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F.C. Council Urged to Adopt Robust New Commercial Incentives Policy

Coming on the heels of some harsh criticism by developers reported in last week’s News-Press, the Economic Development office of the City of Falls Church unveiled a comprehensive new set of financial incentives for commercial development at the F.C. City Council meeting Monday night.

Coming on the heels of some harsh criticism by developers reported in last week’s News-Press, the Economic Development office of the City of Falls Church unveiled a comprehensive new set of financial incentives for commercial development at the F.C. City Council meeting Monday night.

The draft new city policy, hammered out by the Council’s three-person Economic Development Committee over recent months, will come up for review at a work session of the City Council this Monday night. No vote was taken on the matter at last Monday’s meeting because only four Council members were present and, lacking a quorum the previous week, the Council had not had a chance to consider the matter openly.

But the bold new set of proposed incentives answers the call echoed by so many on the Council during the recent, extra-difficult budget deliberations that aggressive new measures to bring added commercial tax revenues to the City’s coffers be a top priority.

The new incentives policy would, if adopted, provide “powerful tools to help turn the market,” the City’s Economic Development office chief Rick Goff told the board of the Falls Church Chamber of Commerce Tuesday morning.

The Chamber will be one of an array of City boards and commissions that will be asked by the City Council to review the policy after it gets its first scrubbing at Monday’s work session.

Among other things, Goff said, the policy will take advantage of a new state law passed in Richmond this spring that allows local jurisdictions to offer new businesses a gross receipts tax (also known as the BPOL tax) abatement for up to two years.

He said the City may adopt some variant of that, such as permitting the abatement for only a single year, but he suggested that other Northern Virginia jurisdictions might not be interested in the policy – since as larger jurisdictions they’re already enjoying more development than Falls Church right now – but that it could make a big difference in Falls Church.

The law permitting local jurisdictions to utilize the policy will go into effect throughout Virginia on July 1.

Another major element of the proposed new Falls Church policy involves “tax increment financing (TIF),” that could help incentivize new, higher density development in targeted areas of the City. While locking in the existing tax base in an area, new development taxes could be diverted for public improvements in that area for a limited period.

Goff noted that a “virtual TIF” approach was used to lure the new BJ’s Wholesale Warehouse, which opened last year, to locate in the City. To close that deal, the City offered that a portion of sales taxes collected by BJ’s will, beginning this July 1, be diverted for up to 12 years to help compensate BJ’s for the considerable cost it incurred bulldozing, infilling and preparing the deeply-gullied site for the warehouse.

“We have to use the TIF carefully, however,” Goff said. “We don’t want it to diminish the City’s bond rating.”

In addition to BPOL abatement, TIF and “virtual TIF” options, the new City policy would also involve industrial revenue bonds, a commercial property rehabilitation tax abatement program (owners of buildings at least 20 years old may qualify for up to three years abatement of property taxes on the value of improvements that increase a building’s assessed property value by at least 50 percent) and the expansion of its existing “technology zone” program to allow up to three years BPOL tax abatement for qualified technology companies.

F.C. City Manager Wyatt Shields told the Council Monday that “the proposed policy contains threshold requirements for City participation in selected projects. There must be demonstrated consistency with official City land use visioning and zoning. Projects must demonstrate exceptionally strong and sustainable net new positive commercial revenue potential for the City. Projects will be measured by their return on City investment compared to the best performing projects of a similar nature and land use in the City.”

In addition, according to a staff report prepared at City Hall, “The City will consider projects that result in comprehensive redevelopment through land assembly and that have the potential for spinoff investment. Developers seeking assistance from the City are expected to make and validate the business case for City investment, which will generally take the form of public improvements in support of private investment.”

The proposed policy stipulates that developer interests must be willing to “open their books, including proformas, for City review, and that the City’s risk shall be minimized and its liability non-existent for any deals that are memorialized.

Meanwhile, the News-Press has learned that City Hall is actively pursuing potential redevelopment opportunities in some sectors of the City’s 2.2 square miles, in particular areas closest to the East Falls Church Metro station, which will undergo its own major growth once it becomes a “hub” for the Metro Orange Line’s connection to the new Silver Line under construction to carry passengers through Tysons Corner and eventually to Dulles Airport and beyond.

Arlington County’s Board recently OK’d a conceptual plan for dense commercial and residential development around the East Falls Church Metro site.

On Falls Church’s side of the border, F.C. officials have been in active discussions with the local owner of a number of commercially-zoned parcels along W. Jefferson Street with visions of the recent Virginia Tech recommendations for the redevelopment of that entire area, utilizing a “sunlighting” of the stream there for mixed parkland, residential and commercial development.

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