Last Tuesday’s Board meeting was an extremely frustrating one. By the end of the day, it was sometimes hard to believe I was sitting on the dais with seven Supervisors who, in their campaigns, had promised to support the sentiments expressed by the citizen anthem, “Stand By Your Plan.”
While I do not remember the exact words, I do remember the song’s insistence that the General Plan should serve the County’s residents, not external special interests. I also remember its emphasis that the County’s Plan – developed during two years of research, analysis, and often heated public debate – should not be amended or replaced without undertaking a similar level of comprehensive research, analysis, and debate. Unfortunately, this Board is taking a number of actions which essentially amend the Plan. And, while research, analysis, and public debate has occurred prior to each of these decisions separately, I do not believe this is occurring in the comprehensive and thorough manner that our Plan and our residents deserve. Were that to occur, I believe my colleagues would consider many of their votes in a brand new light. I would like to highlight two votes in particular: the Open Space Tax Deferral Program and the Kincora Rezoning.
Open Space Tax Deferral Program
As I noted in my alert last week, the Finance Committee voted 3-1 to forward to the June 15 Board meeting without recommendation a proposal to increase the minimum acreage requirement for the open space category from five acres to 20 acres. (This proposal will, in effect, increase the property tax paid on 352 parcels in Western Loudoun by an average of 25 percent.) An earlier vote to forward it with a recommendation for approval failed 2-2. Chairman York and I both opposed the first motion. I supported the second motion in order to move the discussion to the full Board. Several residents responded to my alert asking why I did not kill the motion in Committee.
Unfortunately, the Board’s Rules of Order do not allow such an outcome. First, items sent by the Board to a Committee (as occurred here) with a request for review and recommendation must ultimately be returned to the Board. Unlike in the General Assembly, they cannot simply die in Committee. As the Committee Chair, I was able to keep the discussion in the Committee for several months, but my suburban colleagues were getting increasingly testy about moving the item back to the full Board.
At Tuesday’s Board meeting the Board supported, 5-4, a motion by Supervisor Delgaudio that the minimum qualifying acreage for the Open Space category of the Land Use Program for properties qualifying for a deferral based on their inclusion in an Agricultural and Forestal District be increased from five to 20 acres. Supervisors Delgaudio, Waters, Burk, Buckley, and McGimsey voted yes; Chairman York, Supervisors Kurtz and Miller, and I voted no.
Those who voted Yes cited several reasons – none of which I consider particularly valid.
1) The primary reason for the deferral is to discourage landowners from subdividing their properties. With the zoning changes to the Rural Policy Area in 2006, those with less than 20 acres can no longer subdivide their property. Thus, there is no longer any reason to offer them such an incentive.
Unfortunately, as I pointed out to my colleagues on Tuesday, the underlying facts do not support that logic. Landowners whose parcels are less than 20 acres can subdivide their property by aggregating several smaller parcels in a single subdivision application to meet the 20-acre threshold. A boundary line adjustment is unnecessary. Ownership is irrelevant. Separate landowners can cluster their properties as a single subdivision application. The Board’s action would, in effect, create a significant incentive for a new Western “land rush.” Certainly, this is not the outcome that Loudoun citizens had in mind during the Western zoning debate in 2005 and 2006. Their goal, as I understood it, was to protect low-density zoning in Western Loudoun, recognizing the myriad fiscal consequences of higher density development without appropriate infrastructure.
2) Western landowners who receive tax deferrals are not paying their “full freight” as taxpayers. The deferral is therefore unfair to suburban landowners who do not get a similar deferral.
This argument would be laughable if it did not seem to carry such weight with the Suburban Supervisors. First, it demonstrates no understanding that this is a tax deferral, not a tax exemption. A landowner who subdivides the property must pay roll-back taxes. Second, it does not recognize that the landowner pays the full tax rate on the house and one-acre of land around the house; the deferral is only on property in excess of that amount. Third, it ignores research that agricultural land, even land in land use tax deferral programs, generates a substantial subsidy, when revenue received is compared to service demands. Research undertaken or collected by the American Farmland Trustfrom across the country demonstrates that the median cost to provide services per dollar of tax revenue raised is $0.37 for Agricultural uses (both working and open land) and $1.19 for Residential uses. (New data from Frederick County (VA) puts the cost of each new residence at $2 – a $0.75 increase over earlier studies.) To put it another way, agricultural and open space uses produce a tax surplus of $0.63 for every dollar raised, while residential uses produce a $0.19 deficit. It is that subsidy, which helps to keep suburban landowners taxes from skyrocketing even higher.
