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by ARLnow.com | August 13, 2012 at 9:05 am | 2,863 views | 58 Comments

County Fair Ends — The Arlington County Fair ended Sunday night. The weekend’s highlights included free concerts, cloggers, choruses, the racing piglets, the Harlem Wizards basketball show, a lacrosse speed and skills contest, and a really big pumpkin.

Arlington Senior Wins Spelling Bee — Arlington resident Michael Petrina, 67, has won the annual AARP spelling bee. The bee, which is open to adults 50+, was held in Cheyenne, Wyoming this year. [Washington Post]

Office Vacancies Could Mean Higher Taxes — Office vacancies are on the rise in Arlington, and that’s raising questions about the county’s tax revenues. If the trend continues, taxes may need to be raised in Arlington County and the tax burden may increasingly fall on homeowners. [Sun Gazette]

Photo courtesy John Annand

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  • mms

    So why are we tearing up the place building more office buildings?

    • drax

      Are we? How much has it increased lately? The article, unfortunately, doesn’t say.

      The article does say that it’s a good deal to have offices. They need less services but pay the same taxes. Half of Arlington’s revenue comes from them now. But state law doesn’t allow Arlington to tax them higher than residences, and that could lead to higher taxes for residences.

      • Wesley

        “Projects under construction during the second quarter will eventually total 962,282 square feet of office space, 147,660 square feet of retail, 1,404 residential units, 183 hotel rooms and 929,828 square feet of “other” space (public facilities, school, health care, etc).”

        http://www.bizjournals.com/washington/blog/2012/08/arlingtons-2q-construction-slows.html

        • drax

          Thanks.

          But your quote doesn’t give context. Is this alot compared to existing office space? Is construction increasing, or slowing?

          Click on the article, and I see that it’s title is “Arlington’s 2Q construction slows” and it contains this paragraph:

          “this year’s second quarter was the first second quarter in a decade when no construction started on new commercial space, according to Arlington’s most recent quarterly development tracking report.”

          So while we have projects in the pipeline, starts seem to be slowing.

          • WeiQiang

            Would be nice to see some data on rates of growth in both sharts … er, starts as well as square footage.

          • Wesley

            Arlington lists its total commercial square footage at 39.5 million. So they have under construction or approval on about a 12% increase for commercial space.

            The 1 million currently under construction is a 2.5% increase by itself.

          • drax

            Thanks.

      • DCBuff

        It is not entirely accurate to say that commercial can’t be taxed higher than residential, as surcharges can be imposed on commercial properties to fund transportation. This surcharge supposedly will fund the county’s portion of the streetcar. Interesting to contemplate what would happen if the revenues weren’t there from the commercial properties for the streetcar; funds would then need to come from general revenue, thus raising taxes on residential properties to fund the streetcar.

        • JohnB

          But the surcharge can only be spent on transportation.

    • YogiBerra

      tenants are moving to Tysons cause its cheaper there. Clearly arlington should try to prevent the construction of new office buildings, to make commercial rents more competitive. There is no way that vacancy right could ever, you know, make commercial rents lower.

      • Elmer

        I hope all those multimillion cash contributions and other public bennies promised the county by the developers are in upfront paid cash and/or otherwise locked down and are not the sort of future contractual promises which can be wiped out in bankruptcy.
        County, you are watching this right?

        • yes again

          You have it backwards the developers offer nothing and for every dollar in benefits they provide (parks, low cost housing, public space) they get two dollars in tax abatements. The count does not care because a majority of the county management does not live in the county or the development they approve is not in their neighbourhood.

          • Thes

            What are you people even talking about? There are no tax abatements for developers in Arlington — I don’t think Arlington even have the legal power to give them.

            And as for the cash contributions, in general they come due prior to the issuance of the County permits for building and occupancy, so the buildings can’t be opened without them, bankruptcy or no.

            It is true, however, that the County Manager does not live in Arlington.

          • JRyan

            Arlington has partial tax exemption available for developers who do substantial rehabilitation on multi-family rental projects. Enhanced tax exemption incentives are also available for projects in the Nauck Village Center Plan area.

          • Thes

            That’s pretty limited. No tax incentives allowed for your run-of-the-mill office tower, then.

          • drax

            The board members all live in the county. They make the decisions and/or oversee, hire, and fire staff who do.

          • Thes

            Not true. The County Board members are prohibited from overseeing, hiring or firing any staff except the County Manager, County Board Clerk and County Attorney. Board members are prohibited from issuing instructions to anyone who reports to the Manager, except through the Manager.

          • South Awwlington

            Someone should tell Walter and Chris this.

            There are directives fired off to staff at every board meeting and by staff, I am not referring to any of three listed in the post above.

          • drax

            Okay, I was speaking in general terms, but my point is the same – this county is run by elected reps who live here.

      • Jeff

        Doubtful – I don’t think there’s much of a list of companies who have either moved from Arlington to Tysons or bypassed Arlington in favor of Tysons. I’d like to see it if it did exist.

        And Tysons is still awful, metro or not. It is so cut up still and most buildings are not in walking distance of the metro stops – many will still need to run shuttles to the metro for their employees. Tysons is going to be a terrible place to work for years to come.

