Crystal City BID Pushes to Expand to Pentagon City and Potomac Yard

Arlington County is considering a proposal to expand the boundaries of the Crystal City Business Improvement District to incorporate parts of Potomac Yard and Pentagon City, including Amazon’s permanent HQ2 campus.

At its meeting on Saturday, July 13, the County Board is expected to authorize an advertisement for a public hearing on Sept. 21 to discuss expansion of the BID’s coverage area to include 75 new commercial properties.

The BID was originally established in 2006 to improve the area’s marketability and attractiveness to the community in the wake of the Base Realignment and Closure Act (BRAC) — which resulted in 4.2 million square feet of vacant office space and 17,000 lost jobs.

The BID sponsors activities and markets the area to potential tenants, and is in turn funded by a tax surcharge on commercial properties within its coverage area. The BID’s current budget is approximately $2.7 million, but the expansion is estimated to increase the budget by $1.7 million (an increase of 64 percent) to $4.4 million.

According to the staff report, expansion of the BID has been an ongoing priority as the organization works to shift the area’s image away from just government agency tenants. This culminated with the announcement in November that Amazon would be opening a new headquarters in the area.

Even prior to the arrival of Amazon, Crystal City had begun attracting more non-government tenants — including startups, nonprofits, co-working spaces and new retail. The vision and strategy to expand the boundaries of the BID has been revived not only due to new leadership at the [BID] but also upcoming infrastructure, transportation and planning projects expected to transform the nature of the business and residential community in this area.

The staff report noted that the expansion is part of a wider effort to treat Crystal City, Pentagon City and Potomac Yard as one market — it was dubbed “National Landing” at the time of the Amazon announcement — rather than three separate ones.

Notably absent from the proposed new boundaries is the Fashion Centre at Pentagon City mall, which has “formally requested… not to be included in the proposed expansion.”

Adoption of the ordinance would require the BID to demonstrate 50 percent of greater support throughout the affected areas — evidence that the staff report noted was not currently available. The staff report notes that property owners and managers in the Potomac Yard portion of Arlington expressed concerns that BID would be unable to “fulfill various obligations of the Potomac Yard Property Owner’s Association (POA) site plan.”

Under the terms of the site plan, the POA must fund certain capital expenses and on-going maintenance of various improvements including maintenance of landscaped areas. In March 2019, County staff and the County Attorney’s Office advised [BID] that it should not take on the obligations of the Potomac Yard POA in order to receive support for the proposed BID expansion. Instead, [BID] should demonstrate to the Potomac Yard property owners the value of the other services it currently provides on behalf of the BID in the current and proposed expanded district.

If the BID cannot build the support it needs in Potomac Yard — as happened to a proposed BID in Alexandria in 2017 — the report said it could still be approved as an expansion into Pentagon City. Major property owners in Pentagon City, including Dweck Properties and JBG Smith, are supportive of the proposal.

The potential expansion, if approved, would be the first time any BID in Arlington enveloped new territory.

Map via Arlington County