Far from not paying our “full freight,” Western landowners are carrying an additional tax burden for the higher service demands and new infrastructure requirements of suburban residents. One need only look at the difference in budgets and tax liabilities between rural and urban/suburban counties. The issue is not land use tax deferrals, but service demands. If we really wanted to ensure that everyone paid “full freight” (assuming that the General Assembly miraculously provided appropriate enabling legislation), taxes would be a function of service usage rather than property values. Such an approach would place a greater burden on those with large numbers of children, on the poor, on the unlucky. It might not always be reasonable, but it would certainly ensure tax “equitability” and “fairness.”
3) The County, particularly, Eastern Loudoun residents, receives no tax benefits from the vacant land and open space.
This argument is even more ludicrous and even less founded in fact than the prior argument.
· It completely ignores the fact that the County receives real property tax revenue from all landowners in land use.
· It ignores the point, previously raised, that working farms and open land typically produce a surplus of tax revenue versus service costs.
· It ignores the tourism value of rolling fields and forested groves along scenic by-ways for B&B’s, wineries, and other rural businesses.
· It ignores the County’s own survey data that places the rural landscape of Western Loudoun as one of the things Loudoun residents (both East and West) and Loudoun businesses (again, both East and West) value about the County.
4) Too many landowners are abusing the system, receiving tax deferrals for what are essentially large suburban lawns.
There have been, and continue to be, abuses. However, the Agricultural District Advisory Committee has worked very hard during the last three months to develop a process to prevent future abuses. I believe the Board should allow the Committee to demonstrate whether their new process will succeed at weeding out system abusers before refusing entry to landowners simply on the basis of acreage.
As the change requires amendments to the County’s ordinances, the Board must hold a Public Hearing on the measure before any final action is taken. This will occur on September 13, 2010. I would certainly urge everyone in Western Loudoun, both those directly impacted by the potential loss of the deferral and those indirectly impacted by subdivision pressure, to contact my colleagues on the Board.
Come the final debate, I intend to make the following three points:
1. A majority of this Board’s members pledged to restrain residential growth and to “Stand by Our Plan.” This action is incompatible with that pledge.
2. Small landowners do have a means to subdivide their land despite minimum acreage requirements. Barring them from the tax deferral program sends a message that the Board prefers the red-ink of development to the black ink of open space.
3. There are significant infrastructure and operating costs associated with such development, which will increase the upwards pressure on all residents’ tax bills. As a result, this will have the opposite effect from that intended by its supporters: it will not lower the tax bills of suburban residents. It will, however, help to eliminate one of the quality of life assets most valued by those residents.
As many of you are aware, this is a rezoning application to build a mixed-use project consisting of 1,400 residential units, stores, and offices on land zoned for keynote employment / premier office, in short the land area that the County has reserved for the next Raytheon or AOL. At last Tuesday’s Board meeting we agreed (for wildly varying reasons) to schedule a Special Meeting on July 12, 2010 (prior to the regularly scheduled Public Hearing) for a final vote on the application.
There are so many things wrong with this application it is hard to know where to begin. Yet, it seems increasingly likely that a majority of my colleagues on the Board will vote to approve this significant change in land use for reasons even less valid than those offered by the last Board. As Steve Snow reminded the public again and again, the last Board, at least, negotiated (often successfully) to ensure that road improvements occurred “up front.”
Almost every single member of this Board, either as elected officials or citizen activists, responded to Mr. Snow and those of like mind by noting that you cannot grow your way out of growth – i.e., you cannot solve current traffic congestion created by past growth by trading increased residential density for road construction. This was the argument citizen after citizen made to the Board in defense of the lower densities called for by the County’s Comprehensive Plan. I find it mind-boggling, therefore, that a majority of this Board seems prepared to follow the failed strategy against which they once vehemently argued.
Proponents of this project provide three rationales to justify their support:
1. There is no market for traditional office settings; businesses now demand mixed-use, Reston Town Center-style situations. This is what the County’s Consultants told us; they are the “experts” and we should listen to them.
In June 2009, the County hired Fulton Research, Inc. to provide “limited assistance…to assess the economic development potential under current zoning and planned land use” for the Route 28 corridor. The County’s Request for Quotation described the assistance as “a six-week market analysis that focuses on the portion of the Route 28 corridor where Class A office is planned.” After significant revisions by County Staff, Fulton Research submitted its final report, titled Route 28 Corridor Analysis of Development Potential for Class A Office Space, on August 27, 2009. As defined by the Consultant in their response to the RFQ, “The essence of the study is to identify the market potential (i.e. demand) for Class A office space in the Route 28 North corridor study area. This will be done in the context of the region and the County through an examination of employment forecasts and the existing and planned land uses.” All of these documents are posted on-line.
The report did indeed recommend that the County permit high-density residential in mixed-use developments within the Route 28 Tax District and other areas zoned for Keynote Employment. I would argue that the facts do not support this premise and that the research performed by Fulton failed to take significant and pertinent information into consideration while developing their report.
