Landbay H Land Use Recommendation Memo .pdf
Original filename: Landbay H Land Use Recommendation Memo.pdf
Title: Microsoft Word - Memo (Final).doc
This PDF 1.5 document has been generated by PScript5.dll Version 5.2.2 / Acrobat Distiller 11.0 (Windows), and has been sent on pdf-archive.com on 03/10/2016 at 03:47, from IP address 69.137.x.x.
The current document download page has been viewed 238 times.
File size: 23 KB (4 pages).
Privacy: public file
Download original PDF file
City of Alexandria, Virginia
September 15, 2015
ROBERT KERNS, DIVISION CHIEF, PLANNING & ZONING
RYAN PRICE, URBAN PLANNER, PLANNING & ZONING
SENIOR HOUSING & OFFICE PROPOSAL FOR LANDBAY H - WEST
MRP Realty is proposing a senior housing facility on the southern portion of Potomac Yards
Landbay H – West in addition to the office and retail uses already approved for the site. The block
is currently zoned CDD and is programed for 350,000 square feet of office and retail development.
The proposal would require a change in use on the block and an increase in density. The table below
summarizes the proposal relative to the current programing per the conditions of CDD#10:
Landbay H - West
Senior Housing Proposal
Summary of Staff Position
After analyzing the fiscal and land use impacts of the Senior Housing concept on this block, staff is
supportive of the proposal. While re-negotiations for portions of Potomac Yards further north of the
site will likely occur in the near future, this portion of the CDD is more akin to Oakville Triangle in
terms of both the location and scale. Based on this, staff believes moving forward with this proposal
now rather than waiting for the larger negotiations makes the most sense and will hopefully provide
the opportunity for synergies between Oakville and Potomac Yards. Staff recommends that the
applicant proceed with a CDD Amendment request to allow for senior housing and additional
density on this block. The key factors in the recommendation include:
Earlier development timeline – Based on the current office market in Alexandria and the
greater DC region, the applicant estimates that they would be able to develop the block 9
years earlier if the project includes the senior housing component instead of only office and
Positive fiscal impact – Based on a faster development timeline and an additional 150,000
sf of floor area, the proposal would produce approximately $6.1 to $10.3 million of tax
revenue in excess of what would be collected if the block remained vacant for 9 years
pending commercial development. The low end of the range reflects a phased development
of the block, and the higher estimate assumes the entire block developing at the same time.
Retail connection to Oakville – Bringing retail to this block earlier would also strengthen
Swann Avenue as pedestrian connector between Potomac Yards to Oakville Triangle.
Additionally the proposal would double the amount of retail on this block, which opens the
door for larger tenants on the valuable Route 1 frontage.
Analysis of Applicant Tax Projections
The applicant submitted a proposal package to staff that included a tax revenue projection for the
project. In general, it appears the applicant’s tax revenue projections are somewhat overstated. The
main driver of this is the property tax recapture rate assumptions that are being used in the
calculations. Based on their analysis, 14.9% of the property tax collected from the site would be
used to offset additional City expenditures generated from the development. The rate they are using
is lower than what the City typically uses in these calculations. The standards used in the Potomac
Yards financial model for example are 60% for residential, 17% for commercial, 13% for retail, and
6.5% for hotel. The applicant is using 14.9% for all uses on the block (commercial, retail, and senior
housing). While the City does not have a standard rate for senior housing, it can be reasonably
argued that it should be higher than 14.9 %.
Annual Tax Revenue1
9-yr Cumulative Tax Revenue
Includes property tax, retail sales tax, and Potomac Yard Metro tax
School expenditures are the primary difference between residential use and senior housing use.
ACPS funds represent approximately 30.5% of the City’s entire General Fund. It is logical that
senior housing would not burden the school system, and therefore the expenditure impact should be
lower than the residential rate of 60%. When compared to office use however, senior housing puts a
higher burden on City expenditures mainly due to the Fire and EMS resources needed for these types
of facilities. Based on the City’s emergency response call data, senior care facilities generate
approximately 25 times more calls than offices (2.0 calls per 1,000 sf, whereas offices generate
approximately 0.08 calls per 1,000 sf). The Fire Department budget represents approximately 7.1%
of the General Fund. Based on this information, the expenditure rate for senior housing should be
somewhere between commercial and residential, but closer to commercial given the size of the
ACPS budget relative to the Fire Department budget. An expenditure rate of 30% for senior housing
was used as a preliminary estimate in the analysis below until a more formalized assumption is
generated (there is a pending RFP to do so).
Analysis of Tax & Land Use Implications of CDD Amendment
Impact to Annual Tax Revenue (at full build out): The proposed use change and
additional 150,000 square feet of floor area on the block would generate approximately
$318,000 of additional annual net tax revenue at full build out compared to what is currently
approved. It would also generate approximately $105,000 of additional tax revenue annually
for the Potomac Yard Metro Fund based on the tier 1 special tax district rate.
Impact to Cumulative Tax Revenue (if entire block develops at the same time): The
applicant has communicated that allowing senior housing on the block in addition to the
approved retail and office uses will enable them to proceed with development approximately
9 years earlier than the currently approved program of mostly office. Those additional 9
years of taxation on the developed structures and associated retail sales would generate
approximately $10.3 million of net tax revenue in excess of what would be collected from
vacant land during that time period. The Potomac Yard Metro Fund tax would generate
approximately $2.4 million additional revenue if the block develops earlier.
Impact to Cumulative Tax Revenue (if senior housing develops first): It is possible that
the senior housing building would develop first, particularly given the current office market.
If this were to occur, using the same 9 year delay assumption for the office phase, the block
would generate approximately $6.1 million of net tax revenue from the senior housing
facility and associated ground floor retail in excess of what would be collected if the entire
block remained vacant for 9 years. The Potomac Yard Metro Fund tax would generate
approximately $1.4 million additional revenue under this scenario.
Land Use Implications: Staff generally supports the concept of providing senior housing in
this location for several reasons:
1. Better Mix of Uses: While Potomac Yards is a mixed-use neighborhood, none of
the landbays are currently programed for senior housing. A senior housing facility in
Landbay H-west would provide greater age diversity in Potomac Yards and align
with the City’s Strategic Plan on Aging which was adopted in 2012. Additionally,
this CDD Amendment proposes 25,000 sf more retail than what is currently
approved on the block, which further diversifies the uses in the area.
2. Impact on Development Timeline: Based on the current real estate market, a
senior housing facility on the southern end of this block would most likely spur
development earlier than as currently approved. Office vacancy rates remain high
throughout the region, and demand for new space remains sluggish. Earlier
development on this block would also mean retail space would become available
sooner. This could complement the adjacent Oakville Triangle redevelopment area,
strengthening the presence of Swann Avenue as a retail corridor connecting the two
sides of Route 1.
3. Office SF on GSA Site: While increasing the total floor area in Landbay H-west,
this CDD amendment would decrease the overall office floor area on the site by
150,000 sf. The applicant has expressed a desire and willingness to make up the
office floor area on the adjacent GSA site. Requirements related to the blast zone on
the GSA site have loosened since the original CDD approvals. The footprint of that
building can now be expanded if additional floor area were to be granted. This
would allow the 150,000 sf of office space lost in Landbay H-west to be built on the