The bucolic 815 acres in eastern Loudoun County seemed like a property seller’s dream: sitting four miles from the proposed terminus of Metro’s Silver Line, the swath of land included the pastoral Beaverdam Reservoir lake and had recently been valued by the county tax assessor at $55 million.
But last year the property’s owner, Fairfax City, decided to unload the land and stop operating its own water utility on it. In January, officials sold the property to Loudoun Water in the largest real estate deal in city history. The price? $30 million — far below its newly assessed value.
Now the sale, which city officials say was fair, is being scrutinized by a new city council member and Fairfax City residents, who are upset that officials didn’t put the land on the open market, didn’t have it independently appraised and didn’t allow more public discussion before the city made such a large deal.
The notice of a public hearing on the land sale was vaguely worded, buried in a long paragraph of hearings in the city’s newsletter and in an advertisement in the Washington Times, and not one city resident attended the hearing to discuss the deal. And the city did not announce the deal once it was signed.
“Most people have no idea that we sold this property,” resident Havilah Vangroll said, “and when they discover that we have, there is a great amount of concern about when and for how much. This was the city’s largest single asset, and it seems to have been quietly and secretively sold off, without any public knowledge, by our elected officials.”
City officials said they obtained a number of informal valuations for the land and that they were thrilled to get $30 million for it. They said that the dam at Beaverdam Reservoir needs costly repairs, that another portion of the land near Goose Creek needs untold environmental remediation, and that the lack of infrastructure — streets, sewers, electricity — or high-density zoning in the wooded parcels makes the property unattractive to developers. The land, divided into two sections — one at Beaverdam and the other near Goose Creek — is due south of Leesburg and stretches north of Route 50 and east of Route 15 in Ashburn.
“We told the community about it. We put a public notice in the newspaper, we held a public hearing, we did as much as we could” and met all legal requirements, Fairfax City Manager Robert Sisson said.
Said Mayor Scott Silverthorne: “I remain confident that this was a good deal for the taxpayers and also for the Fairfax and Loudoun water authorities.”
But the deal remained largely unknown to Fairfax City’s 22,000 residents until attorney Nancy Fry Loftus uncovered it during her run for city council this past spring. By the time she had documented the details of the sale, the election was near. She raised the issue at a candidates forum a week before the vote, drew a roar of applause from the stunned residents and went on to win a seat on the council.
The land deal was the second component of a process that began in 2013, when the Fairfax City Council decided, under pressure from a lawsuit with Fairfax County over water rates, to get out of the water business. After extensive public outreach, with mailings and meetings and hearings, the council voted in April 2013 to shut down its water utility after 50 years and join Fairfax Water.
To join Fairfax Water, the city had to pay a $20 million “buy-in fee,” which presumably would come out of the proceeds from selling the Loudoun land. At the 2013 council vote, Loftus and others discussed the need to get full value for the Loudoun acreage, with Silverthorne and council members agreeing.
In 2014, Loftus said, she decided to run for city council. One reason: to help the city decide what to do with its prime real estate in Ashburn.
But after she filed her candidacy, Loftus learned from a family friend that Fairfax City had already sold the land. She was shocked. She filed a Freedom of Information Act request and obtained the sale documents and the notices announcing the impending sale to the public.
“An ordinance approving an asset purchase agreement with the Loudoun County Sanitation Authority,” read an ad in the Washington Times. Identical wording was featured on the city council agenda and as the third item in a long paragraph of hearings in the city’s newsletter. But Loftus and city residents argue that there was no mention of Beaverdam, Goose Creek or $30 million.
Although the hearing on the vote to end Fairfax City’s water utility was packed with residents, not a single resident spoke at the December hearing, and the council approved the $30 million sale unanimously.
“I am certainly no expert on the value of land in Loudoun County,” Loftus said. “But I have to think the Loudoun County tax assessment office does have some idea, and they’ve assigned a value of almost double” what was paid.
Richard Thoesen, the recently retired head of the city’s water utility, said 400 of the acres are in a flood plain, and silt dredged from Goose Creek was still on that property. The dam at Beaverdam needed tens of millions of dollars in repairs. And there was no infrastructure.
City officials had an assessment done in 2011 by an engineer who estimated that a maximum of 104 residential lots could be placed around the Beaverdam lake and Goose Creek because of density restrictions. He put the value of the 815 acres at $11 million. A private developer, unsolicited, had made an offer in 2011 of $21 million.
Fairfax Water offered $25 million for the property, Thoesen said. The city had its own assessor, Tom Reed Jr., do a valuation and he came up with a number of $26 million. Then, Loudoun Water offered $30 million.
With all those “data points,” Sisson said, the city felt it had a good sense of what the property was worth and didn’t see a need for an appraisal. The officials believed that Loudoun County’s $55 million assessment didn’t take into account the environmental remediation costs. Loudoun Water General Manager Fred Jennings said his experts assessed the land at about $45 million, but needing $15 million in work.
Although the land around Beaverdam is zoned for residential use, the 106-acre parcel where the Goose Creek water treatment plant is located is zoned for commercial use along Belmont Ridge Road. Even after Loudoun’s reassessment, the county valued the land alone at $26.6 million and the plant at $6.3 million. Jennings said Loudoun is building a water treatment plant and will use Beaverdam as a backup reservoir but will not need the Goose Creek plant.
The city then decided against putting the land on the open market, even though there is heavy residential development just to its east and Belmont Ridge Road is scheduled to be widened. David Hodgkins, the city’s finance director, said if the bids came in lower than Loudoun Water’s $30 million offer, the water utility might as well withdraw or lower its offer.
“It’s hard for me to think of anyone,” Loftus said, “let alone a public entity, selling such a large asset without having it appraised first.” And she said about public bidding: “Without putting it on the market, it’s impossible to tell what willing buyers might have been willing to pay.”
But Sisson said: “We had a fair transaction with Loudoun Water. I’m proud of the deal; I don’t want it kept in the dark.”