Return to Virginia Business - July 2003

Virginia’s 800-pound gorilla
Fairfax County has it all: great schools, stores and location. Plus, some of the worst traffic and tax problems anywhere

Related story:
An interview with George Mason’s Alan Merten

by David Hubler
for Virginia Business
July 2003

If developers have their way, a 60-acre tract of land not far from the glitzy Tysons II shopping mall will cement Fairfax County’s position as the business epicenter of both Virginia and metropolitan Washington, D.C. Nine steel and glass towers would be erected. One would shoot up 350 feet, taller than any building in the Old Dominion or the District of Columbia, where building height is limited by law. If the mixed-use project is built, the controversial Tysons Corner Urban Center would symbolize the good and bad of Virginia’s richest and most densely populated county.

Indeed, Fairfax has become an 800-pound gorilla. Once a verdant pastureland that in the 1950s led Virginia in dairy production, the county has morphed into Virginia’s economic powerhouse and its poster child for high technology. The county has added 10,000 companies and 200,000 jobs since 1990. Today, with a population at just over 1 million, Fairfax is Virginia’s biggest county, more populous than seven states. One in seven Virginians calls Fairfax home. At tax-time 2002, residents contributed a whopping 26.4 percent of Richmond’s income tax revenue.

Dubbed the best-managed county in the U.S. by Governing magazine, Fairfax leads in many areas. It boasts the state’s highest median household income — as high as $90,000 by some estimates — placing it among the top three counties in the U.S. It has the biggest work force — 532,000 — in both Virginia and the Washington, D.C., area. With more than 165,000 students, Fairfax is the 10th largest school system in the country and consistently ranks among the nation’s best. Newsweek magazine’s recent list of the nation’s top public secondary schools included all 23 Fairfax high schools.

But Fairfax’s remarkable size and successes — and Virginia’s anachronistic tax structure — could prove the county’s undoing. Fairfax has become synonymous with high taxes and traffic congestion. A proposed half-penny sales tax increase to raise money for highway and public transportation improvements was rejected by voters last November. The 1990s high-tech boom is gone, leaving commercial vacancy rates hovering at 20 percent — among the highest in the D.C. area. Taxes are another issue and property assessments are up. A lopsided state treasury returns to Fairfax only 19 cents for every tax dollar the county sends to Richmond. And, while excellent, the county’s public schools have become overcrowded.

Fairfax Board of Supervisors Chairman Katherine K. Hanley says because the state controls about 90 percent of all taxing sources, the major challenge for the county is to find ways to diversify its revenue base away from just property taxes. “Our budget is now almost 60 percent based on real estate revenue, and about 80 percent of that is residential,” she says. “By law, we must assess at fair market value.” The county’s very hot residential real estate market over the past few years has sent home values — and homeowners’ tax bills — soaring.

To understand Fairfax’s conundrum, consider Tysons Corner, the county’s de facto downtown and site of the planned Urban Center project. A rural crossroads as late as the 1960s, Tysons Corner is now Virginia’s largest office market and one of the leading business centers in the nation. Its 22.4 million square feet of office space and 2.1 million square feet of retail space put it among the top five markets in the U.S. — larger than Baltimore, Pittsburgh, Miami, Kansas City, or St. Louis, among other major cities. It is also a major shopping destination with high-end department stores such as Neiman Marcus and Saks Fifth Avenue drawing customers from the entire D.C. area and miles downstate.

Therein lies the problem. Tysons Corner is such a draw that it lures in 100,000 workers and 55,000 shoppers every weekday. The Urban Center would only add more — a factor that persuaded the county planning commission to recommend rejection of the plan in late May. Linda Smyth, the county planning commissioner whose jurisdiction includes Tysons Corner, says the negative vote came because the developer, Lerner Enterprises in Tysons Corner, didn’t address the commission’s biggest problem with the project. “They did not have a very firm commitment to an effective, binding traffic demand management program,” she says. Both sides are attempting to work out a compromise and eventually gain county approval.

One possible solution to crowded roads is moving along at a snail’s pace — the $3.3 billion extension of Metro rail service from the East Falls Church station to Dulles International Airport with three stops at Tysons Corner. Fifty percent of the Metro extension funding is to come from the federal government with the state and local jurisdictions splitting the other half. William Lecos, president and CEO of the Fairfax County Chamber of Commerce, says the single biggest priority for Fairfax is to get the full transportation infrastructure that it needs to grow in a mixed-use, smart way. “And that won’t happen without mass transit,” he says. “This is not a pie-in-the-sky type vision anymore. They have everything but the money.” The failure of the sales tax referendum last November could mean that the rail extension will be completed in about two decades rather than 2010.

New bridges are another sore point. For years, area commuters have been urging construction of a new bridge across the Potomac River and a limited access highway, the “Techway,” linking Maryland’s I-270 corridor and Route 7, which runs through Tysons Corner into neighboring Loudoun County. The Northern Virginia Transportation Alliance calls the 35-mile gap between the American Legion Bridge and the Point of Rocks Bridge the region’s single greatest transportation deficiency. “The lack of bridges outside the Capital Beltway forces tens of thousands of area residents to make lengthy round-about trips which, over the course of a year, waste millions of hours of time,” says Bob Chase, who heads the nongovernmental group.

