The County Manager’s proposed budget indicates that commercial real estate tax assessments dropped by $537 million in 2014 or 2.6% from the previous year. This is the first significant drop in commercial real estate assessments since the BRAC closures in 2011-12 and reflects the 23% office vacancy rate reported by the Washington Post in September, 2014.
Clearly the County must consider business tax relief or otherwise face the likely exodus of more commercial tenants like NSF and Fish and Wildlife Service. One candidate for elimination is the 12.5 percent commercial real estate surcharge tax, the proceeds of which go to the Transportation Capital Fund for projects like new ART buses and the scuttled Columbia Pike trolley.
However HB 2313 adopted by the General Assembly in 2013 stipulates that unless localities raise the tax they forfeit their prorated share of a regional tax dedicated to transportation projects through the Northern Virginia Transportation Authority (NVTA).
In view of the fact that Arlington is now locked into the commercial real estate surcharge tax, the only viable source of relief to local businesses is a reduction in Business Improvement District (BID) taxes imposed on Rosslyn, Ballston and Crystal City. I urge County Board to consider a reduction in the BID taxes for these business districts as the necessary first step in preventing the further exodus of businesses from the County.
Not only has the Silver Line opened up new opportunities for local entrepreneurs but the Orange Line as well. Consider for example that Merrifield has undergone a business renaissance that has converted a parking lot and adjacent industrial corridor near the Dunn Loring Metro into one square mile of mixed use development replete with high rise apartments and big box stores. Arlington needs to meet the competition from Fairfax County with lower business taxes.