Dulles, Loudoun Metro Rail Project Update (and my $0.02)

 

There’s been a lot of talk lately about the Dulles/Loudoun metro rail project. It’s a hot topic because there’s a lot of money involved and a lot at stake – for everyone. Well, here’s an update…

I had the opportunity to attend a forum on the Dulles/Loudoun metro rail project last month. It took place at the Dulles Area Association of REALTORS(r) and featured three speakers…

• Pat Nowakowski, Chief Construction Manager, Dulles Rail, MWAA
• Patricia Nikoson, President, Dulles Corridor Rail Association
• Honorable Suzanne Volpe, Loudoun County Board of Supervisors

Here’s the update in a nutshell…

• Loudoun County is still up in the air as to whether they want to commit to Phase 2 of the Dulles/Loudoun metro rail project.
• Loudoun received a one-month extension from June 4, 2012 to July 4, 2012 to decide whether they’re in or out (a bit ironic that the deadline is “Independence Day”)
• If Loudoun opts in, they will move forward with the plans to extend the metro rail all the way to Route 772 (Loudoun County Parkway)
• If Loudoun opts out, the metro rail will stop at Dulles airport
• As you may have already guessed, Pat Nowakowsk and Patricia Nikoson are proponents of extending the metro rail all the way to Route 772 while the Honorable Suzanne Volke and the Loudoun County Board of Supervisors in general are a bit skeptical about it
• Loudoun is skeptical because the studies conducted are not very in-depth and leave out key considerations that should be taken into account. In situations like this, not being thorough and not taking everything into consideration can easily equal millions of more dollars in additional costs to Loudoun.

Here is my $0.02…

The Dulles/Loudoun metro rail project sounds good at first. The metro rail out to Arlington and then Falls Church and Vienna made a large and good impact on Fairfax County and didn’t empty their coffers. And extending the metro rail to Tyson’s and Reston makes sense as well. So it should be good for Loudoun as well, right?

After looking at the small print, I don’t think so. And here’s why…

Fairfax County has a corporate tax base of 30+ percent. But Loudoun has a corporate tax base of only about 18 percent. This means that Loudoun County home owners will bear a much higher responsibility when it comes to paying the tens of millions of dollars per year in operating and maintenance costs associated with the Dulles/Loudoun metro rail project.

Fairfax County has a much higher population than Loudoun County – 1,086,743 versus 312,311 (2010). This puts the cost/tax burden per resident and home owner in Fairfax County at a much lower amount than per resident in Loudoun County.

A good number of folks who will use the metro rail in Reston and Tysons’ will be working in Fairfax County and bringing jobs (and corporate taxes) to Fairfax County to help offset the cost. Some of them will also live in Fairfax County which will add to the residential/home owner taxes collected by Fairfax County.

On the other hand, the overwhelming majority of people using the metro rail in Loudoun County will be commuting to/from jobs in Fairfax County, Washington, DC and other parts of the metro area – not Loudoun County.

And let’s not forget to address the issue of people who live in other counties in VA, West Virgina or even Maryland who will be commuting along Route 50, Route 7, Route 9 and Route 15 to the metro station in order to go work in Fairfax County, DC, etc.

In essence, Loudoun County will be subsidizing neighboring localities and non-Loudoun residents.

Yes, subsidizing. Because for every dollar it costs someone to ride the metro, Loudoun will pay about half of that out of the county budget. When a metro rail rider pays $5 for a fare card, Loudoun will have to cough up about the same amount to cover the actual cost of trip.

Where does the money come from for that subsidizing? Taxes. And with such a low corporate tax base, it’s Loudoun County home owners who will get the bill stuck to them. It’s either that or Loudoun starts cutting services (and we all know how well that will go over with residents).

Now here’s the kicker (warning, PG-13 language coming up)…

Loudoun is damned if they do and damned if they don’t.

If Loudoun does NOT back out of the full Dulles/Loudoun metro rail project (aka Phase 2), they will be going in semi-blind not knowing what to fully expect when it comes to ridership, costs, future impact on residents and home-owners, etc. Current operating/maintenance costs are estimated at $30M per year. That’s a lot of money per year, but it could be a lot more than that (and most likely will be).