But the bridge and road plan has been stalled as opposing groups fight over its merits, its location and its cost, which has skyrocketed to a projected $700 million — if it were built today. Chances of its construction anytime soon are indeed slim. The Virginia Department of Transportation’s new six-year program allocates $400,000 for a Techway study, but only $9.9 million for 12 already approved projects for all of Northern Virginia.

Yet simply paving more roads won’t do much to solve the problems confronting Fairfax or the planned Urban Center. The issues are much more complex. The county for years has locked itself in with a low-density approach and has not done much strategic planning to build mixed-used projects that are less dependent on automobiles. One irony of the Urban Center project, for example, is that it actually offers higher density occupancy and use than what has been the norm in Fairfax.

Even so, the Coalition for Smarter Growth, a regional grouping of 40 organizations working to fight sprawl and promote mass transportation, has reservations about the Urban Center, fearing that it will jack up car traffic. Executive Director Stewart Schwartz says most so-called “New Urbanist” planners believe Tysons Corner actually has to become more dense, with buildings built closer to the street, a better grid of streets, and be more pedestrian friendly to actually reduce traffic congestion. The Urban Center design favors cars over pedestrians, he says, and just building more roads won’t help.

One advocate of more radical measures is Ed Risse, a regional planner who lived in Fairfax County for more than 20 years. He says Fairfax’s problem is not too many people, it’s just too many people in the wrong place. “There is a myth,” he says, “that you can live wherever you want, work wherever you want, seek your services wherever you want and somebody can build a road system or a school system or a library system or anything else that can provide for the needs of those people. [But] it is not one place, it is a number of places and each one of them has to be planned as a balanced community.” Risse believes Fairfax could adequately house double its current population of one million if it were developed as balanced communities, all with jobs, housing, services and other amenities. “But they have scattered [residents] across the county in an unsustainable pattern,” he says.

As it is, Fairfax is projected to add another 200,000 residents over the next 20 years and they are bound to stress more than just the county’s road system. “Fairfax County has gotten too large. If it has a problem, it’s that it’s too large,” says Supervisor Stuart Mendelsohn (R), a critic of the county’s growth, whose district includes portions of Tysons Corner. Underlying Mendelsohn’s complaint is a financial dilemma: population growth does not mean proportional increases in county coffers and more schools and services.

Draconian measures are already being proposed to prop up revenues. A new Fairfax guideline would require residential builders to give the county $7,500 for each school-age child whose family moves into a new development. The idea is to get builders to contain family-style units and keep school enrollment manageable, and thus not break the county budget. The city of Falls Church, which sits in the midst of Fairfax County, is doing the county one better. It plans to levy a $15,000 per child fee on one developer if his 80-unit condo complex exceeds the limit of eight schoolchildren.

Better than half of Fairfax’s budget goes to education and Superintendent of Schools Daniel Domenech has no apologies. A high-quality school system “is what attracts people to Fairfax County. That is why businesses come to Fairfax. That’s why we are such a vital part of the economy here.” He insists that the system has done much to cut costs. Other county officials say they’ve been hit with surprises, such as the extra expenses of homeland security. However, the Fairfax County Taxpayers Alliance, an anti-tax watchdog group, blames the expanding county work force for needlessly pushing up real estate taxes by almost $1,000 per family over the past four years, the largest rise in the 22 years. “They’ve never had more money,” says FCTA President Arthur Purves.

Like all counties in Virginia, Fairfax’s taxing authority is severely circumscribed. Sen. Richard Saslaw, (D), minority leader in the state Senate and a longtime county resident, believes the state’s tax structure is antiquated and that counties should have the same tax powers as Virginia’s cities. “There’s no reason why Alexandria should be able to put a 50 cent tax on tobacco products and Fairfax County cannot,” he argues.

Fairfax remains the fiscal engine that powers the state. Seven Fairfax County-based companies made Fortune magazine’s list of the largest companies in America this year, led by Freddie Mac, the mortgage-financing corporation. Others are defense contractor General Dynamics; Capital One Financial, a financial services corporation; telecom Nextel Communications and media giant Gannett. The lone newcomer to the list was homebuilder NVR, which a Virginia Business survey found to have one of the best financial performances in the state (page 28). In April, information technology giant Unisys announced that it was consolidating its Global Public Sector headquarters in Fairfax, adding 900 new jobs over the next three years.

While Fairfax County has had a net job growth of 22,000 over the last two years, according to the FCEDA, commercial real estate remains in the doldrums following the collapse of the telecommunications and Internet sectors. The trend lately is for companies to move closer to the district in places such as Arlington, Alexandria or Bethesda, Md. Commercial vacancy rates are in the low 20 percent range — very high for Fairfax. Bill Rucker, senior vice president of leasing for West*Group, puts the overall vacancy rate in the Tysons Corner area at 16 percent. “But if you consider space that’s available for sublease, that number goes up to ... about 23 percent,” he says.

The next hurdle will be fall elections. Local business interests, developers and politicians are now choosing sides for a complete slate of state legislators, a new school board and a new board of supervisors. About the only thing most residents can agree on is that, no matter who wins, very few major problems will be solved anytime soon. After all, an 800-pound gorilla — and a growing one at that — doesn’t move too quickly.

Return to Virginia Business - July 2003