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Another Unwarranted Special Tax on

Restons Station Area Residents

Reston 20/20 Committee

November 7, 2016

The RNAG has two purposes:

Generate a street improvement plan that will accommodate increased


traffic in Restons urbanizing areas.
Create a funding plan to finance the street improvements.

RNAG actually comprises two groups:

The Stakeholders Group made up mostly of developers and their


associates.
RAs CEO represents Reston Association on this group.
Five Restonians selected by Supervisor Hudgins comprise the
Community Group portion of the RNAG.
None of the Community Group members lives in the Reston station
areas.
Robert Goudie, member of the Stakeholders Group and Executive Director of the
RTCA lives in RTC West.

Reston 20/20 Committee

November 7, 2016

The tax proposal is called a Transportation Service District (TSD).


The TSD applies to all property owners in the Reston Metro station areas.
This includes about 2,600 current homeowners.
The value of owned homes in Restons urban area is ~$1.9 billion.

Reston 20/20 Committee

November 7, 2016

FCDOT puts the overall Private Share


Reston road funding gap at $350
million over 40 years.
The Private Share comprises both a
developer Road Fund & the allproperty owner TSD tax.
The TSD portion of the funding gap
varies depending on how much is
funded by the Road Fund.
The TSD tax would go to fill an alleged
$108MM-$175MM funding gap
depending on the option selected.
RNAG is currently recommending three
options with TSD tax rates ranging
from $.017-$.027/$100 valuation
depending on the option.

Reston 20/20 Committee

Contribution Rates and Related Shortfall

Funding Scenarios Proposed

Scenario 1: Tysons residential rates


Scenario 2: Tysons commercial rates
Scenario 3: Rates proportional to
development in Reston TSAs
Scenario 4: Tysons rates and Service
District over Reston TSAs
Scenario 5: Tysons rates and Tax District
over Reston TSAs
Scenario 6: Tysons Rates and Service
District over Reston &TSAs
Scenario 7: Tysons Rates and Service
District over Small District 5
Scenario 8: General adjustment from
Tysons rates, -11%
Scenario 9: Specific adjustments from
Tysons rates, +15% residential, -19%
commercial
Scenario 10: Splits $350M equally
between Road Fund/Service District
and maintains Tysons proportions for
Res/Com road fund rates
Scenario 11: Similar total out of pocket
expense per Road Fund (residential)
contribution and Service District (avg.
home) contribution

Road Fund

Transportation Service District -- Reston TSAs

Residential Commercial
(per DU)
(per GSF)

Added Funding Transportation TSD Contribution


Needed to Meet Service District (%) to $350M
$350M ($M)
Rate
Funding Gap

$2,571
$4,627

$18.34
$12.63

$0
$0

N/A
N/A

0%
0%

$7,058

$5.88

$0

N/A

0%

$2,571

$12.63

$79

0.012

22%

$2,571

$12.63

$79

N/A

22%

$2,571

$12.63

$79

0.012

22%

$2,571

$12.63

$79

0.012

22%

$2,288

$11.24

$108

0.017

31%

$2,957

$10.23

$80

0.013

23%

$1,635

$8.19

$175

0.027

50%

$2,080

$10.09

$132

0.02

38%

November 7, 2016

With 3%/year appreciation over the


four decade planning period, the
TSD will add an average of $320$350 annually to homeowners tax
bills if there are no rate increases.
The Board of Supervisors can
increase the TSD tax rate anytime.
A similar TSD tax in Tysons has seen rates
rise from $.04/$100 to $.05/$100 valuation.
TSD tax rates in Tysons are expected to
rise to $.06/$100 or more as growth
accelerates.
The Board could increase the Reston TSD
rates to comparable levels.

The tax will continue indefinitely,


including after all the streets have
been built or upgraded as planned.

Reston 20/20 Committee

With 3%/year appreciation, the Reston


TSD would generate $168MM$268MM over the 40-year plan period.

November 7, 2016

The grid of streets comprises $305MM


of the so-called $350MM funding gap.
The grid of streets are privately-owned
streets on developer property between
Restons public roads, such as RTC.
In essence, Reston station area residents
public taxes will be transferred to
developers to build private roads in their
for-profit ventures.
In Tysons, developers pay for the
development of all its grid of streets.

The Planning Commission recommended this


approach and the Board approved it.

Tysons grid of streets is projected to cost $865MM


over 40 years in $2012, less than for Restons station
areas although Tysons covers a larger area2,100
acres vs. Restons 1,700 acres.

Reston station area homeowners would pay some $80MM-$150MM for


these private roads depending on the funding option.
Reston 20/20 Committee

November 7, 2016

The new Reston Master Plan calls for:

Population in the station areas to increase eight-fold to 88,000 residents.


