Economic Development Authority

City of Falls Church Economic Development Authority Special Meeting Minutes - APPROVED Tuesday, October 27, 2015 – 7 p.m. Falls Church City Hall – Laurel Room 300 Park Avenue, Falls Church, VA 22046 I. Call to Order – The meeting was called to order at 7:03 p.m. by Chairman Novotny. EDA Board Members Present: Mike Novotny, Barry Buschow, Bob Young, Erik Pelton, John Sandoz, and Ed Saltzberg. EDA Member Excused: Brian Williams. Youth Representatives Absent: Kiran Menon and Tyler Gogal. EDO Staff: Rick Goff and Becky Witsman. Public Attendees: Planning Commissioner Lindy Hockenberry, Letty Hardi, Peter Batten, Dick Buskell, Lisa Varouxis, Stephen Siegel, Alison Kutchma, Rohini Winters, David Tax, Pirouz Kahnmalek, Jan Feuchtner, and many other citizens. II. Approval of October 6, 2015 Minutes A motion was made to move approval of the minutes with one minor correction as noted by Mr. Goff, seconded, and approved unanimously. III. Petitions from the Public Ms. Winters received the chairman’s permission to review a PowerPoint she had prepared and distributed by Mr. Novotny in hard copy to the board about Mason Row. The presentation covered legislative actions required for the project’s approval, voluntary concessions proposed by the developer, a proposed admissions tax incentive for the movie theater, as well as height, massing, design, and special features of Mason Row buildings and open areas. Ms. Winters offered commentary and suggestions about each of these items. Ms. Varouxis questioned how fiscal impact projections for Mason Row address occupancy and absorption rates. She asked how the developer could guarantee that residents of the project would be either millennials or seniors and how they could prevent young couples from living there. She said that mixed-use development will attract pupils to the public schools. She added that she is not convinced Mason Row will provide true revenue generation for the City. Empty commercial space remains in mixed use and other properties, she said. Ms. Witsman was asked to address occupancy rates for retail space in the City and vacant commercial space in the Broadway, specifically. She reported that there is virtually no vacant retail space available in the City. Much of the Broadway commercial space was sold and is occupied by a medical practice, although that is not obvious because there are opaque window coverings and a leasing sign in one retail bay. She said that the City is working with the local arts organization, CATCH, and the owner of the Broadway medical space to install more attractive window treatments. Mr. Tax identified himself as a business owner at the proposed development site. He said that no negotiations with the developers to relocate his business (Mike’s Deli) or the bike shop into Mason Row have taken place and there has been no contact between the parties in at least six months. Mr. Batten of the Mason Row development team explained that they need to nail down anchor uses of the retail space before they engage in serious discussions with smaller retailers after project entitlement. IV. New and Continuing Business: Mason Row Special Exception Application and Movie Theater Admissions Tax Subsidy Agreement Mr. Goff reviewed hard copy materials provided to the board, some of which were received after the packet was distributed electronically. a. Discussion Mr. Pelton said that for the record he would abstain from voting on a Mason Row recommendation because there may be perceived a conflict of interest due to his family relationship with the owners of Mike’s Deli. He said, however, he would reserve the right to comment on various aspects of Mason Row as an EDA board member. Mr. Novotny asked Mr. Goff to summarize the report prepared by consultants Bolan Smart for the City regarding Mason Row. He said the consultants answered questions posed by City Council’s EDC about whether or not 340 residential units proposed in the project and the theater admissions tax requested by the developer are needed to make commercial land uses in Mason Row economically feasible. The consultants were given confidential access to the developers’ financial proforma to truth test and answer these questions. They concluded that the residential volume is needed for project financing and an admissions tax or similar subsidy is necessary toward mitigating the commercial risk of an underground movie theater as a financeable element of the project. Mr. Pelton said that an admissions tax subsidy for the developer should have an annual cap and negotiations should aim at achieving a share of admissions tax capture for the City. There was discussion about whether or not the EDA could be the recipient of admissions tax revenue rather than the City. Mr. Goff was asked to summarize the updated Mason Row Retail Project Plan submitted by the developer. Conceived by StreetSense in collaboration with Spectrum Development, the merchandising plan provides more detail than previous versions, he said. It’s a key piece that was missing from discussion at the EDA’s last meeting and referenced in the developers’ voluntary concessions. The plan contains goals for a retail mix with 20% of space used for full-service dining, 30% for fast casual dining, a limit of 15% on neighborhood services retail and other conditional retail uses, and 35% usage for specialty retail. The plan also details programming for ‘public’ spaces at Mason Row, and describes how the movie theater and retail complement each other. It lists sample retail categories that Mason Row will target to fill the ground level space. Mr. Goff said the plan describes