If Loudoun DOES back out, albeit lower, they will still have to pay a percentage of the metro rail project out to Dulles Airport. And many metro rail proponents will call the current Loudoun County Board of Superivsors, “the ones that killed that metro rail project”.

A deal with the devil was made…

Yes, I said devil. Because that’s what MWAA is starting to look and feel like. MWAA is paying a percentage of the costs of building the metro rail, but they are not responsible for much, if any of the operating/maintenance costs. And they’re passing the buck of paying the debt service on to guess who…the counties.

All the while, MWAA will retain control of the toll amount on the Toll Rd. They’ve already received approval from Virginia to raise the rates over the course of the next decade or so. Imagine paying $5 at the smaller tolls along the Dulles Toll Rd and over $16 at the big Dulles Greenway Toll (that’s each way).

Now stop imaging. Because that’s what they project tolls will be by 2026 – and that’s IF the operating and maintenance costs of the metro rail stay in line with MWAA’s “projections”.

On a related note…the Dulles Greenway is the most expensive road to drive on per mile in the United States. And the deal MWAA got on the road/land to begin with makes what they’re charging highway robbery (literally).

In case you’re wondering how Loudoun got stuck in this position to begin with…well…that’s a conversation for another day. Unfortunately, there’s no third option. It’s either in or out and both options cost a lot of money.

The current Loudoun County Board of Supervisors have it tough… They have the responsibility of making what is probably the biggest and most financially influential decision in Loudoun County’s history. And there’s no option that won’t cost Loudoun residents a lot of money nor leave both sides of the fence happy.

P.S. There were many more details discussed during the Dulles/Loudoun metro rail presentation. If you would like to get those details or discuss the project and its’ impact on Loudoun in more depth, feel free to call me – 703.582.6900.

What Happens if Loudoun Backs Out of the Dulles Metrorail Project?

Loudoun County is considering backing out of the Dulles Metrorail project. More specifically, Loudoun may back out of the last two planned stops on the Silver Line in Loudoun County- Route 606 and Route 772. If this happens, it will have a huge impact on Loudoun, its’ residents and home values.

Why is Loudoun County considering backing out of the Dulles Rail project?

• Loudoun officials want an above ground station at Dulles Airport far from the actual terminal versus MWAA’s more expensive $300 million underground station that drops passengers close to the main terminal.
• This additional cost is on top of the already $1 billion dollar increase in costs to the project. And costs could very well go up even more as the project moves forward.
• Loudoun is responsible for 4.6 percent of costs associated with the building of the project
• Due to the additional costs, tolls would rise to $6.75 (one way) with Federal financing and $10.75 (one way) without Federal financing

What happens to the Dulles Rail project and stations within Loudoun if Loudoun backs out?

• The last two stops on the Silver Line would be scrapped and the Metrorail would end at Dulles Airport
• Since the Dulles Airport station is in Loudoun County, Loudoun will still be responsible for the operation and maintenance of the airport station
• Parking at and around Dulles Airport would be affected – the proposed neighboring Route 606 Metrorail station would have provided parking garages with 6,000 parking spaces

The affect on Loudoun, its’ residents and home value if Loudoun back outs of the Dulles Rail project…

Developments well into (and even beyond) the planning and approval phases will be greatly scaled back if not scrapped altogether. We are talking about millions of dollars and thousands of man hours already spent only to be thrown away at the 11th hour.

We are also talking about Loudoun sending this message to Comstock, Claude Moore Foundation and other developers,
“Don’t take our word for anything. We may just change our minds at the last minute and leave you out to dry.”
This negative stigma will reputation will stick around Loudoun for many years to come. If you think that this may not affect you as a homeowner, think again…

The majority of Loudoun’s tax base comes from residential property taxes (aka homeowners). If the corporate/business tax base increases, the tax burden on homeowners would decrease. If the corporate/business tax base stays the same or goes down, the tax burden on homeowners will increase.

Furthermore, all of the cool developments, their amenities and positive affects on home values be no more. Just look at the affect metro had on Arlington back in the day and is having on Tyson’s and Reston today…

Once the metro came out to Arlington, property values went up. Arlington became a desirable place to live and has further prospered as an easily accessible area with developments and amenities galore.

