Virginia Real Estate, Land Use & Construction Law : Virginia Construction Lawyers & Attorneys : Bean Kinney & Korman Law Firm : VA Real Estate, Land Use & Zoning

For those of you out there who are following whether commercial real estate can be taxed at a different rate than residential property, FFW Enterprises v. Fairfax County, et al. has been slated for the Supreme Court's September arguments docket.  Like most other states, in the Commonwealth of Virginia the Constitution contains a "Uniformity Clause" which was intended to prevent the General Assembly from allowing the taxation of different classifications of real property in an inequitable manner.  Specifically, Article X, Section 1 of the Constitution of Virginia provides:

"...All taxes shall be levied and collected under general laws and shall be uniform upon the same class of subjects within the territorial limits of the authority levying the tax, except that the General Assembly may provide for differences in the rate of taxation to be imposed upon real estate by a city or town within all or parts of areas added to its territorial limits..."

The core of the dispute is whether Fairfax County may tax only commercial property owners, such as FFW Enterprises, without taxing residential property owners, to fund transportation projects.  The General Assembly, through Section 58.1-3221.3 of the Code of Virginia, granted authority to Northern Virginia localities to levy special taxes for  transportation projects, and in combination with this authority, Fairfax County created a special tax to fund portions of the Silver Line metro project using Section 33.1-431 of the Code of Virginia.   In a nutshell, Fairfax County taxed commercial property owners a special transportation surcharge and exempted residential property owners from having to do so to fund metro improvements.

Last summer, the Circuit Court of Fairfax County (see here for opinion) held that the Uniformity Clause does not prohibit localities from "...provid[ing] for differences in the rate of taxation to be imposed upon real estate..." so long as these differences are not imposed upon the "same class of subjects."  However, in 1947 pursuant to City of Hampton v. Ins. Co. of North America, the Supreme Court has already held that the test to determine the constitutionality of such a tax is:

"[Alre there others, who are benefited as much or more than those smarting under the tax imposition, who go unwhipped of its burden?"

FFW Enterprises plead just that, asserting that residential property owners will benefit as much from the construction of the Silver Line as commercial property owners in Fairfax, however commercial property owners will bear the sole brunt of the costs and taxes.  Nonetheless, the Circuit Court of Fairfax County found FFW Enterprises failed to establish this, and that the 1947 standard is no longer relevant or applicable.  These questions will now be put to the Supreme Court in just a few weeks - we'll keep you posted.

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Arlington County has moved to sue yet another individual transportation official in its pending HOT lanes project in federal court in the District of Columbia.  The pending case, a fight over the HOT/HOV lanes in I-395, argues that VDOT and the US Department of Transportation failed to undertake appropriate traffic, environmental, and other studies in approving the northern section of the project.

In its inital papers, Arlington elected to not only sue the various governmental agencies, but also the highly regarded Pierce Homer, then Secretary of Transportation for the Commonwealth of Virginia, individually.  The primary thrust of the case relates to an alleged failure to consider environmental, traffic and other impacts of the project during the review process.  Arlington County sued Secretary Homer individually for engaging in civil rights violations by allegedly favoring suburban white people over less affluent minority residents of Arlington County.  The Complaint alleges, in a remarkably long, rambling, ninety plus pages, things like:

The use of public funding, to serve the interests of wealthy, predominantly white Virginia residents from the southernmost counties affected by the Project and at the obvious expense of the largely less affluent, predominantly minority and ethnic populations that reside in and along the corridor of the Northern Section, in particular in Arlington County.

Arlington has been widely and universally criticized by the business community, amongst others, for this approach.  The Northern Virginia Transportation Alliance, with virtually every significant regional business organization signing off, wrote Arlington County Board Chair Jay Fissette on May 28, 2010 and called out the County's lawsuit as an impediment to regional transportation efforts.  In particular, the letter stated the the civil rights allegations "are not credible and frankly an embarrassment to this region."

How did the County respond?  On June 22, Jay Fissette sent a reply letter to NVTC.  The silence was deafening in that the letter did not even respond regarding the civil rights elements of the lawsuit.  We now see that rather than focusing on the traffic and environmental issues in the case, the County has elected to double down on its strategy of filing suits against individual transportation officials.  The County now seeks to add Edward Sundra, a Senior Environmental Specialist for the Federal Highway Safety Administration, as an individual defendant.  The County again argues in its Motion to Amend and Amended Complaint for individual liability based on Mr. Sundra's alleged individual acts of civil rights violations.

