Tuesday, February 16, 2010

One Yard Down?

It's budget time for the City of Alexandria, and anyone who hasn't been living under a rock (or a mountain of snow) knows that with residential property values still in the tank it's going to be another year of tough decisions for the politicos.

But is the City tripping itself up when it comes to raising revenue?

Next month the City Council will consider approving a revised development plan for North Potomac Yard, and there is a possibility that elected officials will once again waste a golden opportunity, just as they did nearly 11 years ago. That's when they drastically scaled back the original landowner's visionary plans for the former railroad property, which would have created a major transit hub with 18 million s.f. of development and two developer-funded Metro stations.

At the center of the 2010 plan revision is Landbay F, where the big box stores and theaters are currently located. (New residents may not know it, but the popular mall as it is presently configured was always meant to be a temporary use.)

Readers may remember that politicians proclaimed from the rooftops during the 2009 election campaign that they were committed to reversing the City's over-reliance on residential property tax collections, which now account for nearly 60% of revenue. Conversely, commercial property tax receipts have shrunk from more than half in years past to only 40% today.

Landbay F could, with redevelopment, become an even more massive commercial tax revenue juggernaut than it is today, with a 900,000 square foot mall surrounded by 1 million square feet of big box discount retail, 250,000 square feet of theaters and restaurants, another quarter million square feet of new hotels and 4 million square feet of office space. A Metro station within walking distance (judged to be a ¼ mile) would help fuel this mighty engine.

To this 6.5 million square feet the City could throw in an additional 1 million square feet in multi-family housing, but the parcel would still generate for City coffers an admirable 87% commercial/13% residential revenue split which would do much to restore the City’s goal of tax-base parity.

However, the draft plan the Council will be reviewing in March is designed to achieve just the opposite effect. It envisions the same 7.5 million square of development in Landbay F, but with just 1.5 million square feet of office space, only 1 million square feet of discount retail … and a whopping 5 million square feet of residential.

In other words, the proposal for Landbay F locks Alexandria into a 70:30 ratio of residential to commercial development.

Has Planning & Zoning been cruising down the wrong track while the politicians raced each other to pontificate about income diversification?

It gets worse. The Potomac Yard Plan Advisory Group (PYPAG) concluded that the Metro station should be optimally located adjacent to the mall and its construction largely financed by the mall owner and big box retail, based on factual evidence that retailers like Nordstrom at Pentagon City derive more than 40% of their customers from the subway. Retailers and the mall owner stand to benefit from a Metro station, and should share the cost.

The advisory group, however, was designed from the get-go to be toothless. Behind-the-scenes pressure from Landbay F’s current owner resulted in City staff (with former Planning Commission chairman Eric Wagner cynically red penciling what was supposed to be the group’s consensus report) now touting a location further from the mall – and in fact, a location that will require more money to build because it will be more disruptive to build than an elevated station near the mall.

Dumbing down the commercial potential of Landbay F will force the City to bear most of the cost of the future Metro station while letting the landowner off the hook. And paradoxically City staff are now proposing a Metro site that not only requires the City to obligate $240 million in municipal bonds but in a location closer to the Potomac Greens townhomes that ensures low ridership because it lacks significant density and commercial activity.

In essence, Alexandria would be repeating the same mistakes it made 30 or 40 years ago when Metro was first laid out by siting Metro stops at locations like Van Dorn or Eisenhower Avenue (some of the lowest utilized stations in the system). Compare and contrast this with Arlington County’s long-term planning for its Orange Line stops, which was an integral factor in the carefully orchestrated economic revival of the Clarendon-Ballston corridor.

In the scenario now proposed for the Yard, the cost of a new station would be a crushing debt burden that would be shared by Alexandria taxpayers and purchasers of properties within the Yard. Off-line objections by the current owner of Landbay F forced staff to settle on a marginal location, whose predictable poor-performance means that no sensible developer is willing to fund it.

So what should the Council do?

Simple: drop the plan for now. The current owner of Landbay F has an acknowledged interest in selling the property. Why give them a City-funded Metro stop that will help them flip their property at an enormous profit while escaping any major financial obligation to help pay for the station?

Council would be smart to table the draft plan, allow a sale of Landbay F to proceed, and then work with the new owners on a better mix of land uses, a more sensible Metro Station location and more creative funding strategies.

The Growler for one will be watching to see if Mayor Euille, Vice Mayor Kerry Donley, and Council Member Del Pepper redeem themselves for the hash they made of the Yard in the 1999 plan — when they killed the goose that could have laid golden eggs — or if the failure of leadership persists into the new millenium.

Meanwhile, the next time you cruise Jefferson Davis Highway take note of the difference between the landscape on the Alexandria side of the Yard and what Arlington has done north of Four Mile Run.