Developers of the massive Pearson Square mixed use project on S. Maple St. in the City of Falls Church got the official blessing from the Falls Church City Council Monday to convert 230 residential condominiums from “for sale” to “for rent” units.
By a 6-1 vote Monday, the City Council OK’d the switch for the 15 units designated for “affordable housing” applicants under a special agreement with the City, and that opened the way for the entire project to convert to rentals.
It marked the first major concession in the City’s recent condo development boom to the realities of the housing market in the region and the nation. The condo sales market ground to a standstill a year ago and no one is able to say now how long it will take for a rebound.
It may not be the only case that Falls Church, or other jurisdictions in this region, will experience. Waterford Development, owners of another large-scale project, the Spectrum, now under construction in the 400 block of W. Broad, stopped its condo sales effort last fall. Officials there have said that sales will resume this fall, but it is not certain whether in the meantime they will switch to rentals.
The Byron, another large project near completion in the 500 block of W. Broad, has sold most but not all of its units as condos, but has found selling its remaining units difficult.
Preceding Monday’s vote on Pearson Square, Falls Church Mayor Robin Gardner noted the switch had the unanimous approval of the City’s Planning Commission and City staff. “This is the best case scenario given the realities of the market,” she said.
The City would suffer far more if the building sat empty, noted Vice Mayor Lindy Hockenberry adding that, in fact, making the affordable units rentals rather than “for sale” is a benefit for addressing the City’s affordable housing needs.
With Monday’s vote, a tentative agreement by Carr Homes, which had purchased the condo units earlier, to sell the units to Trans Western Investment Co. for their development and management as rentals, was set to be consummated.
Atlantic Realty, which originally won the “special exception” from the City Council for development of the site in July 2004, was praised for sweetening its proffer package last week to win Monday’s vote by $100,000. The $100,000 will go to the construction of the 3,000-square foot “flex art” space it had offered to the City at a significant discount.
Former Vice Mayor Marty Meserve, now head of Falls Church Arts, said that because of the offer, “this is a great night for the arts in Falls Church.”
She said the money for the build out of the “flex art” space will contribute to the realization of its potential to provide educational, intergenerational producing and presenting theatre opportunities. A permanent art gallery will also be on the premises.
An Atlantic Realty spokesman Monday also confirmed that, with the vote, the company will now move swiftly to return the deposits, with interest, to all those that had signed up to buy condos at the site.
Atlantic also offered a voluntary contribution of $134,944 to the City schools in light of the additional numbers of school-aged children that can be expected to move into the rental units, as compared to what was expected when the units were to be condos.
Councilman David Snyder, the only council member to vote against the OK, said that the conversion from condos to rentals will cost the City $185,000 a year in lost tax revenues. “This is a fundamental change to what we agreed to,” he said.
“I know we’re all distressed by the conversion of these units from sale to rental condos, but our vote is strictly on the one area we have control over (the rental of the affordable units),” Mayor Gardner said.
The residential units will retain all the features of “for sale” condos in their construction and use, meaning they will remain available for conversion back to “for sale” status when the market rebounds.