In a time of deep fiscal challenges for state and local governments, Arlington has reportedly spent over $1,000,000 already on this lawsuit.  It is rare that I editorialize and opine rather than report, but it seems to me that money should have been used for a variety of other causes, like keeping the planetarium open, instead of further killing Arlington's credibility in Richmond.  This case, and in particular the allegations against the individual defendants, are easy fodder for the rest of the state to throw up their hands, scoff at Arlington, and say, "See, I told you so."  Continued delays in litigation threaten the Commonwealth's ability to tap into various federal funding sources and we desparately need investment into every potential transportation avenue, including roads, in the region.

For lessons learned on litigation strategy, this case brings to mind a couple of strategic litigation truisms which are worth sharing.  I will leave it for others to judge whether these can or should be applied to this case.

1. Focus on your strongest arguments, do not permit distraction
2. Never weaken a strong argument with a weak argument
3. Always keep your credibility in mind ... it is the hardest coin the gain and the easiest to spend
4. Never forget the big picture or the finder of fact, and
5. Brevity is the soul of wit, especially in drafting pleadings

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We are very enthused to announce that I have been asked to regularly post as a guest blogger with the Washington Business Journal.  WBJ is one of our very favorite sources of information, news and commentary regarding business, law and real estate.  The guest blog spots will be weekly and part of their Biz Beat page alongside posts by WBJ reporters.  Our initial post is an expansion of our previous discussions regarding how little stimulus funding for transportation has actually been spent.

We have a very high regard for WBJ and follow numerous WBJ reporters on twitter and publisher Alex Orfinger.  We regard being invited to serve in this capacity by the go-to information source as quite an honor.  For those not familiar or not as focused on the WBJ's offerings, we strongly recommend not only their print subscription, but signing up for their daily e-mail news alerts which contain critical updates for the business community.  We will keep everyone posted on further developments on this front here and invite you to check out the Biz Beat blog!

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The Arlington County Board will be deciding whether to approve a series of amendments to Arlington's Comprehensive Plan relating to Crystal City at their hearing at the end of September, after several years of evaluation on how best to react to the loss of approximately 17,000 jobs and over 4 million square feet of occupied office space due to the recommendations of the Base Realignment and Closure Commission (BRAC).  Specifically, the County Board will decide whether to adopt the new Crystal City Sector Plan 2050, and modify the General Land Use Plan and the Master Transportation Plan.

With Long Bridge Park and the Pentagon to the north, the airport and the river to the east, Aurora Highlands and Pentagon City to the west and Alexandria/Potomac Yards to the South, existing metro and VRE access, Crystal City seems well poised to make a comeback.  Here is an exhibit showing Crystal City's existing conditions.  The plan specifically outlines which sites are expected to be redeveloped, which sites have potential for redevelopment, and which sites are expected to remain for the life of the plan (click here for the comparison). Much like the Tyson's Corner Plan, Crystal City's 260 acres are broken up into proposed "districts" (shown here), including the Northwest Gateway, Northeast Gateway, Central Business, Entertainment, South End and West Side Districts, each with their own respective district-level focus.

The areas planned for the highest densities are basically limited to certain principle areas, including the sites in proximity to the planned multimodal transit hub facility and also those sites a the center of the Entertainment District.  The "Base Densities" referenced in the plans show what the existing GLUP designations contemplate for density, and are shown on the Base Density Map.  The plan models a 61% increase in density for Crystal City over the life of the plan, but rather than calling out specific densities caps for specific sites, density under the Crystal City Sector Plan will be controlled by bulk restrictions, shown on plans for height, setbacks, bulk angles, tower coverage, massing, etc.  Land use is set forth on the plan's new Land Use Map, and required on-street retail space is shown on the Retail Frontage Map.

Of particular interest in the plan is the "...addition of a dedicated surface transit-way to Crystal City's existing [transit] system...," that will include a streetcar or trolley system.  The recommended alignment for this system is shown here, as well as a new eastern entrance to the Crystal City Metro Station.  A multi-modal transfer hub facility (shown here) is planned to connect metro, VRE, bus and trolley systems at the location of the existing entrance to the Crystal City Metro Station.

