A little reality check regarding Sunrise and others, 2-28-2019

Unlike most of my other posts, I have no hard data here.  I’m just going to tell you how I see it.

Sunrise is a major US corporation that has likely spent millions of dollars buying land and putting a contingent contract on land and preparing plans to build an assisted living facility in Vienna.  Presumably, the Mayor invited them in and quietly assured them that they would be able to build here.  At the very least, the Town was talking about a development at Maple and Center long before there was any public acknowledgement that it would be a Sunrise assisted living facility.

To get to the point, if you think the Town of Vienna could stop them from building anything they wanted, at this point, you’re probably out of touch with reality.

They are planning to build a five-floor building. You can dance around that all you want, but at least some of us are able to count to small numbers.

Nothing is going to stop that.  Not the fact that MAC was sold on the basis of a four-floor limit.  Not the plain language “four” in the MAC statute.  Not that the purpose of a floor limit was, in part, to keep the density down.  With Planning and Zoning working for the developers, it’s a 1984 world now.  It is what they say it is.

We have always been at war with East Asia allowed five-story buildings under MAC.  How could you not have known that?

And it’s not just that Planning and Zoning more-or-less appears to be cheerleaders for the developers, adopting their viewpoint and even their language when it comes to these new developments.  My guess is, even if they wanted to, with this much money at stake, they couldn’t stop this anyway.

How much revenue are we talking about, for Sunrise?  Last I heard, they’re going to have about 100 beds, and my best guess is, each bed will rent for an average of about $8K/month, or $96,000 per year.  Allow me to round up, and that’s a $10M gross revenue item in the Sunrise income statement.  More or less.  (That’s gross revenue, please, not profit.)

EDIT 3/2/2019:  I should have done some homework before writing that.  Finding average assisted living costs is difficult, because a) pricing information often is not public, and b) pricing often varies with the amount of help the resident requires, c) pricing varies with amenities.   After looking at a handful of internet sources, I would now guess that $5000/month would be a conservative guess, making this more like a $5M gross revenue item.

Moreover, Sunrise may have relatively few good options for building cheaply in Fairfax.  The County requires a minimum five acres for such a facility, and there has been resistance to locating a big new building close to the moneyed enclaves in Fairfax that can support an expensive service like this.  You can read some reporting on that here, for a failed attempt to build one in McLean. Hence, in part, that prompts the shift from the large stand-alone exurban facilities of prior decades to targeting urban sites in the handful of independent jurisdictions where Fairfax zoning regulations do not apply.  Places like Falls Church.  And now, thanks to MAC, Vienna.

Edit 3/2/2019:  To be clear, Fairfax just changed its zoning regulations regarding assisted living facilities at the end of 2018.   But it remains true that if built in the County, this facility would require a minimum of five acres of land, and at least one acre would have to be left as open space (unless the Board of Supervisors specifically ruled otherwise).  You can read the Fairfax County regulations on their website.

So a dinky little Town, with a rich population, and a compliant zoning department?  Must of the surrounding land area subject to more restrictive zoning rules?   We’re exactly what they’re looking for.

The Town’s basically going to see peanuts, revenue wise, from this.  We know this, because Falls Church’s excellent economic analysis of their new mixed-use buildings puts assisted living almost dead last in terms of tax revenue per acre.  Sunrise provides services, not goods, so I think that means there’s no sales tax revenue.  The Town will likely get about $19,000 in BPOL (business license) tax.  And, taking a wild guess at the valuation of the building based on the larger Kensington building in Falls Church (current tax value $22M), I’m guessing Vienna will get about about $35,000 in additional property tax revenue, beyond what they collect from the current buildings on that site.  And, judging again from the Kensington, there will be only marginal revenues from the retail portion of the building.

(As an aside, given the number of meals to be paid for in that building, you’d think Vienna could extract some meals tax revenue.  But I have heard no mention of that, and likely because the meals are not separately paid, but are included in the overall room rate, that won’t happen.  So, my guess is, BPOL and property tax is all the Town is going to get.)

Call it $55K/year, to the Town, in additional tax revenue.  That’s good money, in an operating budget of maybe $22M (excluding capital and other costs). Nothing to sneeze at.  Except for the Pandora’s Box that this opens.

Obviously, once Sunrise sets the precedent, this option will be available to anyone else with a good lawyer and the favor of Planning and Zoning. We’ve already seen the proposal for 380 Maple West come in with five floors, using the same mezzanine terminology.  It’s not crystal clear to me that you couldn’t have six 9′ floors, at least for the portion of the building behind the retail space.  But likely that market would prevent that, for the price you’d have to charge for the resulting units.

So, I guess, other than looking at houses elsewhere, that’s what I’m pondering now.  What happens next, exactly?  At the request of Sunrise, the Director of Planning and Zoning has nullified what appeared to be a simple limit of four floors.  And she’s now fighting hard to make sure that’s codified in the revised law.  Because, see 1984 above.

So we have no clue what’s going to happen next.  After Sunrise, I mean.  But if it were up to me, and I ran the show, and this is what we’re getting, I’d say the solution is to rescind MAC.  Just throw it out, and try again later.  Call me reactionary.  But they’ve clearly given me something to react to.  A gigantic fast food restaurant designed so that the drive-through funnels directly into the busiest intersection in Town.  An apartment block bigger than a football field, where the only convenient way to get to Metro is to cut through my neighborhood.  A set of gigantic lux condos.  Another condo building that so thoroughly fills its lot they’ll have to ban parking on the adjacent public street so that trucks can service the building.  Little bits of useless “public space” directly adjacent to a 33,000-vehicle-per day arterial highway.  And some tax revenue.  I’m sure some see this as a pot of gold, but to me, it’s a mess of pottage.