        • Sam

          Didn’t Northrup Grumman bypass Arlington for Falls Church? However, Accenture moved into Arlington from Reston so I guess the two cancel each other out.

          • Jeff

            I’m sure there are a few that went both ways.

            But Yogi made it sound like there is a big wave of tenants moving out of and bypassing Arlington. I don’t believe that is the case but I’m open to hearing otherwise.

          • Arlingtonian

            At a recent local commercial real estate conference, one developer said that Tysons Corner would be a major competitor for Arlington… in about 5 years. Even with Metro heading out to Tysons, traffic is still a problem. The Silver Line between Loudoun and Tysons won’t be complete for several more years.

            A big issue for Tysons is the lack of residential buildings, which the developer said was a weakness of Tysons when compared to Arlington.

            Arlington is hardly in a crisis mode. The major uptick in vacancy rate was in Crystal City but that is largely explained by BRAC. Sure, there will be some challenges with BRAC and the slow economic recovery. But Arlington is still in pretty good shape overall.

          • Arl2

            Grumman, SAIC, CSC, Booz Allen, Gen Dynamics, Hilton Hotels…..

    • Clarendon

      There is no one answer. In general, the office market appears to be slow. There are individual organizations looking to move and now is an attractive time to build with construction firms hungry for work. The CNA building in Clarendon is an example. Also, the good time to buid argument may apply to spec office even if the company knows that leasing is going to be a challenge in the short term. It all goes into the cost-reward-risk calculation.

  • JnA

    In five years you will see 90% of the indoor space filled by home-improvement contractors.

    • WeiQiang

      more info, please.

  • Dora The Explorer

    Didn’t we already agree that the photo above is a sunset pic?

    • Chimichanga

      that was a different picture. we need to debate this all over again.

      BTW, why doesn’t arlnow put a proper linky back to the photogs flickr stream like dcist. that’s proper way to give credit and promotes us to go look at some more art.

      • http://www.arlnow.com ARLnow.com

        Sunrise was a typo, we’ve changed to sunset. This photo was emailed to us and did not come from the Flickr pool.

    • Josh S

      Yeah, I’m still having a hard time seeing how that could be a sunrise. Assuming those tall buildings are Rosslyn.

  • Everything Went Black

    I don’t want

    To see the plan succeed

    There won’t be room

    For people like me

    My life is their disease

  • R. Griffon

    > taxes may need to be raised in Arlington County and the tax burden may increasingly fall on homeowners.

    Doesn’t a higher tax burden fall on EVERYONE who lives, works, shops or dines in the county? Homeowners may pay real estate taxes directly, but residents and area businesses also pay these taxes via increased rent, which is passed on to consumers in the case of a business. So life gets more expensive for everyone.

    • drax

      Homeowners relative to commercial building owners, R.

  • http://cache.ohinternet.com/images/2/24/I_see_what_you_did_there_super.jpg BoredHouseWife

    and when homeowners start leaving they will tax the renters

    • Jeff

      Run for the doors! The homeowners are leaving Arlington! In droves!

    • drax

      What will the renters be renting?

    • Landlord

      If you own a house, townhouse or apartment building you have to pay the property tax. That is one of many expenses that goes into the calculation of how much you need to charge the renters. Fortunately in Arlington the market allows the owners to charge a high enough rent to cover the taxes, operational and maintenance costs and make a nice profit. I’ve been other places where that wasn’t true.

  • Jason S.

    What if instead of raising taxes on the people remaining, which makes Arlington less attractive, budgets are reduced?

    • Josh S

      Depending on what is cut, that also makes Arlington less attractive. Witness the outcry over reduced library hours recently.

      • DCBuff

        How does the “reduced” library hours make ArlCo less attractive? Are the many library branches–8–in the smallest county in the U.S. somehow unattractive? Alexandria, a decent local comparison in terms of poplulation and size, has only 4. Did people move out of ArlCo to another jurisdiction because of the library hours? Are people now clammering to get into ArlCo because there are longer hours?

        • Glebe Roader

          Library hours are just one item that affects quality of life in a jurisdiction. It, on its own, won’t make people move out. But, if you keep adding to the number of services that get cut, people will start noticing and comparing to other jurisdictions.

          I have lived in both Alexandria and Arlington. In Arlington, the schools are better, the parks are nicer, trash pickup is better, etc. After a while, the cumulative effect gets people to look elsewhere.

        • Josh S

          Who moved into or out of Arlington as a result of property tax rates in the county?

          • Arl2

            I will be soon…

      • ACDC Hack

        That was a very cynical move on the part of the board.
        They realized that the libraries were the one thing that residents liked and used…..so they cut them.

        The first service that major urban areas always cut back in the 70′s was trash collection….that will teach those tax payers to demand fiscal prudence !!!

        • Elmer

          And who needs trash collection? The last “essential service” to cut will be the Artisphere.

          • DCBuff

            Indeed. What I find interesting is that ArlCo essentially privatized trash collection several years ago, in theory to save money, but when it comes to their grand follies they are happy to pour tax dollars down the drain.