One of the most unique things about Crystal City has always been the Crystal City Underground which connects a lot of Crystal City for pedestrians via a network of tunnels, underground and interior  spaces.   While the plan guides how retail, pedestrian systems and planned open space will make use of these existing features, most of the Underground is contemplated as remaining in place.

The Crystal City Sector is also going to be one of the proving grounds for Arlington's currently developing Community Energy Plan, with carbon reduction and sustainability as some of the major plan objectives, as well as incorporating the proposed streetcar/trolley system's energy needs in Crystal City's district energy plans.

All said, it is a fairly extensive and unique plan, and I don't think a simple blog posting can do it justice.  For those of you that want all the details, here's a link to the entire proposed plan and the staff report for the September hearing.

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I know most people out there who follow land use in the DC metro area are pretty familiar with the Columbia Pike Revitalization Plan and the Columbia Pike Form Based Code.  Then, like many others, you've probably wondered what will happen to the trolley system once Columbia Pike hits the Arlington County line?  Well, instead of continuing to head west down the corridor, it abruptly bangs a left at the county line, and heads south up the hill to Skyline (here is a transit plan showing approximate station locations and here is an aerial transit plan overlay).

Actually, this is in conformance with the transit plans that have been in place for several years now, so it is no great shock to see this concept on the "Preferred Plan" which is the latest culmination of two prior land use plans presented to the community last month and updated and posted yesterday on Fairfax County's website.  Not surprisingly, the highest densities are planned along the proposed street car system, which culminates at the existing high density sites at Skyline.  As you can see on the Preferred Plan, however, the system only tracks the eastern periphery of this first portion of the Community Business Center plan area (the "CPC"), leaving much of the planned area geographically disconnected from the trolley system, and in particular the Columbia Pike corridor.

So rather than seeing higher densities planned along the Columbia Pike Corridor as might be the intuitive preconception, right now the idea is to concentrate higher densities in Land Unit C between Leesburg Pike and South Jefferson Street, with street car stations straddling both the north and south sides of Leesburg Pike on Jefferson Street.  Adjacent to the conceptual transit center and and station north of Leesburg Pike is where the highest density mixed use sites and the high density retail nodes are proposed to be located under this portion of the CPC.

While this is a revitalization plan for the Baileys Crossroads area rather than an extension of the Columbia Pike Revitalization Plan into Fairfax, it does seem, at least initially, counter-intuitive to connect the old Skyline density to the planned Columbia Pike transit corridor.  But life is not perfect, and Fairfax has to deal with the existing, built densities at Skyline, and probably needs to take advantage of the new transit system now  to alleviate some of the immediate conditions at Skyline.  I just wonder if it would not be more wise to take a longer view and realign the density and transit capability up Columbia Pike rather than focus on connecting the aging density at Skyline.  I also have to admit though, it is pretty exciting to think of Pentagon City and Skyline being connected by a street car system.

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This week we have announcement of two significant bond offerings to cover transportation funding.  According to ENR, Governor Bob McDonnell announced last Friday that Virginia will sell $500 million in bonds for transportation projects in the Commonwealth.  This will be the first in a wave of bond offerings contemplated by Virginia which will total $2.2 billion over the next six years.  Count me as an observer that says the state bonds are nice, but Virginia will not solve its transportation problems absent a steady, consistent and meaningful source of transportation funding at the General Assembly.

In separate news, the Washington Examiner reports today that the Metropolitan Washington Airport Authority announced plans for a $650 million bond sale this month.  This bond issuance is calibrated to take advantage of stimulus funding support towards interest expenses.  The MWAA bond issuance is planned to help defray costs for the Metro rail extension to Dulles Airport and will be paid down by proceeds from the Dulles Toll Road.

The Washington Examiner report notes that the MWAA bonds issued last year for Dulles Rail received a A rating from Standard and Poor's and an A2 rating from Moody's.  In contrast, this latest issuance received a Baa1 and Baa2 rating from Moody's.  Moody's cited risks associated with slow toll revenue growth, construction cost overruns, and the potential loss of the stimulus bond subsidy.

