City.

Since this conversion requires that its affordable housing component get City Council approval, the City is in a position to recover at least a portion of this differential by insisting on new developer proffers.

City Hall argues that since Carr Homes has offered to hike its voluntary cash proffer to cover the prospect of a considerable increase in the number of school-aged children expected in rentals, it has done enough. But that one-time contribution is designed only to cover the additional costs to the City of educating and providing other services to the anticipated additional youngsters. It is a cost offset to the City schools, not a contribution to offset the cost to City taxpayers of the conversion because of lost tax revenue.

To date, including through the “preliminary approval” vote of the City Council this week, the City has failed, in this case, to exercise any leverage at all to stand for its taxpayers. All it has done was to cloud the fiscal impact of the switch behind a questionable “revenue neutral” claim, even though that has been subsequently corrected.

An appropriate and reasonable proffer that Carr Homes can and should make would be to deed over to the City the 3,000 square feet of ground floor space that Atlantic Realty, the previous owner of the project, offered to set aside for the City’s arts programs. Under the terms of the original deal, this space is to be leased to the City at a “substantially-discounted” rate. However, the annual payout on the lease will still be considerable, rising over time, while no provision to cover the cost of its build-out is included in the arrangement.

It will not be too much to ask for the City to insist that, in exchange for a favorable vote late this month to expedite the conversion from condo sales to rentals, the site owners’ gift to the City this space, and offer to build it out for free. The cost to the owners for this will be a tiny fraction of the $185,000 a year the City is being asked to absorb in tax revenue losses through the owner’s conversion plans.