- Reaches agreement with Forest City Realty Trust
- Partnership will realize vision for Ballston Quarter redevelopment
- Agreement protects County from cost overruns
- County will benefit if project significantly exceeds financial expectations
The Arlington County Board today formalized the public-private partnership that will transform the Ballston Common Mall into Ballston Quarter, a mixed-use urban retail project in the heart of Ballston.
The Board voted 5 to 0 to approve a Development Agreement that outlines the responsibilities of the developer, Forest City, to build identified infrastructure improvements. The Board also voted to approve a Lookback Agreement between the County and the developer that provides opportunities for the County to receive future cash payments if future financial performance results in less County investment than was originally required.
In addition, the Board, acting as the board of the Ballston Quarter Community Development Authority (CDA), approved documents that will allow CDA bonds to be issued this fall.
“As anyone who has driven by Ballston Mall recently can see, its transformation into Ballston Quarter — an exciting regional shopping, dining and entertainment center in the heart of Ballston – is already underway,” Arlington County Board Chair Libby Garvey said. “The Board’s action today formalized our partnership with Forest City to complete the transformation. Importantly, the agreement includes provisions that both protect the County from unexpected costs if the project experiences difficulties, and ensures that we will benefit if the project does significantly better than anticipated.”
Forest City Washington President Deborah Ratner Salzberg welcomed the Board’s actions. “We’re pleased to take this important step forward with the County as we renew and transform Ballston Quarter into a vibrant and vital asset for the community,” Ratner Salzberg said. “Forest City has a long history of successful public-private partnerships, and we’ve been an active member of the Ballston community for the past 30 years. We look forward to building on that legacy with Ballston Quarter. This project is a perfect example of Forest City’s long term investment in communities. It was the first project I worked on at the company and will now be the newest example of our urban mixed-use placemaking strategy.”
Read the staff report for this item on the County website. Scroll down to Item No. 60C on the Agenda for the Tuesday, September 27 Recessed Meeting.
The Board in November 2015 approved plans to redevelop the Ballston Mall into Ballston Quarter, and approved a Letter of Intent with developer Forest City to fund up to $55.5 million in public infrastructure costs related to the project, including improvements to the Ballston public garage, investments in Wilson Boulevard and North Randolph Street, and the creation of public plazas and mews. In July 2016 the Board established the Community Development Authority that allows for the issuance of revenue bonds related to the Ballston Quarter public-private partnership.
The County will publicly finance up to $54.33 million of identified public improvements. Through the CDA, the County will fund up to $43.44 million of improvements by issuing CDA bonds (the bond size will be larger in order to meet investor requirements for reserves and other bond terms).The bonds issued by the CDA will not appear on the County’s balance sheet. The County will bear no responsibility to repay the bonds, other than the pledged tax revenues. The bonds will not affect the debt capacity of the County.
In addition, the County plans to use existing transportation and garage improvement funds to pay for another $10.89 million in direct investment in infrastructure related to the project – infrastructure the County either owns or in which it will have easement interests.
Read the related documents on the County website. Scroll down to the “Ballston Quarter Community Development Authority Meeting” to read the items that will be voted on by the Board convening as the Ballston Quarter Community Development Authority.
CDAs are widely used development tools in Virginia
A CDA is a development tool authorized by state statute that allows a jurisdiction to issue bonds to help facilitate redevelopment projects or public-private partnerships. In this case, the bonds will be backed with a pledge of 65 percent incremental real property, sales and meals tax revenues. Incremental tax revenues are those generated within the CDA boundaries over and above taxes generated as of an established base year — in this case January 2015. If such revenues do not meet debt service, a special assessment or tax on real property will be levied within the CDA boundaries in order to secure and repay CDA bonds.
CDAs have been widely used by Virginia localities in order to provide funds for public infrastructure investments and create incremental tax revenue growth.
The CDA district created by the Board is comprised of three parcels owned by Forest City Enterprises, developer of the Ballston Quarter project. The CDA board is comprised solely of members of the Arlington County Board.
The powers of a CDA are limited to those authorized specifically by the local governing body, and the bonds issued are not on the County’s balance sheet and thus do not affect the County’s debt capacity or debt rating.
County to oversee, control improvements to transportation infrastructure and County-owned public garage
The County capital expenditures will fund the planned narrowing of Wilson Boulevard, streetscape improvements, reconstruction of better designed pedestrian bridge over Wilson Boulevard, and elevator and wayfinding improvements to the public parking garage.
All County and CDA funding will reimburse actual expenses, based upon formal requisition requests by the developer, with the County and CDA maintaining approval of significant changes to budget and scope. Any cost overruns are the full responsibility of the developer.
Aging mall has been cornerstone of commercial development
The Ballston Common Mall, historically a cornerstone of commercial development in Ballston, has been the focus of past County investment, including funding for the mall’s public garage and the construction of the Kettler Iceplex.
The redevelopment of the mall into Ballston Quarter represents the next generation of the County’s commitment and investment. The renovations will open up the existing mall, create more dynamic retail spaces along public plazas and mews, add a 406-unit residential tower with ground floor retail and improve adjacent parking and transportation facilities.
The County’s investment in this extensive makeover will help reposition the mall into a mixed-use, urban retail district in order to better compete with other such districts across the region and attract more retailers, shoppers, residents, visitors and businesses to the heart of Ballston.
The Ballston Quarter public-private partnership is projected to net the County approximately $150 million in direct tax revenues over a 30-year period.
Lookback Agreement allows County to benefit from excess financial return of the project
The Lookback Agreement allows the County to participate in excess financial return of the project, either over time if the developer retains ownership of the project, or through the result of a sale of some or all of the development. The Lookback Agreement is meant to right-size the County public financing component of the project if future financial performance indicates that the amount of County investment was not required.