Image from VDOT/VA Mega Projects

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The Washington Post reported on Sunday that the Obama administration will propose taking over safety regulation of subways and light rail, including the regional Metro system.  Metro has been taking a regular beating in the press recently for safety concerns and its anemic response to those concerns.  Metro has apparently gone so far to frustrate efforts to investigate its safety procedures and efforts that it has barred independent monitors from walking along its subway tracks, even escorted by Metro employees, to observe its procedures in practice. 

The frightening revelation is that the safety oversight is apparently imposted by a relatively powerless, "Tri-State Oversight Committee", "which has no employees, office or phone number.  It also has no direct regulatory authority over Metro."   Locally, concerns regarding Metro's safety have mushroomed following a June 22, 2009 crash that left nine people dead and injured 80.  Since then, the Washington Post has reported an another "dangerously close" near miss, an August 9 fatality when track repairman Michael Nash was struck and killed, and another fatality when a Metro technician John Moore was killed in a separate incident in September.

I believe that density based development around the Metro corridors is critical to long-term regional success, reduction of carbon footprint, reduction of use of non-renewable fossil fuels, and reversing or at least slowing down the traffic impacts of decades of sprawl.  A trusted, safe and reliable Metro system is a prerequisite to this entire style of development working.  In particular, the rail extension to Dulles Airport and the interconnected plans to redevelop Tyson's Corner into a more intelligently designed, denser urban center with improved walkability are crucial to the successful continued vitality of the entire region.  Leaving the success of these important ventures in the hands of a powerless committee with no direct regulatory authority is simply not acceptable.

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For those of you that don’t already know, Arlington County has filed a complaint against the U.S. Department of Transportation, the Secretary of the United States Department of Transportation, the Federal Highway Administration, the Federal Highway Administrator, the Virginia Department of Transportation, and the Secretary of the Virginia Department of Transportation. Apparently, the purpose of this complaint is to stall and possibly derail the HOV/HOT highway project in Northern Virginia which would add additional travel lanes along the I-95/I-395 corridor from Spotsylvania to the Pentagon. For decades, Arlington County has been tirelessly waging a war against suburban sprawl and the impacts of funneling more and more automobile traffic from outlying suburban counties through Arlington County.

 Among many other things, the complaint alleges that Federal Highway Administrator, the Secretary of VDOT, and the Secretary of the US DOT, personally and deliberately, unjustifiably defined the project so narrowly that it would be excluded from the comprehensive review and public scrutiny requirements of NEPA and the Clean Air Act. The complaint alleges that there is no defensible way that the Northern Section of the project could obtain a “Categorical Exclusion” allowing it to bypass the Environmental Impact Statement or Environmental Assessment processes which would require an in depth review and analysis of the environmental impact of the project.

The complaint also alleges that the defendants failed to adequately analyze the impact on Arlington’s communities that the significant increase in traffic volumes the project would generate. Arlington is particularly concerned about what Arlington considers some of its traditional and historic neighborhoods that are in proximity to the project.

Unexpectedly, however, the complaint also alleges that Secretary LaHood, Secretary Homer and Administrator Mendez deliberately, in their individual capacities, promoted this project to “…enable a financially-able, privileged class of suburban and rural, primarily Caucasian residents…” to the “…disparate impact of the Project on minority and low-income communities…” in Arlington. Ouch. Sounds like the gloves are off.

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A Fairfax County judge has ruled that a commercial real estate tax used to help fund the rail extension to Dulles Airport is constitutional. According to the Washington Business Journal, Fairfax Circuit Court Judge Stanley Klein approved of the structure in the context of a bond validation suit initiated by Fairfax County and related entities. Fairfax created the Dulles Corridor Phase I Special Improvement Tax District as a funding mechanism to repay bonds issued to fund Fairfax County's contribution to the rail extension project.

Virginia has seen significant challenges to its attempts to create stable funding mechanisms for transportation over the last several years. The most notable challenge was a successful appeal to the Supreme Court of Virginia to significant portions of the overall transportation funding legislation adopted by Virginia's General Assembly in 2007. In the case of Marshall v. Northern Virginia Transportation Authority, the Supreme Court of Virginia held that the General Assembly violated Virginia's Constitution by attempting to delegate its taxation powers to unelected multi-district transportation authorities in Northern Virginia and Hampton Roads.
 

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