Developers Contend F.C. Continues to Tie Hands With Delays, Impediments

If there was one unified cry that came from the Falls Church City Council at the conclusion last month of its painstaking budgeting process for the coming fiscal year, it was that the City urgently needs to spur economic development to bring in fresh revenues for future budgets.

If there was one unified cry that came from the Falls Church City Council at the conclusion last month of its painstaking budgeting process for the coming fiscal year, it was that the City urgently needs to spur economic development to bring in fresh revenues for future budgets.

But the News-Press has learned that, as much lip service as has been given to the subject, little if anything has practically changed from the “business as usual” approach at City Hall. The failure to move on this matter will only further burden City residents with higher real estate taxes and continued cuts in services.

The prime example is an already-approved large scale mixed use project proposed by the Washington, D.C.-based Akridge company for N. Washington St. known as The Gateway.

On one of the commercially-zoned properties in the City closest to the East Falls Church Metro station, modifications to an earlier approval of The Gateway were OK’d earlier this year with projections that, if built, it would add $810,180 annually in net revenues to the City’s coffers, equivalent to over 2.5 cents on the real estate tax rate.

However, an urgent call from the Falls Church Chamber of Commerce to remove a potentially “deal-breaking” restriction on the development, vetted by the Chamber’s legislative committee and board of directors and issued to City Hall by the Chamber’s then-president Ralph Perrino in late December 2010, went unheeded. Perrino wrote, “The City’s demand for ground floor non-office use will likely doom this project.”

Last December, Mike Gill of Akridge addressed the Chamber board on grave concerns his group had for its ability to move to construct the project given the City’s insistence that the ground floor of the office building component be limited to retail units. It severely restricts, he cautioned, the ability to find a tenant for the use of the office building, since many insist on being able to occupy the entire structure.

That restriction, combined with another prohibiting Akridge from beginning construction of the project’s residential component until its office building construction had already begun, has stalled the project, and may kill it outright.

“Nothing has changed” since December, Gill told the News-Press in a phone interview yesterday. “The residences can work, and we can construct them with the idea that they will fill up slowly over time. But the office part is much tougher. We cannot commit to construction until we have enough pre-leases in hand to justify it.”

Therefore, nothing is moving, at all.

Akridge’s search for office tenants has been severely constrained by the inflexibility of the City on the requirement for ground floor retail, even though all the other new mixed use projects built in the City in the last decade continue to suffer for lack of ability to fill similar spaces.

As noted to the News-Press yesterday by Becky Witsman of the City’s Economic Development Office, this comes despite the suggestion by two F.C. Council members – David Snyder and Robin Gardner – that if Akridge were to find a potential tenant seeking to occupy the entire office building that Akridge might come back to the Council seeking a revision to the agreement that was finalized last January 25.

Without the guarantee that a clear majority on the Council would back such a revision, however, it has proved to change nothing about Akridge’s dilemma.
The reality is that very few retailers have moved into first-floor spaces at projects like The Broadway, The Byron and Pearson Square, even while those projects’ residential components have moved well. A quick survey of those projects reveals an overwhelming vacancy rate in the first-floor retail components of those projects. They’re simply not in demand in Falls Church.

“This is another case of the City’s wishful thinking getting in the way of reality,” developer Bob Young of the Jefferson Group told the News-Press yesterday. Decision-makers in the City “imagine what they’d like to see, and then require it. They take nothing of market realities into their thinking.”

Young said that The Spectrum, The Byron and Pearson Square were approved and built when the economy was booming, and the developers could afford to take the risk that the retail units would lag. But as they have, and the economy has tanked, developers no longer have such luxuries.

(Young has a guest commentary elsewhere in this edition of the News-Press. In it, he quips, with the current restrictions on the Akridge project, “Don’t hold your breath to see that one come out of the ground!” He adds, “It is very clear that the City must do everything possible to bring certain kinds of development to the City – and soon – or it will lose the opportunities it now has for a generation or more.”)

Young, who is the developer of The Read mixed use building in the 400 block of W. Broad and the so-called Flower Building, all commercial, in the 800 block of W. Broad, himself has a major new project, a Hilton Garden Inn in the 600 block of W. Broad, pending.

“The deal for the Hilton Garden Inn was inked last August, and we still have not reached the point to begin construction,” he told the News-Press.

He complained, “There is no sense of urgency at City Hall. It’s the ‘same old, same old.'” He added, “It takes weeks to get meetings at City Hall on prospective projects, and there is no impetus to streamline the process. There are a bunch of flapping lips about the need for development, but what are they doing besides talking?”

Young noted that a former Falls Church Economic Development employee, Jim Gahres, is now working for Prince William County’s Economic Development Authority, and he’s been very pro-active there helping to find “real tenants” for a project that Young is involved with there. “Others are doing the necessary things,” he said.

There are also anecdotal reports being circulated through the Chamber of Commerce that the City’s new arborist has expressed a lack of concern for the impact of untrimmed trees along Broad Street on retailers there.

In addition to The Gateway and the Hilton Garden Inn, there are two other large-scale projects, the giant $314-million City Center project of Atlantic Realty and the Northgate project of the Hekemian company which are approved and ready for development.

Delays in those projects may have as much to do with the Great Recession still, but something more than a “business as usual” posture at City Hall will certainly be needed to help bring them along at this stage.