First, the 2005 decision by the Department of Defense to shift thousands of workers out of mixed-use settings in Arlington to more secure settings indicates that one of the region’s largest employers has no interest in town centers. In my experience at the Pentagon, where DOD goes, the contractors follow regardless of what the office situation in the new location may be. When I asked the consultants whether their study incorporated the BRAC force protection standards that resulted in the loss of up to 40,000 DOD and associated jobs from the mixed-use, transit-oriented developments of Rosslyn and Crystal City, the consultants responded that they had not. I cannot take seriously a study that purports to “identify the market potential (i.e. demand) for Class A office space… done in the context of the region and the County” and which does not evaluate the office space requirements of one of the region’s largest employers.
Similar gaps between conclusions drawn and research undertaken are found throughout the report. For example, the report states, “Today’s Class A office tenant requires a high quality building in a high quality setting. The preferred office settings are generally pedestrian-oriented, mixed use environments.” Yet the only data the consultants offer to support that premise is the differential in vacancy and rental rates between Reston Town Center and all of Reston. The consultants’ list of factors considered by companies when selecting an office location includes factors found in mixed-use developments (access to and quality of amenities, good mobility in and around the office neighborhood, proximity to employee and corporate housing), but not necessarily exclusive to such developments. The list also includes such factors as proximity to client(s), accessibility from a variety of locations by a variety of transportation modes, parking, building characteristics, prestige of location, and employee recruitment and retention. Again, this hardly supports the consultants’ broad premise.
When explaining the greater success of office development in the southern part of the Route 28 corridor, the consultants points to the presence of the National Reconnaissance Organization, “which serves as an employment anchor attracting government contractors.” The consultants then note, “The absence of such an anchor in Loudoun County to outsource work to contractors is limiting the development potential of the Study Area.” Given the new DOD regulations, unstudied by the Consultants, I do not believe that mixed-use development will attract such an anchor.
Arguing against the consultants’ own conclusion is the following statement they make in their report: “One major advantage Loudoun County has over its competitors is large tracts of land set aside for custom campus development. These set-asides have attracted users such as Orbital Sciences and most recently Raytheon….The Raytheon consolidation at the former AOL campus underscores that there is demand for second-generation campus space, and that this space remains viable even after the original tenant has vacated.” It is precisely this advantage that the consultants’ report – and those who point to it as justification for approving the Kincora application – would urge us to relinquish.
The consultant themselves point to the decision by Raytheon last year to consolidate its operations in a traditional office park setting as evidence that the market for such facilities continues. Conversely, I see no indication that the County’s already approved mixed use centers are particularly successful. With the exception of Wegman’s, the Village at Leesburg remains a ghost town. Work at One Loudoun seems to have stalled as the developer seeks to refinance the project. Arcola Center has submitted a Zoning Concept Plan Amendment to change the phasing of the project and its proffers. As of last September, only five percent of the planned office space at the Dulles Town Center was sold or leased. Fairfax County approved two large mixed-use developments in the southern end of the Route 28 corridor: one project is in the site plan process; the other is idle because the developer has filed for bankruptcy. Elsewhere in Virginia, mixed-use developments have a mixed history of success. For every success, such as Bell Creek in Hanover County or Heritage Hunt in Prince William County, there are several failing to live up to their promises, such as the Celebrate Virginia developments in Fredericksburg and Stafford County, Watkins Centre in Chesterfield County, and the Lewistown Commerce Center in Hanover County. To my mind, trusting that mixed-used development will maximize the County and the corridor’s economic development potential is nothing more than an act of faith.
2. Allowing residential units is the only way to incentivize developers to build Class A office space rather than by-right data or distribution centers.
The State legislation authorizing the creation of the Route 28 Tax District includes a measure that prevents the County from ever changing the underlying zoning without the landowners’ permission. Thus, while the County’s Comprehensive Plan designates this area for keynote employment and Class A office space, the by-right zoning is Industrial Park (IP). Yet, this argument ignores the substantial number of requests from district landowners to voluntarily opt-out of the by-right 1972 zoning to the zoning called for in the 1993 Revised Comprehensive Plan. Since 2004, the Board has received and approved 18 such requests, almost one-third of which were received during the past two years. None of these landowners requested residential density as an incentive.
3. Approving this application – no matter how flawed – is the only way to get the missing sections of Gloucester Parkway and Pacific Boulevard built and to relieve traffic congestion at Waxpool Road.
Last week, the County Administrator presented the Board with nine options for funding the Gloucester Parkway segment, which everyone seems to agree is the first priority of the two roads. The County can undertake five of the options independent of this application. I have posted these options on my County webpage.
