Updated 8/1/2018 after I found that the Mill Dominion Residents Association had already made the same points I make here, some time ago. I have included references to their analysis. And again on 8/2/2018 based on updated information in the Town’s last newsletter (.pdf).
The Town is going to pay $4.6M for 121 parking spaces in a new 4-story building on Mill Street, just down the street from the Pennywise Shop. It will replace the building where, among other things, Vienna Hardwoods is located. (Read some reporting, with a drawing of the proposed building, here.)
This proposed garage building is the second major piece of redevelopment, by the Town, along Mill Street, in the past two years. Most of Mill Street is currently an industrial area, ending in the Town of Vienna’s Northside property yard. In 2017, the Town spent about $0.5M reconstructing Mill Street just north of this area. Among other tasks listed in the plan above was adding sidewalks, but if they are there, I missed them when I drove down Mill Street today (7/24/2018), or I was misreading the plans.
For the new garage space, the agreed-upon price works out to $36,000 per parking space, plus anywhere from $50,000 to $100,000 in annual condo and maintenance fees. For some time now, the Vienna Town Council has wanted a garage to support the merchants on Church, and this is what they got.
There are several odd things about this transaction.
Half the capital cost is going to be covered by the Northern Virginia Transportation Authority (NVTA). But NVTA is not in the business of providing parking for merchants. That Authority is in the business of using tax dollars to relieve traffic congestion in Northern Virginia.
So, why did NVTA decide to cover half of Vienna’s cost for these parking spots? Vienna’s story is that people will drive to the Mill Street garage, park there, and then bike, walk, or bus to Metro. Or car pool from there. Or something. So, half the parking spots — about 60 spaces — will be reserved in the morning for commuters. Presumably, at some point in the day, all remaining spaces will available for parking for local merchants.
According to Google Maps, the Mill Street garage location is 2.3 miles/seven minutes from Metro.
The NVTA was sold, apparently, on the idea that people will get in their cars in the morning, drive to within 7 minutes of Vienna Metro. And then, instead of completing their trip (largely against the flow of AM rush hour traffic) and simply driving to Metro … they’ll park their cars in this Mill Street garage, and take some alternative transport for the remaining 2.3 miles.
Who would do that, exactly? This does not seem aimed at Town of Vienna residents. I spent years commuting by bike to the Metro, and anyone in the Town who wanted to do that would simply bike from their house. Perhaps, for some, this would be an easier way to get to a bus stop. But by and large, it seems implausible that Town of Vienna residents who wanted to get to the Metro would use this. Possibly, if you routinely plan to arrive at Metro after the parking garage is filled, and don’t want to rent one of the reserved spots, then I guess you could do this. So this becomes kind of a remote parking garage for Vienna Metro.
Really, the only plausible audience I see for this is people living outside of the Town of Vienna. But for anyone living west of Nutley, it would be vastly faster just to drive to Vienna Metro. So this most be aimed at people living east of Nutley, who want to drive toward Vienna Metro, then stop 7 minutes away, park, and either take a bus or a bike to the Metro.
As you can guess from my write up, I don’t find the story here very plausible. So you can add this to my list of things the Town is saying that I have a hard time believing.
Even if this succeeds perfectly, the NVTA just spent $2.3M to take maybe 60 cars a morning off a largely-uncongested 2.3 mile stretch of road. (Maple has almost no traffic westbound in the morning, and Nutley southbound typically flows freely even during AM rush hour.) And if it works less than perfectly, which I think is the likely outcome, it will do less than that. From the standpoint of reducing traffic congestion, that looks very close to being a waste of money.
I guess it’s great if somebody wants to hand the Town a bunch of money. But as a taxpayer, I’m kind of appalled that they would do this. The basic premise is barely plausible, and even if it works out, the likely traffic congestion reduction per tax dollar is virtually nil. I can’t even imagine the analysis that said this was the best use of tax money.
Even with the NVTA subsidy, it looks like this will cost quite a bit per parking space, once you factor in the condo fee.
The Town considered two options for getting a municipal garage with costs of around $20,000 – $21,000 per parking space. The Town considered building a parking garage on Church Street for about $20,000 per space, but that deal fell through. (The only remaining reference to the cost of it on the Town website appears to be here. ) And the Town is still considering a garage on the Patrick Henry Library parking lot at a cost of $21,000 per space. (That came out in a Town Council meeting, and I will post the link for that when I find it again.) For both of those, I believe the land would have been free, and those figures only represent the construction cost.
