Local Commentary

Guest Commentary: Many Reasons to Support & Appreciate City Businesses

When it comes to decisions involving our personal hard earned dollars, we all try to get as much bang for our buck as possible. We are constantly evaluating our purchases, large and small. Is this expenditure necessary now? Can I afford it? Can I afford not to? Can I pay less? Pay later?

Because individuals and businesses alike must make financial decisions all the time, it is important that we, as a community, continue to pay attention to the value proposition we offer to City businesses. We need to ensure our tax base remains healthy so we can continue to pay our City bills, both in the short term and the long term. It’s a partnership in which all of us have a stake and a role.

We all know that businesses generally exist to make a profit. And we, as individuals and families, can help businesses be successful. We can regularly patronize the local businesses that we like best and try out new businesses. We can also understand and appreciate how City businesses and landlords are a critical part of the City revenue picture, supporting important public services to City residents, including our excellent schools. In addition to real estate taxes paid by our commercial owners/landlords, local businesses pay other local taxes – business license fees based on gross revenues, business personal property taxes (vehicles, computers, etc.), meals taxes, hotel taxes and sales taxes (1% of state sales taxes come back to the City).

Consider also that for every household in the City with just one student in the City Schools, the “cost” for that one student is approximately $17,000 per year. Two students = $34,000. With a median home value in the City of $637,000 (according to a Washington Post article on July 10, 2013), the annual real estate tax bill for that median home is $8,313 per year. That means each median household valued at $637,000 with one student in the City schools creates a hypothetical deficit of -$8,687 for school services alone. A median household with two children in the schools creates a hypothetical deficit of -$25,687. But, the revenues/taxes paid collectively by our commercial sector far exceed the cost of the municipal services they receive. It is this favorable revenues/expenses imbalance that is critical to the overall balance needed for the City to succeed as a whole.

So how does the City (developed at over 70% residential) balance its budget and how are those hypothetical deficits made up? The answer is primarily that households without pupils and commercially-derived revenues absorb that difference. For every dollar a City business pays in City taxes, they receive less than $1’s worth of City services. Therefore, that surplus paid by businesses and households without pupils offsets any deficits created when City households receive more City services than their real estate tax dollars cover. Fortunately, businesses and commercial property owners are willing to absorb those excess costs if the cost/benefit of their tax investment enables their profit objectives.

The very good news is that relatively few businesses in the City fail or leave the City and new businesses locate in the City all the time. Developers continue to want to build new projects in the City and those projects include new commercial space for new businesses. The City government provides police, fire, snow plowing, road maintenance and many other services and assists businesses with regulatory and other hurdles they may face. We help new and existing businesses find commercial space in the City (http://bit.ly/FallsChurchCommercialDatabase) and we work closely with the owners and real estate brokers of our commercial spaces to attract and retain tenants in order to keep our buildings full. We also work closely with the Falls Church Chamber of Commerce on policy and many other issues that are important to businesses. And, when we do have vacant commercial space that lingers on the market, it generally means it does not compare as favorably as occupied space – variables like visibility, signage, ingress/egress, parking, lease rate, tenant improvement allowance, lack of reinvestment in an older building, lease term, etc. Some of these issues are not so easily solved by more customers, the Chamber or the City government.

It takes all of us to keep our business climate healthy and to help to make our businesses successful. So, thank you to City residents and customers from outside the City, for supporting existing City businesses and for welcoming and patronizing new ones. Please keep it up! And, a big thank you to all of our businesses and our landlords for your decision to locate here, invest here, and stay here and for your generosity in supporting, even above and beyond your tax dollars, many community needs and wants over the years!

 


Becky Witsman is the Business Development Manager of the City of Falls Church’s Economic Development Office.

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