Of the four options which require the Board to approve Kincora’s application, one requires significant financial investment by the County and none of them guarantee that the road will be built within the next few years (if ever). This last statement also holds true for the off-site improvement to Pacific Boulevard. All of them require that the Board apply the Kincora capital facility proffers to the road improvements rather than to the construction of schools, parks, public safety centers, and other necessary infrastructure.
Roads are a State responsibility. When the General Assembly refuses to adopt a meaningful and legal means of funding the roads made necessary by its refusal to provide localities with meaningful growth controls, the County is left with three untenable options:
· Sit in traffic;
· Build the roads by raising local taxes, or forgoing the construction of County commitments (such as schools, parks and public safety centers), or both;
· Approve any development application – no matter how flawed, no matter how many new road trips it will generate, no matter how many new students it will add to already strained school buildings – so long as it promises to build roads.
Based on comments made by State Secretary of Transportation Sean Connaughton at a recent gathering in Northern Virginia, this is exactly the strategy of the current Administration in Richmond. For the reasons outline in the above bullet points, I have a problem with that. And you should too.
Those are the rationales for approval and my concerns regarding the logic. However, I have three further concerns about this project.
1. The Proposed Method of Financing. Over the last year, I have expressed grave concerns in my newsletters about the applicant’s proposal to finance the proposed road construction with Community Development Authority (CDA) bonds. Unfortunately, proponents of this project have managed the process in such a way as to separate the two discussions. Yet the proffers associated with the rezoning on which the Board will vote in three weeks contain language inclusive of a CDA. Proffers are a legal document, comparable to a binding contract. I have a problem including language that the Board has not fully discussed. The proffers do contain alternative approaches to road construction. However, contrary to long-standing Board practice, the alternative proffers delay the road construction until the end of the project. Should the Board approve the rezoning as currently proffered in July, it will face strong pressures to accelerate the road construction by approving the CDA. This is the wrong way to go about making such an important decision.
2. Impact on the Financial Health of the Route 28 Tax District. The Route 28 Tax District was established as a joint effort of VDOT and landowners to finance the widening of Route 28 and its transformation into a limited access highway through the construction of interchanges. Landowners pay an additional ad valorem tax on top of their local real property tax to pay off a portion of the bonds issued to finance the improvements. Under the legislation which established the district, residential units are removed from the district through a buy-out equation established in the legislation. The revenue generated by this equation is laughably small. It also leaves remaining landowners in the district carrying an ever-larger burden of the debt load. The health of this tax district is extremely important to the County as it committed its moral obligation to the bonds’ repayment. This means that the County has guaranteed bond holders that should the District fail to raise enough revenue to meet its debt service, the County will step in and use local tax revenues to cover any shortfalls. I voted against making such a commitment.
Currently, there is a glut of office space throughout the DC-Metro area and some 4.75 million square feet of new space under construction. Rents are falling and vacancy rates increasing. During the first quarter of 2010, Loudoun County had an office vacancy rate of 18.5 percent. This has resulted in lower assessments and lower revenue collections from the district. Coupled with a decision last year to lower the tax district’s ad valorem rate and higher than expected right-of-way costs (due primarily to a $15 million condemnation settlement with the Kincora landowners, by far the highest demanded and the highest received by any single landowner), the district was forced to tap into its Reserve Fund to make its last debt payment. To my mind, this is not the time to remove property from the district, especially as there are several residential rezoning applications waiting in the wings and watching the Board’s decision.
3. Precedents. The Board’s decision will set two important precedents neither of which I can support. First, an approval of the application will signal other landowners that the Board is prepared to support their applications and continue to add residential density to the Route 28 corridor. This is density that the Comprehensive Plan removed and for which new schools, new parks, new safety centers, new teachers, new deputies, new fire and rescue workers must be funded. The result: continued upwards pressure on our taxes.
More importantly, the Board’s decision to add these residential units to an area planned and zoned for commercial development only, without first requiring a Comprehensive Plan Amendment (CPAM), has far-reaching ramifications. Many of you will remember the battle over the Dulles South CPAMs which proposed to add 35,000 new residential units to the Route 50 corridor. It was, after all, only three years ago. What if the landowners had believed they could accomplish their goals without a CPAM by carving them up into smaller rezoning applications? The end result would have still been 35,000 new units – but with less study, less analysis, a State-mandated 12-month timetable, less opportunity for public input. The Board’s decision regarding Kincora sends a clear signal to other developers with landholdings in the County that the Board does not stand by its plan. It also eliminates our strongest legal defense against lawsuits by disappointed developers. Are two road segments really worth such a loss?
As I noted above, the Board has scheduled a Special Meeting on July 12, 2010 (prior to the regularly scheduled Public Hearing) for a final vote. There will be no public comment at that meeting. Thus, the last opportunity for citizens to comment to the Board in person will be at our Public Input meeting on Tuesday, July 6th.