Employment in the station areas to increase by half to 123,000 jobs.

Tysons transportation plan calls for spending $953MM on bus transit over 40 years.

Tysons currently has limited bus transit service.


NO Tysons TSD funds will be used to fund the transit.
The bus service will serve about 200K employees and about 100K residents at buildout.

FCDOT claims that re-routing the current Reston bus service will be adequate to meet future needs.
It will not be adequate.

So how does this make sense?

Reston TSA Comprehensive Plan Development Potential

New
Added Jobs & Total GSF & Total Jobs &
Land Use
Development
Residents
DUs
Residents
Potential (GSF)
Dwelling Units
5,860
11,720
38,140
76,280
44,000
88,000
Residential
5,860,000
46,940,000
52,800,000
Office
20,982,169
69,941
8,717,831
29,059
29,700,000
99,000
Retail
1,094,476
2,432
1,005,524
2,234
2,100,000
4,667
Industrial
841,957
1,684
-251,957
(504)
590,000
1,180
Institutional
2,096,840
5,242
303,160
758
2,400,000
6,000
Hotel
936,782
2,342
3,963,218
9,908
4,900,000
12,250
Total Non-Res
25,952,224
81,641
13,737,776
41,456
39,690,000
123,097
Total
31,812,224
93,361
60,677,776
117,736
92,490,000
211,097
Reston Funding Plan: Potential Cost Allocations, FCDOT Presentation, February 22, 2016
2010 Existing
Land Use (GSF)

Reston 20/20 Committee

Current Jobs &


Residents

November 7, 2016

With 3%/year property value


appreciation, TSD revenues will
outstrip County tax revenue goals by
$60MM-$93MM.
Because the TSD revenues must
be spent in the Reston TSD, the
surplus will almost certainly be
spent on better bus serviceand
require a higher tax rate.
40-Year TSD Tax Revenues with 3%/Yr Appreciation ($MM 2016)
TSD Tax
Rate
$.017/$100
$.020/$100
$.027/$100

TSD Revenue
Goal
$108
$132
$175

TSD Revenue @
3%/Yr Appreciation
$168
$198
$268

Excess Tax
Revenue
$60
$66
$93

The 60 million GSF of added space


by developers will generate huge
profits even after investment costs.
3% appreciation/year will only nearly
double those profits over 40 years.
Appreciation will be critical to new
development profits.

40-Year Reston Station Area Developer Profits*


Net Operating Income
New Construction
Existing Development
Total
Total per Year

No
Appreciation
$203
$44,559
$44,762
$1,119

3%/Yr
Appreciation
$2,576
$83,996
$86,571
$2,164

*Estimated based on data from Boston Properties 2015 annual


report.

In contrast, station area homeowners will likely pay out $168MM-$268MM in


TSD taxes ($2016)--~$400-$500/year on average--with no financial return.
Reston 20/20 Committee

November 7, 2016

The Board has chosen not to be flexible in either its allocation of


existing tax revenues or increasing county-wide tax rates to cover
the cost of Restons roads, much less expanding its bus system.
Shifting 1-1.5% in annual County transportation funding budget, now at
$300MM, would generate the $3-$4MM needed to fill the Reston road
funding gap.
Alternatively, very small increases in County tax rates would achieve
the same goal.
A change in the RE property tax rate would be less than a millionth of one
percent.
A $.0002/$100 addition to the C&I $.0125/$100 tax would also fill the
funding gap.
Other County tax rates, individually or combined, could also be increased
by very small amounts to help fund Restons road improvement needs.
Reston 20/20 Committee

November 7, 2016

Both the County and developers will see huge financial gains from development and
appreciation of property in Restons station areas.
The County will collect an extra $4 BILLION in base property tax revenues over the next
40 years because of new development in Restons station areas with no rate increase.
The Reston road improvements would use less than 10% of this extra base property tax revenue.
Expanding bus service would add hundreds of millions to County costs over several
decadesand lead to substantial TSD rate increases that would continue indefinitely.
Reston station area homeowners will see NO increase in their income as a result of the
development, yet they are being asked to fund between 1/3 and of the TSD costand will likely
end up paying a much larger share.

Those who benefit financially from Restons urbanizing development--developers


& the County--should bear all the costs of developing its infrastructure, including
street improvements and additional bus service.
The Reston TSD tax proposal is not about the small amount of funding needed to
improve public streets in the Reston station areas to serve future growth.

The reason for the proposed Reston TSD is that the Board wants to create
a new tax revenue stream whose rates and uses it controls indefinitely.
Reston 20/20 Committee

November 7, 2016

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