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Falls Church approves deal to subsidize movie theater with tax dollars

Falls Church Mayor David Tarter. (Katherine Frey/The Washington Post)
4 min

A previous version of this article incorrectly reported that a bowling alley previously took up part of the Founders Row site. The bowling alley was located elsewhere in Falls Church. The article has been corrected.

Lawmakers in Falls Church voted Tuesday night to approve a deal that would grant up to half a million dollars in tax revenue each year for a long-awaited movie theater in this tiny Northern Virginia suburb.

The unusual economic-incentives deal had been subject to criticism from some residents and city leaders who questioned whether funding a movie theater was an appropriate use of city money. An initial vote set for September was delayed after the city’s planning commission recommended against the deal.

But in the end, all but one City Council member voted to greenlight the agreement, which proponents had hailed as a way to secure Falls Church’s first new cinema in decades — a deal that had already been cemented by lawmakers years ago.

“The taxes that we’re talking about today are taxes paid by those folks who attend the theater,” City Council member Debbie Hiscott said at the council meeting. “If you’re not attending the theater and you’re not paying taxes on those tickets, you’re not contributing to those taxes that are going back to the owner.”

Falls Church wants a movie theater. It might use tax dollars to pay for one.

Under the deal, Falls Church would essentially redirect much of the revenue it collects over the next three decades through taxes on ticket and concessions sales at the cinema back to the developer and property owner, Mill Creek Residential Trust.

The plan’s supporters had stressed that incentives are necessary to attract an entertainment facility that might otherwise choose to locate in the city’s much larger, better-resourced neighbors — and could attract visitors and even lower taxes for Falls Church residents.

Incentives serve “to give us a complete community where we walk to entertainment,” said Mayor David Tarter, “and not just be a bedroom community where you drive somewhere else.”

The first $20,000 generated by the city’s 10 percent ticket tax will stay with Falls Church. Any money collected beyond that up to $340,000 would go back to the developer in the form of annual grants.

The first $10,000 generated by the city’s 4 percent meals tax would go to Falls Church, while up to $150,000 beyond that would also go to the developer. All dollar figures will increase by 3 percent each year.

That said, the cinema could get less money from Falls Church depending on how well it performs: If the theater makes $13 million in any given fiscal year, the subsidies are put on pause. And if that happens four years in a row, the city will terminate the meals tax grants entirely — and scale back the other grants to a 20-year period instead.

The agreement is also contingent on the developer meeting certain milestones meant to keep the developer on track on this long-delayed project. They include: executing a lease by the end of the month, submitting design drawings to the city by Dec. 31, and opening the theater by March 2024.

Paragon Theaters, a small chain that has cinemas in Florida, North Carolina and Fredericksburg, has been secured as the movie theater operator for the project.

City lawmakers had approved a similar agreement with the developer in 2o16, but the cinema had to revise its plans, cutting down on one screen and reducing the number of seats from 750 to 550 as the coronavirus pandemic dealt a tough economic blow to movie theaters.

The Founders Row property is replacing a strip on a main road that previously included a handful of beloved small businesses, including a deli/ice cream parlor. The development project also includes apartments, senior living, retail space and offices.

Vice Mayor Letty Hardi said that while she acknowledged the vocal opposition to the idea of using public money for the movie theater, the project’s design depends on keeping the cinema as its anchor.

“Given that the site was really built around the theater … I don’t hear of a viable alternative for the shell of the space,” Hardi said. “It would be irresponsible for us not to proceed with it at this point.”