The Falls Church City Council voted unanimously Tuesday night to make a major revision to its tax abatement policy for development or renovation of office spaces in the City.
In a regional market that is currently heavily overbuilt, there is still a place for office spaces in the City of Falls Church that are right-sized, and not too big. That is the view of one of the City’s most active developers, Robert Young of the Young Group, who has two all-office buildings in the City now that are fully occupied.
Young is best known for his famous “Flower Building” at 800 W. Broad that is home to the U.S. Post Office, the Falls Church School Board and his own operation, among other things. He also did a combined renovation and add-on construction of the 444 W. Broad building that has Panera Bread on its ground floor.
He has also built his own home on Poplar Drive, built the Read Building at 410 W. Broad, built out the “Tulip Building” at W. Annandale and S. Washington (the Smash Burger strip) and is completing another Art Nouveau-styled facade on the Southgate Shopping Center on E. Fairfax that he leased from the next-door historic Falls Church Episcopal Church. Now he is a vocal member of the City’s Economic Development Authority, and was at the City Council meeting Tuesday night to speak out in favor of the revision to tax abatement components of the City code.
“We have no guarantees that in this regional market, changes in the City’s tax abatement policy will attract the kind of new development we want, but it could,” Young told the Council Tuesday. “The key will be the ability of the City’s Economic Development Office to get the word out to the development world.”
With the unanimous vote Tuesday, it is unlikely the Council will change its mind to any significant degree when the ordinance comes up for a second and final approval at the October 24 meeting. So inquiries would be timely even now.
Essentially, the change, the first related to this matter since 1996, would increase the minimum square footage of eligible projects from 5,000 to 10,000 square feet of improved, expanded or new space for projects to make them eligible under the program. A qualified project would also be required to increase a building’s assessed value by at least 100 percent (compared to 50 percent now).
Also, the qualified tax abatements will be 100 percent on assessed values attributable to improvements for the first five years and 50 percent during the next five years (compared to the current cap at five years).
In the last 20 years, there have been six projects that qualified for abatements under the current code, mostly building rehabs, and none that have added significant new commercial space to the City’s inventory.
There are currently 75 commercial buildings in the City that are at least 20 years old and at least 10,000 square feet (an average of 28,085 square feet). The new ordinance could also apply to buildings over 20 years old that are currently less than 10,000 square feet, but could be expanded by new work to over 10,000 square feet.
Some on the Council expressed the concern that a tax abatement amounts to giving away money to developers. Council member David Snyder asked, “How do we know if significantly more tax revenues will come from this?”
Mayor David Tarter challenged, this notion, saying the “give away” would apply to real estate that is currently generating almost no net taxes to the City, anyway. “We need this to incentivize a more balanced tax base,” he said. “We need more Class A office spaces in the City.”
Council member Dan Sze said the new terms “should be in our quiver of what the City has to offer.”
Young, speaking on behalf of both himself as a developer and as a member of the EDA, which originated the idea, said it is important to view the results from the standpoint of a 50 or 100 year horizon, not five or ten. “This covers properties where you are not getting anything now, and it requires a delayed gratification.”
He reiterated there are no sure things, but this provides a chance. “It is the market that will dictate and control this,” he said.
To be successful in filling office spaces like he has, Young told the News-Press yesterday, “You have to be flexible with prospective and existing tenants, and attentive to their needs.” He is currently working on filling the retail spaces at the Southgate Center, where work on its “Art Nouveau” facade and the parking lot are nearly completed.