retail uses that support an entertainment and food destination center. Mr. Pelton asked the City to consider Arlington County’s policy to include local businesses in new development such as Mason Row. Mr. Novotny said he agreed that steps to help local businesses are needed. Mr. Sandoz countered that subsidies for retail rent would be problematic and rental rates could not be known in advance. Mr. Young agreed. Mr. Buskell of the development team requested clarification about whether the goal was to include local tenants or local tenants that could not afford market rental rates. It was noted that displaced businesses need an interim location, which are greatly limited, before they can move back into a new building at their previous location. Mr. Novotny said that he appreciated the developers’ providing more detail in their merchandising plan for retail. He noted, however, that the plan is more aspirational than committal. He said he would like the City to be more like Arlington in having specific retail guidelines. He urged the developers to identify hierarchies of retail categories and uses along with where they would be placed physically in the floor plan. He also recommended that more detail be provided by the developer for sidewalks, streetscape design and outdoor seating. Mr. Novotny invited board members to comment, in turn, on Mason Row as a final step to a board resolution and recommendation. Mr. Young said Mason Row is a very good project, which can deliver a movie theater, a long-held City aspiration. He said the project would draw dining and other tax-generating activity to the City. He noted that Mason Row represents a large and difficult land assemblage. If the project is not approved, he said, the City will likely lose its opportunity for a movie theater and existing land uses at the site will remain for a very long time. Mr. Sandoz supported Mr. Young’s comments and added that the developers’ have made substantive, positive changes to the project and their voluntary concessions over time. He said he was in favor of moving forward with Mason Row. Mr. Pelton said Mason Row needs more work. It should add a shuttle to Metro for Mason Row residents and improve its retail plan, in part by including local businesses. He commented that the City needs a better approval process for similar projects in the future. Mr. Saltzberg agreed that the City’s approval process has never been a good one. He suggested that the EDA work with other boards and commissions to seek the best process possible in the future. He said Mason Row should meet several standards for approval: Does the project make overall sense? Does it look right and meet overall City goals? He concluded that the project strikes a good balance between residential and commercial content. It works financially and conceptually, concentrating retail in one place, he said. He added that the Market Square feature has great potential and Mason Row will make that area of the City look much better. Mr. Buschow also stated that the City’s approval process is broken. He said that Mason Row is the best mixed-use project the City has seen to date in term of economics (net fiscal impact) and developer proffers. He acknowledged that the project’s massing is still a neighborhood concern, and the retail plan can use improvement. He said the Bolan Smart report was helpful in the board’s analysis. Mr. Novotny noted that Mason Row has improved from previous iterations, its economics are good, and he generally supports the admissions tax subsidy. Details matter, however, he added. He identified many specific shortcomings in the retail plan and voluntary concession documents. Ms. Hockenberry said that the Planning Commission shares some of the same concerns expressed by the EDA board. b. Recommendation Mr. Sandoz made a “motion to recommend the City Council approve the Mason Row project subject to the developers’ clarification of commitments as expressed in their ‘Retail Project Plan,’ and ‘Voluntary Concessions’ (with a list to be attached as identified by Mr. Novotny). The EDA recognizes that a balanced mix and density of land uses on the 4.3-acre development site are necessary to achieve Mason Row’s high concentration of commercial components, which is very positive for this section of our core commercial corridor.” Mr. Saltzberg suggested and Mr. Sandoz accepted as an amendment to the resolution that “the strong net positive fiscal impact estimated for Mason Row takes into consideration school operating expenses tied to a range of probable outcomes supported by data generated locally in comparable multifamily apartment buildings.” Mr. Young seconded the motion as amended.  The EDA Board approved the resolution by a 4-1 vote with one abstention. Board Members John Sandoz, Bob Young, Ed Saltzberg and Barry Buschow voted yes and Board Member Michael Novotny voted no. Board Member Erik Pelton abstained. Mr. Goff was asked to draft a memo to planning staff for City Council memorializing the board’s resolution with attachments for board review and comment before release. A process for board commentary was chosen so as not to violate the Virginia Open Meetings statute. Mr. Goff reminded the board that its next regular meeting was scheduled for Monday, November 2 and would feature a presentation by TischlerBise consultants on the City’s fiscal impact model. Mr. Novotny asked staff to pursue having the meeting recorded on video for future viewing on the City’s website. V. Adjournment A motion was made to adjourn by Mr. Novotny, seconded by Mr. Young, and carried unanimously. The meeting adjourned at 9:04 p.m. EDA minutes, 102715