  • JohnB

    Umm…BRAC. This is not a sustained trend. There were a lot of tenants that moved out at the same time. The reason they all moved has nothing to do with Arlington. Oh, and we’re still below the NoVa regional average. Says more about the quality of the Sun Gazette’s reporting that they failed to mention BRAC than the story does about future tax burden on residential property owners.

    • Westover

      But there’s another potential round of cuts coming that will affect federal and by extension contractor jobs around here if it goes through. It may not result in as many new vacancies, but it can impact county tax receipts when companies shrink.

      • DCBuff

        Exactly. And, it is irrelevant that we are below the NoVa average. What is being discussed are ArlCo tax revenues and the dependence on commercial property taxes.

    • Arlingtonian

      +1

      The article should have mentioned BRAC. That’s the most significant factor in the numbers, especially when the author pointed out the high vacancy rate in Crystal City. That had nothing to do with competition from downtown D.C. or Tysons Corner.

      BRAC will be an ongoing problem for a couple more years, until the process is complete. Crystal City recovered from the departure of the Patent and Trademark Office although that took a couple years.

      There will certainly be challenges in the near future, but Arlington’s location will still be a big positive. BRAC doesn’t change that. The article failed to mention how large a role BRAC plays. It’s an incomplete and poorly researched article.

      • Westover

        Everybody knows about BRAC. It is implicitly there in the article. In fact, BRAC is over and continuing to blame it is missing the story. The story is what (and when, and why not yet) will backfill the BRAC’d space. That should be happening already in a healthy market, but is not. That is the current story.

        BRAC happened, and the space is not being re-leased. That might mean taxes have to rise for all of us, and that is what the article is about.

  • nota gain

    I toured the county fair again this year. For some reason I felt compelled to do so and again came away with a feeling of wasted time. The honey is much more expensive than Trader Joes and the outside food prices were not worth the food.
    I too will be leaving Arlington soon. I like the progressive style of the area but I very much dislike being mentioned with anything connected to Grey’s DC. My house is very convenient to VA Square so, when it is on the market, come in droves to make an offer.
    Where does the City Manager live?

  • YTK

    I’ve always enjoyed the County Fair but this years’s Fair was….fair…. Looks like they are trying to save money — too bad.

  • Suzanne Smith Sundburg

    Articles, whether in the Gazette or elsewhere, tend to be limited in scope by the space available. There are a number of factors at work here, not just BRAC. Covering them all probably wasn’t practical. But judging from the comments here, Scott seems to have done a pretty good job of focusing the general public’s attention on a pertinent issue that isn’t well understood by most citizens.

    At a county board budget work session this spring, the head of Arlington’s Economic Development Office, Terry Holzheimer, said that BRAC was having and would continue to have a significant impact on Crystal City’s vacancy rate for several more years. He likened the situation to the pullout of U.S. Airways’ headquarters. According to a recent Post article—http://www.washingtonpost.com/business/capitalbusiness/can-arlingtons-crystal-city-become-a-hip-place-to-live/2012/08/03/db061aa2-db16-11e1-9745-d9ae6098d493_story.html—Vornado (a top Crystal City landlord) is struggling. And if Vornado bites the dust, I think it’s naive to assume there won’t be a domino effect on space in Rosslyn, Ballston, Shirlington, etc.

    The real problem is price. Arlington’s commercial office space has become too expensive for the GSA to continue locating federal offices here. Moreover, Arlington chose to build office buildings right up to the street, which does not meet federal safety guidelines created after 9/11. An exception was made in order to keep DARPA in Ballston. At least historically, the federal government has been Arlington’s chief tenant. Now demand from the feds is greatly reduced, and not just by BRAC.

    It’s hard to overstate the very fragile state of the economy and the challenges Arlington faces in the near to medium term. Federal cutbacks will likely have a negative effect on commercial/residential tax revenues, and it will most likely suppress demand for commercial/residential space at a time when Arlington is still building like crazy.

    A blogpost on Bacon’s Rebellion provides a disturbing synopsis of the likely impact of federal cutbacks on Virginia and Virginians: http://www.baconsrebellion.com/2012/08/boomergeddon-in-virginia-federal-cutbacks.html

    In addition to creating new and more expensive office space, Arlington is also putting up nearly 2,000 new, expensive apartments in 2012 alone. A Washington Post graphic—http://www.baconsrebellion.com/2012/08/boomergeddon-in-virginia-federal-cutbacks.html—illustrates the current and near-term growth.

    And the related article—http://www.washingtonpost.com/business/economy/a-renters-respite-in-washington-area-thousands-of-new-units-to-open-soon/2012/08/08/7d643afa-da9e-11e1-b829-cab78633af7c_story.html—discusses the thousands of apts. being built across the region. But it fails to mention federal cutbacks and the increase in unemployment and lessening of demand that will almost surely result.

    Safe to say that a combination of factors will reduce Arlington’s RE revenues at a time when the need for revenue is increasing—due to growth in the school population, higher unemployment rates, cost-shifting from the state. Under the circumstances, now is not the time to be maxing out the municipal credit card on anything but absolute necessities.

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