Tysons Corner upgrades prove divisive for landowners

Private-sector executives are sometimes known to grumble about government tax policies that amount to a bureaucratic maze. Why can’t the government just create a straightforward system, they wonder? And why does every decision take so darn long?

In Tysons Corner, the roles have been reversed, as the area’s major landowners have struggled for months to agree on how to raise $506 million for more than a dozen major road upgrades as the government waited.

The projects — including a new Beltway overpass and a widening of Route 7 — are considered critical to turning the sprawling area into an urban neighborhood built around four Metro stations expected to open in late 2013. The $506 million represents half of the expected $1.1 billion price tag for the projects. (Another $1 billion is needed for a grid of streets, transit and neighborhood improvements.)

But with the road improvements looming, the landowners — many of whom are competitors — are laboring to agree on who should pay what.

They recently voted down the most obvious way of raising the money, by creating a special tax district in which commercial landowners would contribute a few cents for every $100 of land they own. The landowners created such a tax district to raise as much as $400 million for the Metro expansion.

But the companies, which operate under the Tysons Partnership coalition, fall into three categories with very different priorities and statuses in the new Tysons Corner: those who need zoning approvals for new development, those who already have approvals and those who have little or no interest in development.

Landowners who have no interest in building or who do not require zoning changes don’t want to pay the additional costs. Some own shopping centers that are profitable despite the area’s constant state of construction. Others, particularly Lerner Enterprises and Macerich Co., are developing their properties but already have the needed approvals.

The Fairfax County Planning Commission canceled a number of committee meetings this spring as its members waited for the companies to find consensus. The coalition finally appeared with a plan Wednesday, but county officials were not impressed.

Keith Turner, senior vice president of Cityline Partners, and James D. Policaro, managing director of development for Lerner, told the committee that their group was far from achieving the required level of support for a Tysons-wide tax district, which is 51 percent of the landowners by value. Turner said the group reached only about 15 to 20 percent at a recent meeting.

Instead Turner and Policaro suggested that the $506 million be raised solely from the companies that are seeking zoning changes, such as Cityline, Capital One and the Georgelas Group.

But county officials expressed skepticism that the proposal was financially viable or even legal. Commissioner Frank de la Fe said it seemed “unequitable” that only some of the landowners would pay for improvements that all of them would enjoy. Policaro’s firm, for instance, would not pay for the improvements even as it constructs a 476,000-square-foot office building that could be ready for occupancy by 2014.

Barbara Byron, director of the Fairfax County office of community revitalization, suggested that, without a more reliable funding method, the county might impose a tax district to raise the money, similar to the way it does for leaf collection services or to build community centers.

With that in mind, Byron said the landowners might want to reconsider.

“It may be beneficial to them to think about a position in which they can control the terms and the conditions,” she said.

Jonathan O'Connell has covered land use and development in the Washington area for more than five years.
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