The Herndon Town Council met Tuesday night in a work session to discuss downtown redevelopment.
The council discussed a proposed amendment to the existing comprehensive agreement with Comstock Herndon Venture, LC, from 2017.
The redevelopment was first proposed in the 1980s and a handful of proposals over the years were heard for the project, but none materialized.
In the Nov. 10 work session, town manager Bill Ashton and town attorney Lesa Yeatts laid out issues that have delayed the redevelopment project and detailed proposed amendments to the comprehensive agreement the town has with Comstock.
When finished, Comstock will develop the area into a mixed-use neighborhood. It will include 273 apartments, a 787-space parking garage, 18,000-square-foot arts center and 17,000 square feet of retail space.
Ashton pointed to a variety of issues that have caused delays because of economic pressures. Among those, he specified rising commodity and labor prices as a result of a thriving construction market in Metro DC since 2017. He also cited COVID-19 economic pressures that included commodity issues when mills were closed down.
He also recognized a reenergized interest from the community and its “palpable frustration” that was shared by the council about the delays in the redevelopment.
“They were certainly well founded, but it was out of the fact that we couldn’t just rush into development when we had these economic pressures sitting out there,” Ashton said.
Yeatts presented to the council members a variety of amendments to the comprehensive agreement with Comstock to address issues and other concerns.
The existing agreement has the town contributing land with an assessed value of roughly $10 million, and $3.6 million cash that is broken into two categories, according to Ashton. The first category for the cash value is $2.2 million to be utilized for the project.
The remaining $1.4 million is to be used in a series of allowances that will allow the town to take care of its obligations prior to releasing the property. Those obligations include environmental remediation, transitional downtown parking, transitional art space relocation and box culvert repair for the storm water management feature.
According to a presentation from Yeatts and Ashton, the changes to the existing agreement include:
- Establishing the closing date on the property on or before Dec. 15, 2020.
- Permitting the satisfaction of certain conditions precedent subsequent to the conveyance.
- Requiring town appropriation prior to closing.
- Adjusting the outside satisfaction date by which Comstock must have the project under construction to Dec. 31, 2021.
- Extending certain rights of Comstock to pause the commencement of construction (up to 24 months) due to market conditions and other matters, including delays caused by the COVID-19 pandemic.
- Increasing the parent guarantee by an additional 5 million to 10 million to cover the arts center and the parking.
- Priority recordation of a parking easement on the site for a minimum of 162 spaces.
“These financial economic stresses led us, both parties, to feel that negotiation of an amendment to the existing agreement between us would really improve our situation,” Yeatts said.
She highlighted the priority recordation of a parking easement as a significant “concession on the part of our partner in this agreement.” This amendment will ensure that Herndon will receive 162 parking spaces regardless of the loan on the property.
Ashton detailed potential economic development incentives to “help at least close the gap on some of the elements cost that have gone up on our components.” Those incentives amount to a total fee reduction of $2.35 million for water, sewer and building permits.
He also listed a 10-year tax refund to the arts district with an estimated value of $1.9 million over that time, wherein the estimated tax return above refund would be $1,165,000. At this time, the town does not receive tax benefit on the site and will not as long as the town owns the property, Ashton explained.
Ashton also broke down the town’s return on its investment of the project. He totaled Herndon’s investment at $15,950,000 while looking at a return of $16,637,000. The public parking to be returned will be worth an estimated $9,537,000, the arts center shell $2.25 million, and public improvements worth $3.5 million. Comstock will also take care of the town’s responsibility for temporary parking, temporary arts center and the environmental cleanup that combines for an estimated $1.35 million.
To keep on schedule, Ashton told the council that it would be looking for an adoption of this amendment in November to allow for appropriation of funds in December.
“I think this amendment, if anything, has enhanced the deal,” Ashton said.
The town council will vote on this amendment at a public session on Nov. 17 at 7 p.m. Mayor Lisa Merkel has asked the council and Yeatts for public comment on this project to be the first item discussed during the meeting.
Image via Comstock