Alexandria council to wrap up planning for Potomac Yard
Saturday, June 12, 2010
The Alexandria City Council is expected to approve plans Saturday for an estimated $3 billion to $4 billion development that would include a Metro station and 7.5 million square feet of residential and commercial space.
The council was scheduled to hold a public hearing Saturday and take action on the zoning of the last 69-acre tract of the Potomac Yard project.
The tract is bordered to the north by Four Mile Run, to the west by Route 1 and to the south by East Glebe Road. The development would remove a Shopper's Food Warehouse, a Target and other stores in a shopping center at that location.
"This is big progress," said Mayor William D. Euille (D). He said he expects a unanimous decision from the council on "the last bastion of major undeveloped land in the city."
Because the city is adding density, including a few buildings that could be 24 stories tall, Euille said, "you'd be foolish not to address the transportation needs."
The council agreed a few years ago not to move forward without a solid financial plan to construct an in-fill Metro station on the Yellow and Blue lines off an extension of East Glebe Road.
Depending on location, city officials estimate that a station could cost $190 million to $270 million, adjusted for inflation, said Mark Jinks, deputy city manager. The city would float $275 million in bonds to pay for construction and would use tax revenue from the new community and developer contributions to repay the debt.
The financial plan, based on a 25-year model, uses high construction cost estimates and low revenue projections, Jinks said.
"Our whole objective was to develop a financing plan that did not put the city's general fund or taxpayers at risk in any kind of substantial way," he said.
In the initial years, the city estimates that there will be a $6 million gap in debt payments, which the owner of the property, RREEF, a real estate investment management business of Deutsche Bank, agreed to cover with a payment of $32 million.
RREEF also agreed to contribute $10 per square foot of construction, up to $49 million, as the development is built out toward a new Metro station.
Representatives for the firm declined to comment on the project because the city's approval process is underway.
Taxes on the new construction will be used to finance the project. In addition, the council will consider establishing two special tax districts within the Potomac Yard development this fall. The districts would add 10 or 20 cents per $100 of assessed value to a property's tax bill to help repay the bonds, according to the current plan.
In the meantime, city officials will meet with residents of communities such as Potomac Greens to discuss the taxing districts, Euille said. Several community members have begun to lobby against them.
"Since the benefits of a Metro stop in Potomac Yard would be widespread, and apply to all of Alexandria, I think it is unfair to single out property owners in Potomac Greens with a special tax," A. Lewis said in a comment posted on the city's Potomac Yard planning Web site.
Metro officials have been involved in planning the station and expect the city to make a formal request that Metro take the lead on further environmental and engineering studies, said Steven Taubenkibel, a Metro spokesman. Alexandria officials said they think Metro would contract out the construction of the station, although Taubenkibel said that remains to be discussed.
"It is doable," said Taubenkibel, referring to the construction of an in-fill station. "I can't say for certain what the impact will be here, but when you are building a station between two existing ones, it will require a lot of work."
Metro estimated in February that about 10,000 riders would board at the Potomac Yard station by 2030, which is comparable to traffic at the King Street and Huntington stations, he said. Alexandria's subsidy to Metro would be adjusted for a new station, but no operational costs have been determined, he said.
The council's action Saturday will set the density and height rules for the neighborhoods -- which would include a new school near Four Mile Run, an entertainment district and a hotel -- and strict environmental guidelines, said Faroll Hamer, director of the city's planning department.
The developer, McCaffery Interests, will be able to build at least 2 million square feet before the Metro station is started, Hamer said. She said an additional 3.7 million square can be built simultaneously with the Metro station's development. Once the station is completed, the remainder of the project can be built.
City officials estimated the cost of the development at $3 billion to $4 billion, and they said it would take about 20 years to complete.
Some residents voiced concern at a recent Planning Commission hearing about traffic and the need for more studies during the project's development.
"If you don't measure it, you can't improve it," David Frome of Del Ray told planning commissioners.