Let me look at almost the worst case scenario for the new garage, and assume that the $100,000 annual payment is a condo fee. (That’s not quite the worst case, because that condo fee almost surely has an escalator clause to keep pace with inflation, but I will ignore the probable increase in that over time.) That works out to $825 per parking place. How much is that perpetual “rent” equivalent to, in terms of up-front purchase price? I.e., if Vienna borrowed money, and that payment were the interest payment, how much money would that be?
The condo fee is a bit different from a mortgage payment, in that a) you never actually “pay down” the borrowed money (principal) and so b) it never ends. So it’s not exactly like a 30-year mortgage, it’s more like interest on a loan that you will never pay back. Vienna typically pays about 2.5% interest on its bond borrowings, and so in this case, the loan that would generate $825/year in interest payments is ($825/.025 = ) $33,000.
In other words, a perpetual $100,000 condo fee actually costs the Town much more than the purchase price does.
The calculation above is realistic in the sense that the condo fee goes on forever, and that you don’t actually “pay down” the equivalent loan. But in another sense, the Town’s actual bond obligations don’t work like that — those bonds have to be paid down just like a mortgage.
So let me me make a more conservative calculation, as if the condo fee were like a mortgage payment and would end in 30 years. How big a mortgage could the Town have taken out, given the 2.5 percent interest rate it pays? That’s easy enough to answer with any on-line mortgage calculator: A 30-year mortgage for $17,500 requires $825 per year in principal and interest payments. The condo fee is like adding another $17,500 to the purchase price.
Another way to look at this is just to calculate what the Town’s bond payment will be for its $2.3M loan. Again, just feed that into a standard mortgage calculator for a 30-year mortgage at 2.5 percent interest. (Assuming your calculator will accept $2.3M – the first one I tried didn’t go that high). The answer is $109,000. Which, again, is just slightly more than the condo fee.
Even if we assume the condo fee will end in 30 years and has no escalator clause, half the cost of the garage is hidden in the annual fees. The $100,000 condo/maintenance fee is just slightly less than the payment on a 30-year bond covering the purchase.
To compare this deal to a garage that the Town owned outright, add the capitalized value of the condo fee to the purchase price. With a $100,00 condo fee, the Town is paying the equivalent of $35,500 per parking space ($18,000 purchase + $17,500 capitalized condo/maintenance fee) . If, by contrast, we talk about total cost to all taxpayers, that would amount to $53,500 per space ($36,000 + $17,500) .
To be fair, that’s a modest exaggeration because some portion of the $100,000 is for maintenance, and the Town would have to do maintenance in any case (whether it owned it outright or as a condo.) But the Town did not provide enough information to separate out what part of the $100,000 is condo fee versus maintenance.
I’m not the only one to have done this calculation and come to roughly the same conclusion. The Mill Dominion Residents Association made roughly the same point, and noted that medium-rise garages typically cost in the range of $20,000 to $25,000 per space. And that the total capitalized cost of this garage far exceeds that.
Possibly the high cost of the land drives this in part. At the end of 2015, Fairfax tax records indicate that the land there sold for $6 million, to Mill Street Development One LLC. At the time that, the purchase price was — wait for it — twice the tax valuation — a phrase that shows up so often here on this website that it is starting to look like the norm for redevelopable land in Vienna. But since we don’t know what the Town’s share of the condominium is, we can’t even guess what share of the land price it could have paid for.
No matter how you slice it, this is some expensive garage space, compared to what the Town considered on Church or is considering at the Patrick Henry library. Those spaces ran about $21,000 each, with no condo fee. Here, if we net out the NVTA contribution, but treat the $100,000 annual condo fee as if it were a mortgage payment, this costs the town about $35,500 per space. Cost to all taxpayers, by contrast, is about $53,500 per space. Some of that difference must be due to the cost of the land, but just eyeballing the numbers, the Town would have to own a huge share of the condo for the land cost to justify the difference in price per space.
