The City of Falls Church announced this afternoon that a special court appointed by the Virginia Supreme Court approved the voluntary boundary adjustment agreement between the City of Falls Church and Fairfax County. The boundary adjustment is contingent upon the sale of the Falls Church Water Utility to Fairfax Water, which is planned for closing on Jan. 3, 2014.

“The City Council is pleased that the three-judge state panel found the boundary adjustment to be in the best interests of the Commonwealth, City, and County,” F.C. Mayor Nader Baroukh was quoted saying in the City’s press release. “The sale of the water utility system is a win-win situation for the City, the County, water customers, and water employees. The new year brings many positive changes for the City.”

The boundary adjustment will bring an additional 38.4 acres into the City limits, although the majority of that land is already primarily owned by the City. The largest parcel includes the 36 acres on which City’s George Mason High School and Mary Ellen Henderson Middle School sit. Additional parcels totaling 2.4 acres near Gordon and Shreve Rds. are also included.

This is one of the last steps in finalizing the sale of the Falls Church Water Utility to Fairfax Water. In November 2012, the City, Fairfax Water, and the County agreed to terms of settlement with the assistance of a federal mediator. In November 2013, City voters approved the referendum to sell the water system to Fairfax Water.

The settlement calls for a number of terms, including Fairfax Water’s purchase of the Falls Church water system for $40 million; a reduction in water rates to customers in the Falls Church system’s service area within two years; certain adjustments of the City’s boundary line with Fairfax County; the settlement of all litigation between the City, the County, and Fairfax Water; and employment for Falls Church Water Utility employees with Fairfax Water.

“The sale will create a robust water system that combines the benefits of three independent water treatment plants that now serve the area,” the City’s statement concluded.

The $40 million sale price includes a commitment by Falls Church to settle an array of debts and expenses that will leave about $14 million coming to the City in net cash. The F.C. City Council has already begun to mull how to utilize those funds.

Also, a condition of the boundary adjustment component requires that 75 percent of the land on which the high school and middle school sit must remain dedicated to educational use for 50 years. That leaves about nine acres, presumably those directly adjacent to the West Falls Church Metro station that will be available for dense new development.

No formal discussions of prospective uses for that land have yet begun, but its proximity to the Metro station and relative distance from existing residential neighborhoods mean that it could be put to a use that will bring a whopping new revenue stream into the City coffers. Informal discussions have included the idea of construction of a high-rise combination hotel and luxury condominium complex with retail and office on lower levels.

Earlier in the year, the Virginia Commission on Local Government recommended approval of the boundary adjustment by the Special Court.