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Peter’s Take: The Fiscal Impacts of Development in Arlington

by Peter Rousselot December 27, 2018 at 2:15 pm 0

Peter’s Take is a weekly opinion column. The views and opinions expressed in this column are those of the author and do not necessarily reflect the views of ARLnow.com.

In a Dec. 17 interview, County Manager Mark Schwartz, when asked about Arlington County government’s projected $20-$35 million FY 2020 budget deficit, stated:

“For the last [several] years, the commercial market has either been flat or going down. If revenue grows less than your expenses, you already have a gap. Now, add on top of that the obligations to Metro, expansion of Medicaid, public safety pay increases, steady funding for affordable housing and you get to $20-$35 million quickly.”

Schwartz also acknowledged that:

  • at least in the short run, Amazon’s arrival in Arlington will not solve the county government’s structural budget problem
  • APS is projecting a $43 million (!) FY 2020 budget deficit

Fiscal Impact Analyses of Development

There are some steps the County Board should take early in 2019 regarding the fiscal impacts of development across the county, especially in light of the major land use changes now planned in Crystal City by JBG Smith and Amazon.

At its April 21 meeting, the County Board took one small, partial step in the right direction. As part of its FY 2019 budget guidance, the Board directed the manager to develop for Board review by the end of this calendar year (2018) a plan for preparing and making public periodic, retroactive cost-benefit analyses of new residential and commercial development on an aggregate rather than a project-specific basis.

The manager has yet to share for discussion with the community a draft of his proposed approach to this Board directive.

  • Project-specific fiscal impact statements needed for major site plan projects

As I have previously explained, what Arlington really should do is adopt the recommendation of the Community Facilities Study Group (CFSG) for prospective, site plan-specific, fiscal impact statements. We need project-specific, prospective fiscal impact statements for each major site plan project, particularly to measure impacts on schools and parks.

Multiple studies have demonstrated that constructing new, large multi-unit residential projects consistently generates more new costs than new revenues. The most comprehensive “cost of community services” survey of 125 jurisdictions nationwide found that the mean ratio was $1.18 of incremental costs incurred compared to every $1 of incremental revenues generated (at p. 392).

This comprehensive study’s results recently were corroborated by noted GMU economist Stephen Fuller in a November 2018 Amazon Arlington HQ fiscal impact study (at Table 6).

Just some examples of the other studies reaching the same net-negative-cost-impact results are available here and here.

  • Arlington County Attorney continues to block transparency

The adoption of project-specific, prospective fiscal impact statements for major site plan projects continues to be blocked by the stubborn and unjustified refusal by the Arlington County attorney to release for review by independent legal experts a public-facing version of his existing legal memorandum that Arlington lacks the legal power to implement the carefully-considered CFSG recommendation for such statements.

The County Attorney has been refusing to disclose his detailed legal reasoning to the public for at least 5 years.

In an interview with ARLnow.com earlier this year, the county attorney also demonstrated that he does not understand the facts regarding development and school enrollment growth. He mistakenly believes that “the practice of replacing small, single-family homes on large lots with multiple new homes tends to drive most of the strain on Arlington’s classrooms.” To the contrary, the principal enrollment growth challenge APS confronts now is the absolute total number of students generated when:

  • thousands of elevator apartment units are being built every year
  • these units are not evenly distributed across the county

Conclusion

Arlington County government:

  • cannot legally proclaim a moratorium on by-right development even if it realized that it previously might have approved too much of it
  • can and should prepare project-specific, prospective fiscal impact statements for major site plan projects in which developers are seeking more density than permitted by current zoning
  • should be able to condition approval of such projects on the developer’s willingness to provide community benefits directly tied to the impact of the project on schools and/or parks

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