Fast forward to Tyson’s and Reston today…property values in both areas started going up well before the rest of NoVA showed any signs of stabilization or recovery. I can give you countless examples of property values going up 10 to 30 percent over the last 18 months around the future Metrorail stations including roads and arteries to/from the Tyson’s and Reston stations. I highly doubt we would be seeing this type of appreciation without the metro.

Coincidence or not?

Is it mere coincidence or is thanks to the proposed metro stations at Route 606 and Route 772 that Brambleton, Loudoun Valley Estates, South Riding, Stone Ridge and other neighboring communities have seen sales go through the roof and values hold strong over the past 18 months?

Considering that every buyer I have come across looking in those areas over the last 2 years has mentioned the future metro stations as a reason for considering buying there, I’d say it’s definitely not a coincidence.

Now consider what would happen if Loudoun backed out of those stations.

I usually remain objective in my posts, but I’m interjecting my $0.02 this time…

- Yes, costs are important to consider. And yes, costs have skyrocketed. But you should have anticipated this if you’ve read even one U.S. history book in your lifetime.

- You should be looking hard for alternatives such as Federal financing/assistance rather than just thinking about scrapping the project.

- Consider the affects on the residents and overall reputation of Loudoun.

- Consider the good the proposed metro has had on the area already, its’ future positive impact and the negative impact it will have if its’ scrapped.

- Think long term rather than just tomorrow.

It would be a shame to see Loudoun County back out of the Dulles Rail project – for everyone’s sake. I hope Loudoun County can get it together and move forward rather than backward.

 

Photo Credit

This Month’s Special: 58% Off Greenvest Land in Loudoun

Vienna-based Greenvest LC used to own 4100 acres in the Dulles South area of Loudoun County. That all changed two days ago when the land, valued by some at $165 million, was auctioned for $69 million.

iStar Financial, the company that originally lent Greentvest $130 million for the land, foreclosed on the land. The land was auctioned off this past Tuesday at the Leesburg courthouse steps.

The winning bidder?

iStar Financial (they sure love spending money, don’t they?)

What led to the foreclosure auction?

Greenvest was hoping to have the land subdivided into four communities — Greenfields, Lena, Broad Run Village and Arcola. But the public outcry against further intercounty development and the congestion that would come along with it led to the county denying requests to rezone the land. And that left the development dead in its tracks.

Last year, Greenvest tried to sell 100 of those acres to the Loudoun County school system, which wanted the land for future schools. The Loudoun School Board rejected the idea over concerns that the $20 million price tage was too high.

With no chance of moving forward with the development, Greenvest defaulted on its $130 million loan. That led to foreclosure proceedings, Tuesday’s auction and iStar Financial, the company that originally lent Greenvest the $130 million, buying the land back for $69 million.

What now?

iStar Financial will try to sell the land in order to recoup some of the money lost (and spent) throughout this whole ordeal. But they face some serious hurdles:

• previous requests to rezone the land have been denied
• tightened lending/financing guidelines
• a weak local and national economy
• increased proffers (click here for more on that)

On a related note, the $165 million valuation seems to have come from Loudoun County itself – probably for tax revenue purposes – and is most likely not the land’s true market value (just look how much it actually sold for at the auction).

At $16,829 per acre, it may seem like quite a bargain. But it may be a while before iStar sees a return on their purchase. As one real estate developer who attended the auction said, “I don’t buy green bananas.”

1st Annual Dulles Home Fair Offers Free Classes for Consumers

The 1st Annual Dulles Home Fair, presented by the Dulles Area Association of Realtors, will offer free classes to consumers on a variety of real estate related topics. Some of the topics being taught/discussed are:

• Keeping Score: How to Monitor and Fix Your Credit
• Homeownership 101: How to Buy a Home
• County Housing Opportunity Programs
• The Legal Pitfalls of Foreclosures
• Staging your Home for Resale
• The State of the Housing Market
• Finding and Working With a REALTOR®

The classes are free as part the Dulles Home Fair Consumer Day on Saturday, June 13, 2009. Doors open at 9:00am and the event goes until 4:00pm. The Dulles Home Fair is being held at the Embassy Suites Hotel Dulles North, 44610 Waxpool Road, Dulles, VA 20147.

UPDATE: Click here for the schedule of free classes on Consumer Day at the 1st Annual Dulles Home Fair