Blog posts are the personal views of Letty Hardi and not official statements or records on behalf of the Falls Church City Council

Dear Friends,

We are in the supposed “lull” before budget season, which begins in earnest on March 27 when the City Manager proposes his operating budget and the Capital Improvements Program (CIP). (ICYMI, 2023 property assessments did come out last week; property owners will receive their assessment letters by the end of March. City Council does not have a role in determining property values – by law, real estate assessments must reflect fair market value, which is usually done by comparing properties to sales of comparable properties.)

As we had a fairly tame agenda this week, I’m going to take the opportunity to share more insight into regional trends in retail, developer negotiations in the voluntary concession process, and do some myth busting re the city’s commercial vacancies – as all of this relates to an application (our second in 6 months) to amend the ground floor uses in a mixed use building. Land use/economic development has been one of the largest parts of the City Council dockets. In addition, I’ll briefly cover an informative annual report on transportation and a budget amendment funding many park projects.

March is Women’s History Month: with this early spring weather, check out this year’s history walk with “herstory” stations at local businesses and civic buildings all over Falls Church. As one of the nine elected women of Falls Church (52% of our local elected positions are held by women!), it’s a privilege to serve with a group of talented, dedicated women and honor the legacy of those strong women who came before us.

Best,
Letty

What Happened This Week:

(1) CACT Annual Report

If you care about pedestrian safety, bike infrastructure, traffic calming, or just interested in learning more – I highly recommend reading the annual report from the CACT (Citizens Advisory Committee on Transportation). The CACT is one of our most active boards, reflecting the community’s high desire to keep evolving our city from car dependency to more transit, pedestrian, and bike friendly infrastructure. As you read their accomplishments and priorities for the coming year, you will have a sense of the breadth of the CACT’s work and interests. And like all of our boards and commissions, their meetings are open to the public – so even if you aren’t a member, you’re welcome to attend their meetings, listen, and share your thoughts with the members.

(2) FY23 Budget Amendment

While we’re just a few weeks away from starting next year’s budget, long time readers/budget followers will know that we often will adopt several budget amendments over the course of the year. Usually it’s due to changes in appropriations or receipt of new revenues such as additional grant dollars. Of note from the current budget amendment:

• Use of bond interest income in lieu of issuing new debt for park projects, including light replacement at basketball and tennis courts at Cherry Hill and Cavalier Trail Parks and a new shade awning at Cherry Hill Park.
• The schools and general government are splitting the cost for new lights at the secondary campus’ tennis courts, truing back to the commitment that the new high school would be a true “community use” facility for the entire city.
• Of all the items in the amendment, the largest item is $1.1M in new school appropriations funded by surplus revenue, pandemic-related grants, and unused funds carried over from previous years. (Note that the School Board, by charter, is the elected body with authority to determine school-specific appropriations.)

(3) Pearson Square Amendment & Ground Floor Uses

As I previewed in one of my January posts, we received an application requesting more flexibility on uses allowed in the ground floor space at Pearson Square (current home of Pizzeria Orso, Creative Cauldron, Body Dynamics, Tax Analysts, and 230 apartments) due to the changing nature of commercial uses, which was already changing pre-Covid and certainly has been accelerated with post-Covid remote work patterns. The specific change is to allow ~1600 square feet of vacant space to be leased to a local architectural firm. Under the current restrictions, the allowable square footage for office uses has already been reached (11K out of total 19K square feet of commercial space) because the original desire was to have more retail uses. (It’s worth noting that this is the 6th requested amendment at Pearson Square – there have been 5 other amendments that previous City Councils approved from 2007-2012, so this is not a new thing.)

We voted 7-0 to refer to the Planning Commission for their recommendations and expect this back in front of us at the end of March for a final vote.

Letty’s Thoughts:

Anytime the city entertains requests from property owners to renegotiate original terms, there’s a perception that we’re giving away too much or making too many concessions.

What happens behind the scenes is more complex and nuanced. As background – when there is a rezoning or a request for a special exception for a new development, developers offer a list of “Voluntary Concessions” (VCs), ie, community benefits. Note that by law, the city can’t demand concessions – they are voluntary. But of course there is a negotiation – and over the past 20 years of mixed use development in Falls Church, developers have offered cash and in-kind contributions for parks, schools, library, utility undergrounding, environment benefits, streetscape improvements, affordable housing commitments, and more. Here is an example of Voluntary Concessions from the Whole Foods project underway and a good summary of the community benefits we’ve received over time (as of 2021). We do try to “raise the bar” with every project by negotiating for more or different VCs based on community needs that evolve over time – such as moving the affordable housing contribution from 6% of units to a high of 12% as permanently affordable at Founders Row 2. I have found that developers set aside a set amount for VCs that are based on the underlying economics of the real estate deal and they’re mostly agnostic how the concessions are divvied by a jurisdiction.

The original intent to have retail space at Pearson was laudable – retail use activity (ie, people buying goods) creates vibrant streets, generates sales tax, and spins off economic value. That said, reflect on your own shopping habits – outside of grocery and restaurants, which have mostly stayed resilient, shopping habits have been shifting online for years. Retail brokers also tell us we need more foot traffic to attract and sustain a larger retail environment than we currently have. So often, the choice is not negotiate harder but to decide if we’d rather keep a space empty vs allowing a more productive use, such as a local small business that brings jobs and daytime population to nearby businesses already here. Of course there are additional voluntary concessions that can be negotiated, but we should be anchored in market realities.

In the era of virtual/hybrid work, office space is abound in the region. As context, high office vacancy rates surround us and our neighbor jurisdictions are converting office to residential and adding flexibility in allowable uses. And you might be surprised that our office vacancy rate is only 7% when the regional rates are upwards of 15-20%+, partly because we don’t have a lot of Class A office supply. So I believe a professional office choosing to locate in Falls Church is a good thing. I’m supportive of welcoming more small businesses and adding foot traffic. Meanwhile, we need to have a broader reassessment of our retail strategy and commercial uses going forward – what are market trends, what are the community desires, what generates good fiscals for our overall tax base.

What’s Coming Up:

Monday, March 6 – City Council Work Session*

Monday, March 13 – City Council Meeting*

Monday, March 22 – City Council “Ask the Council” Office Hours (9 am, City Hall)

Monday, March 27 – City Council Meeting* (FY24 budget presentation)

*every Monday (except 5th Mondays and holidays) at 7:30 pm. You can access the agenda and livestream here, including recordings of past meetings