Industries

Fairfax still attracts

Recession fails to stanch stream of new businesses

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Print this page by Robert Burke

Of all the places in Virginia that could use a dollop of federal cash, Fairfax County would probably not be at the top of anyone’s list. It’s true that the recession did damage here — especially in the construction and retail sectors — but other places have suffered far worse. Yet, the biggest project in Virginia funded through the federal government’s $787 billion stimulus package is happening in Fairfax. Work began this year on the $140 million extension of the Fairfax County Parkway, and President Barack Obama showed up in February and October to praise the project, which federal officials say will support 221 jobs.

When the parkway extension is done in 2010 it will improve access to Fort Belvoir’s Engineering Proving Grounds, which is set to gain almost 20,000 workers in the next few years through the Base Realignment and Closure process. “If we can put Americans to work rebuilding the Fairfax County Parkway, we can help get the economy moving again in Fairfax County,” Obama said during his October visit. “And if we can get the economy moving in Fairfax County, we get it moving across Virginia.”

That’s a decent argument for celebrating any good economic news out of Fairfax. One million of the state’s 7.8 million residents live here, and Fairfax alone provides about a quarter of the state’s annual income tax revenue, as county leaders like to point out. The truth is, the economy in Fairfax is chugging along well enough. This is, after all, the second-richest big county in the country, with a median household income of more than $107,000. (Only neighboring Loudoun County is wealthier, at $111,000.) Plus, unemployment here was 4.7 percent in September, two percentage points lower than the state average.
The jobless rate remains relatively low because companies have continued to set up shop in Fairfax, despite the recession. In the past two years, Hilton Worldwide and Volkswagen of America moved their headquarters here, for example. In September, Science Applications International Corp. (SAIC) moved its headquarters from San Diego to an existing office in Tysons Corner, making it the county’s seventh Fortune 500 company. The county’s latest big catch is the Ignite Institute, a health research organization focused on personalized medicine. (See story on page 99.)

Tysons is the heart of the county’s commercial growth, and it’s going to get bigger. County leaders are making plans to transform this sprawling car-centered area into a high-density, pedestrian-friendly urban center that would grow over the next few decades to about twice the current 44 million square feet of commercial and residential space.

A major piece of Tysons’ $15 billion makeover has already begun. Workers broke ground earlier this year on the first phase of an extension of the Metrorail system, which will bring four Metrorail stations to Tysons. The highest density levels of new development would be built around those stations, according to the county’s plan.

What has helped make Tysons grow so fast is location. “We moved to be closer to our main customer, which is the federal government,” says SAIC spokeswoman Laura Luke. The company already employs about 6,000 people in Fairfax and plans to hire 1,200 more in the next three years.

Small- and medium-size companies are coming, too. In August, Meridian Imaging Solutions, which sells and services office technology hardware and software, moved its 90 employees from Alexandria to a new, 33,000-square-foot building in eastern Fairfax. “There was nothing inside the Beltway that could compete with what we found here in Fairfax,” says Trina Edwards, Meridian’s vice president of business operations and marketing. “We’ve got room to grow now.”

There are also some indications of growth in the residential real estate market. That is a good a good sign in any Virginia county because local revenues depend on property values. In September, the most recent data available, single-family detached houses in Fairfax were selling 12 percent higher than a year earlier, a median price of $365,000. Tom Pietsch, a broker with Long and Foster who works in the Alexandria-Springfield area, says prices are up because the housing inventory is less than half of what it was a year ago. “Prices certainly went down from 2006 on, but we’ve managed to hold things in line, and this has been a very good year,” he says.

Plus, houses are selling quicker — 72 days on the market, compared with 103 in September 2008, according to the Northern Virginia Association of Realtors. “One of the great things about doing business here is that there’s always people moving in and moving out,” says Pietsch.

While prices have edged up lately, they’re still way down from a few years ago. Pietsch says that trend is attracting buyers who were previously priced out of the market. “Now we’re getting a lot of people looking for single-family houses at $350,000, and you can do that now.”

Still, the overall decline in property values is taking a toll on Fairfax’s top-rated public school system.  The county is home to Thomas Jefferson High School for Science and Technology, for example, ranked the best high school in the nation by U.S. News and World Report. The county’s 174,000-student school system added about 5,000 students this year but faced $18 million in budget cuts that eliminated nearly 800 positions. Now school leaders say it’s going to get much worse: The system is facing a $176 million budget shortfall for fiscal year 2011, which will force more cuts in jobs and academic programs, and require bigger classes. The main reason: declining real estate tax revenues.

School board member Jane K. Strauss, who chairs the board’s budget committee, argues that there’s a clear link between the quality of public schools and the county’s business success. “If our schools begin to unravel, then test scores begin to fall and people begin to look hard at other options” for educating their children, she says. “How well then can we sustain the business economy that drives the rest of the commonwealth? SAIC, Volkswagen — why do they come here? It’s not because of the roads. We know it’s because of the quality of the schools.”

Gerald L. Gordon, president and CEO of the county’s Economic Development Authority, acknowledges the hit the school system is taking as county spending goes down across the board. The county had to fix a $700 million deficit last year, and a $350 million deficit is projected in the coming budget, which will be finalized in mid-2010. The school system “will take a hit like everybody else … the bottom line, however, is that Fairfax County schools will continue to be excellent,” he says. “It’s the community that can sustain those cuts and still provide quality of life that will get the business community to come here and keep coming.”


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