This garage is not all that convenient for people shopping on Church Street. I have a few clips from Google Maps below. Let me call the intersection of Church and Center the middle of the Church Street shopping district. It’s about 1000 feet, by sidewalk, from the proposed garage to the intersection of Church and Center.
And, once again, I am not the first one to see this. The Mill Dominion Residents Association compared walking distances from the garage site to the Church Street business district. They cite an authority as saying that 600 feet is the maximum most retail customers will walk between where they park and where they shop. They concluded it would be “a stretch” to think that customers would be willing to walk from that garage to most Church Street merchants.
I’ll do that one better. In the evenings, and on weekends, is there really no place to park within 1000 feet of Church and Center? No, of course there is.
The lot at Vienna Elementary is within that distance, as is the lot behind Town Hall. Pretty much any time after school, or any time at all on the weekend, you’ve got free parking there. And it’s no further than the proposed garage.
Evenings, Saturday afternoons, and all day Sunday, the Post Office is closed. . That’s no farther to walk, but requires crossing Lawyers’ Road. So, more free and uncongested parking there.
And Patrick Henry library– a site the Town is still considering for a garage — is actually substantially closer, by foot, than the Mill Street Garage is.
So, based on walking distance, what this garage provides is some moderately inconvenient weekday parking. Any afternoon, or any evening, or any time on the weekend, we already have plenty of moderately inconvenient parking downtown that is as close or closer to Church than the planned garage is.
Apparently this garage is aiming at people who who want to do business on Church during the day and don’t mind walking to get there. Or for people who want to do Church Street business in the afternoon, evening, or weekend, and have never figured out that if you’re willing to walk 1000 feet, any number of venues with big parking lots are already available to them.
Yet another puzzler about this garage is all the parking in the basement. The town gets 121 spaces on the 2nd floor. The first floor has some retail and some storage, and it looks like it has first-floor parking adequate to support that. The top two floors are storage, but that’s not exactly a high-turnover space. If you look at the self-storage facility across the street, it’s quite large and appears to have maybe a dozen marked parking places. And yet the basement of this building has another 120(ish) parking spots.
So this five-floor building actually appears to be a 240-space garage (plus parking for retail), half owned by the Town who will give away free parking, and half owned by a private entity that will … do what with it, exactly? What does the building owner intend to do with the other 120 parking places in the basement, given that the Town is offering free parking on the 2nd floor? And that, as noted above, large amounts of additional free afternoon/evening/weekend parking are available at the same or shorter walking distance from Church and Center?
I have no idea, I just think it’s odd. It’s as if the garage developer expects there’s going to be a demand for parking in that area, in the future, that simply does not exist now. It’s almost as if the developer thinks there’s going to be a lot more development in that area.
Finally, why didn’t the Town choose the Patrick Henry Library site for a garage? Per the Town’s FAQ (.pdf document): “May not be desirable for Church Street visitors/customers due to crossing Maple Avenue“. Given that the Town is selling MAC zoning based on how how nice it will be to walk on Maple, I guess I have to say, that’s ironic.
An afterthought on property taxes. I forgot to address the issue of property taxes. The Patrick Henry lot is owned by Fairfax County and is listed as tax-exempt. I’m not sure whether Fairfax pays the Town something in lieu of taxes for that or not, but I would guess not. So, my guess is that if the Town built there, there would be no loss of tax revenue.
Assuming this new Mill Street building would have been built with or without the Town, by buying part of it the Town loses the property tax revenues for its share of the building. (Or at least that’s what I assume.) It’s hard to quantify that. The existing self-storage up the street (300 Mill St NE) is worth $11M, according to Fairfax County. If the new building is worth perhaps $15M, then by owning this piece of it (versus full private ownership) then the Town would lose maybe $10,000 per year in property taxes. Not enough to worry about, I think.
One final odd property tax question: With public-private ownership, is the Town of Vienna going to owe Fairfax County property taxes on its share of this building? In other areas, joint ventures between tax-exempt and non-exempt entities are, to the best of my understanding, typically treated as taxable entities. Here, I have no clue how Fairfax county will treat this for property tax purposes. If so, that would be material. Possibly that’s what the condo fee covers? I really can’t see Fairfax County assessing taxes on Vienna’s share of this building, but I don’t know. It will be interesting to see how Fairfax values that property, and what the tax situation is, once this is built.