An explosive new report from the City of Falls Church Economic Development Office has found the City’s top eight mixed use projects constructed since 2001 have brought net tax revenues of $4,086,853 into the City’s coffers to relieve the burden on residential real estate taxpayers.
The number adds up to almost nine cents on the real estate tax rate.
The City’s Becky Witsman made the report to the monthly meeting of the City Council’s Economic Development Committee which met online March 25.
The net annual yields (after costs were excluded) are $1.190,000 for 301 West Broad, $1.150,000 for the Spectrum, $719,000 for the Byron, $684,000 for the Broadway, $457,000 for the 455 at Tinner Hill, $186,000 for the Read Building, $106,000 for Northgate and a net loss of $406,000 for Pearson Square.
All the projects have been approved and constructed since 2001, the final approval for the first one, The Broadway, coming in September 2001, the night before the 9/11 attacks.
The unique case of Pearson Square was explained as due to the large rental units there appealing to families with school aged children, with 70 percent of the units, originally built to be condos but converted to rentals at the developers’ request during the last Great Recession.
It was noted that 122 of the 229 pupils in the local schools who live in the eight projects come from Pearson Square.
F.C. Councilman Phil Duncan, the chair of the committee, noted that the contribution of the eight projects adds up to a savings of $600-$700 annually for the average City residential taxpayer.
The City Council is currently debating the tax rate for the coming fiscal year, having voted this Monday to set the advertised rate a penny-and-a-half lower than the current rate of $1.355.
Pending more details on the contribution the City will get from the federal $1.9 trillion American Rescue Plan, which may be as high as $13 million, the rate could go even lower by the time the City’s FY22 budget is adopted in late April.
Duncan noted, in a comment to the News-Press, that the total student count from all eight buildings is only 229 pupils in the City’s public schools. “That’s just nine percent of the school system’s total enrollment of some 2,500. It is a myth that new mixed-use development in Falls Church has flooded the schools with kids. It has not. The numbers prove that,” Duncan said.
He added, “In addition, the new mixed-use buildings are home to some of the City’s most popular retail businesses and restaurants, such as Harris-Teeter, Target, Penzey’s, Solace Outpost, Moby Dick’s, and Cafe Kindred, with more new choices coming soon, including Cuates Grill in the Broadway.”
Council member Letty Hardi added at last week’s meeting that the impact of new people in the City is vital for supporting local businesses.
As far as commercial development goes, which some critics have said is way too low a percentage of overall new developments in the City, Hardi’s comment reflects a new way of thinking about it. Namely, it is people, not bricks and mortar in themselves, that contribute to commercial development yields.
In other words, there can be lots of retail storefronts, but if they are not supported by a strong enough population base, they will struggle and may fail.
Therefore, the growth in the City’s population from about 9,500 30 years ago to an estimated 15,300 today is its best engine for economic and tax revenue yield growth. It is a trend that is not about to slow down, either, given the fact that in the development pipeline are new projects with large-scale residential components, including the Broad and Washington project and the revived Atlantic Realty project, catty-corner from each other right at the City’s central interaction of Broad (Rt. 7) and Washington (Rt. 29), the Founder’s Row 2 at the current site of the abandoned Rite Aid on West Broad, and the granddaddy of them all, the almost 10 acre Falls Church Gateway project at the City’s west end, set to go onto the location of the old George Mason High School, which with the completion of a new $120 million campus, is now slated for demolition in May.
All the new proposed projects plan for the vast majority of their residential units to be small, studio and one bedroom apartments, because that’s what the market will bear in this area. They will tend to become homes to relatively few children of school age. Duncan was careful to add the unit mixes have been determined by the developers, and not by the City.
Council member Ross Litkenhous commented that “unit mix and size make a big difference.”
Falls Church developer Bob Young added that he thinks other recently constructed new projects without residential components in the City’s commercial corridors, such as the all-commercial Flower Building at 800 W. Broad (where the U.S. Post Office is located), the Kensington Assisted Living site at 700 W. Broad and the Hilton Garden Inn at 706 W. Broad should be included in the data, as they, as well, have added significantly to the City’s tax base without offsetting costs to the City for services.
They also have all gone up since 2001. Moreover, in all, the new projects have replaced heavily underutilized and relatively low tax yield old uses, like abandoned art supply store, abandoned gas station, free standing fast food establishment (Burger King) and restaurant with a way too big parking lot (Red Lobster).
Moreover, the pandemic has not slowed the construction of the one project currently going up, the Founder’s Row at the corner of W. Broad and N. West St.
The good news on that front is that its Mill Creek developers are very near to scoring a replacement movie theater chain to go onto the site following the bankruptcy of an earlier chain that had inked a contract to go there.
Jim Snyder, the City’s chief planning officer, said the City is in relatively very good shape with a low commercial space vacancy rate of 6 percent in the mixed use buildings.
New retailers such as Tropical Smoothie, Pho Vietnamese, Cuates Grill (at the former Locker Room site in The Broadway) and Five Guys (at the former Einstein’s Bagel site) are set to open in the near future.