In an e-mail to members of the Falls Church City Council last week, City Manager Wyatt Shields reported that the anticipated budget shortfall for the current fiscal year is close to $800,000, double what he expected as recently as two weeks ago.

The decline in revenues from real estate values and sales taxes, even if not as severe as outlying areas in the region, is identified as the cause.

Shields told the Council at a work session Monday that he will provide more solid numbers and a game plan for cutting costs in the next months. Fairfax County is already engaged in a similar process, but with much higher stakes.

According to Fairfax County Supervisors Chair Gerry Connolly, in comments to the News-Press yesterday, a total of $350 million in budget cuts is coming in the county, and “no entity in the county is immune,” including the schools.

In the City of Falls Church, $800,000 is percent of the annual budget of $76 million, but finding where to make the cuts will not be easy. Shields said that he convened a meeting of all City department heads last Friday to urge them all to find savings.

“I am not calling for mandatory cuts yet,” he told the Council. “I am hoping we can come back and work together, evaluate the level of service provided, and agree on where we can save.”

The “good news,” he added, “is that we are jumping in and doing this early, giving us more room to maneuver.”

Another piece of good news, he added, is that the originally-calculated $355,000 shortfall in the budget year ending June 30 turned out to be a $55,000 surplus, instead.

That budget ended “right on target” for the first time ever in the City, he noted.

The Council also discussed difficulties the Hekemian Company’s already-approved Northgate mixed use project may have in gaining site plan approval from the Planning Commission, given a thumbs down by the Virginia Department of Transportation (VDOT) to a proposed median to allow left turns onto N. Washington Street out of the project.

VDOT considers N. Washington Street (Rt. 29) part of the national highway system, thus requiring its approval of the plan.

The Council reviewed the Sept. 2 report of the City’s Economic Development Office that included hard data reflecting the on-going struggles of new mixed-used projects to sell or rent their residential units in the current economy.

According to the report, as of Aug. 5, only 17 of the 195 residential condos at The Spectrum, 444 W. Broad St., were sold, and there we no sales during the month of August. A number of the sold condos are “affordable” units under agreement with the City, and prices for units that went for $490,000 last year are going for $418,000 now.

The Byron in the 500 block of West Broad Street still has seven unsold units, according to the report, and the lease rate for its last ground floor retail space has dropped from $45 per square foot to $35.

The Pearson Square apartments on S. Maple Street are 58 percent leased (133 units) and 53 percent occupied (122 units) and received a front page showcase in the Aug. 24 Washington Post Apartment Living section.

Signed leases or sales reported for new businesses included those of Pizzeria Orso and a dental office in the Tax Analysts building adjacent Pearson Square on S. Maple, of Caregivers in the Spectrum, of Flippin’ Pizza and the U.S. Post Office in the 800 W. Broad Street building now under construction, of Massage Envy to occupy the Hallmark store space in the Falls Plaza center, of Uncle George’s Carryout/Dine In Chicken/Ribs and Burgers at 1079 W. Broad St. in the West End Plaza.

The report indicated a 161-room extended stay Hampton Inn and third 190,000 square foot office building are now expected to go onto the BB&T Towers property near Seven Corners, just outside the Falls Church city limits. It added that on another boundary of the City, on N. Washington Street in Arlington, property beside the La Cote D’Or restaurant, originally owned by the Hovnanian company was sold to Hanover Development of Houston, which will build 214 one and two-bedroom rental units there, with ground floor retail. Construction is expected to begin soon.