Fairfax County officials have started considering how they will pay for nearly $1.5 billion in roads and transit costs that will be needed to support future growth in Tysons Corner.
Last week, county staff outlined a mixture of funding mechanisms to raise the money from both public and private sector sources. The initial staff proposal includes a 55 percent public funding share through bonds, taxes and state or federal transportation dollars, and a 45 percent private share from developer contributions and localized tax districts.
The Fairfax County Board of Supervisors will decide on the funding mechanisms when it considers the new land-use plan for Tysons Corner this summer.
The proposed 55-45 split is unlikely to please either community activists or future Tysons developers.
During public hearings on the Tysons plan in April, numerous speakers said the developers who build high-rises around the four new Metro stations should contribute at least 75 percent of the costs for new infrastructure. The McLean Citizens Association also approved a resolution endorsing this split last week, said Robert Jackson, the group's president.
Jackson and others argued during the hearings that developers will be benefiting from the increased building density the county is likely to approve in Tysons Corner, so they should pay the costs.
Business leaders view the proposal as a starting point for discussion, said Stuart Mendelsohn, chairman of the Fairfax County Chamber of Commerce.
"While we still have to discuss some of the details, I think the county looking at this as a public-private partnership is a good start," Mendelsohn said, though he noted the staff proposal contains options the chamber has supported, as well as those it has historically opposed.
In addition to the new rail stations, the major new transportation feature planned for Tysons is a more urban-style street grid. Under the staff proposal, developers would be responsible for building out sections of the grid as part of their projects, much like they would when building a new subdivision on open land. The remaining sections of the street grid would be funded through developer contributions.
Building out the street grid is expected to cost about $444 million during the next 20 years, according to county estimates.
Fairfax County would pick up the entire estimated $374 million tab to expand bus service throughout Tysons, and the estimated $646 million cost to improve the main roads throughout the Tysons area would be split between public and private sector funding sources, according to the staff proposal.
James Zook, director of the Fairfax County Department of Planning and Zoning, argued the county has an obligation to fund some of the Tysons Corner infrastructure as it has identified that area as one of the county's growth centers.
"If we were to not do that, it might put Tysons at a disadvantage ... the question is then where would growth occur," Zook said.
The business community also already is paying a significant chunk of the cost to bring rail to Tysons, Mendelsohn noted, in anticipation of land values increasing and on the promise of higher density development. The Tysons plan also likely will impose regulations on "green" building practices and the provision of affordable housing that do not yet exist in other parts of the county.
"It's not like the business community isn't already paying part of it," Mendelsohn said. "You can't just keep going back to the same well."
The potential public funding sources are:
-Tax increment financing: Allows the county to bond against anticipated future growth in real estate tax revenues from an area undergoing redevelopment. This could generate as much as $439 million in 20 years.
-Countywide real estate tax: The county could allocate a portion of its general fund revenue to support projects in Tysons. If the equivalent of one cent on the real estate tax rate was earmarked for this purpose, it would generate an estimated $502 million in 20 years.
-Meals tax: Fairfax County does not currently have a meals tax, but is allowed to impose a restaurant meals tax of up to 4 percent. Voters would have to approve the tax via referendum. This could generate about $80 million per year, only a portion of which would likely be allocated for Tysons projects.
-General obligation bonds: County officials could fold Tysons Corner projects into the county's capital improvement program, which is primarily financed by voter-approved general obligation bonds. There is not much room to add projects to the capital improvement program prior to 2016.
-State and federal funds: Fairfax County historically has relied heavily on state and federal funds to pay for its road and transportation projects. However, the amount of state and federal dollars that will be available during the next 20 years is uncertain.
-Commercial and industrial tax: The county has an additional real estate tax of 11 cents per $100 of assessed value on commercial and industrial properties. The revenue from that tax must be used for transportation projects. Using a set portion of this funding in Tysons could bring $138 million to $336 million during a 20-year period.
The proposed private financing options are:
-Developer contributions: Major new development proposals typically include voluntary cash or in-kind contributions to mitigate community impacts of the development proposal, such as the need for new roads, schools, parks or other public facilities.
-Special tax district: Similar to the process used to help fund the Metrorail extension, landowners in a certain area could petition the Board of Supervisors to create a special tax district for a specific purpose.
-Community development authority: A community development authority essentially operates the same as a special tax district, but bonds can be issued in anticipation of future revenues.