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Phase three of the Manassas Park city center development will be built across the railroad tracks from the existing VRE station.

Manassas Park is anticipating a March groundbreaking for its large “phase three” downtown development that will ultimately bring a new city hall and public library, as well as about 300 condominiums, to the city center.

Last week, the City Council voted to authorize the 30-year lease-to-own agreement that will finance the $43 million city hall and library building. The agreement also authorizes the city’s new economic development authority to issue bonds for the project that will be backed by those lease payments.

City Manager Laszlo Palko said forming an EDA to issue the bonds ultimately would result in a lower cost to the city than going through the developer, McLean-based Norton Scott.

On the residential side of the project – which Palko and Mayor Jeanette Rishell have said will generate more revenue in property taxes than the cost of the public building – homebuilder Stanley Martin is replacing Toll Brothers, but the total number of stacked townhomes has been reduced from 314 to 300 since the council approved the project outline last summer. Palko said that will likely reduce city revenues from the development by about $5.5 million, although the city still projects to net roughly $80 million over the lease’s 30-year lifespan.

Norton Scott will pay the city about $14 million for proffers and the cost of the land, but to finance the city’s side of the development, the EDA will serve as the lease-holder and the city as a tenant. In fiscal year 2024, the first year of lease payments, the city will pay the EDA $420,488. The following year, that cost will increase to $840,976 before jumping to over $1.4 million for the following 28 years.

Before the residential units come on line and begin generating revenue, Palko said the payments from Norton Scott will cover the initial lease payments.

“The development proceeds will far exceed those payments … we’re going to be banking profit even in those early years,” Palko told InsideNoVa, “That’s to ensure that we’re keeping up with our promise to our residents that we’re not touching current taxpayer dollars for the city hall development.”

If all goes according to plan, Palko said, the city government would move into its new building in the summer of 2022, allowing for the current city hall building to be demolished. Officials say it would be imprudent to renovate the current city hall to the point where it meets the city’s needs. That land, in turn, would be used for a public plaza and an entertainment venue. The ground floor of the new 51,000-square-foot city hall building will also house a new public library and a small retail space.

The long-discussed, four-part city center project has thus far failed to deliver what the city had hoped for: a bustling mixed-use downtown next to the Manassas Park Virginia Railway Express station. Phase one brought 291 residential units and 49,000 square feet of retail space. The residential component has largely filled up, but 23 of 25 storefronts have remained vacant since they were completed in the late 2000s.

When pitching phase three, officials said they’d learned from the mistakes made under previous councils and city managers and that the new development would help to fix some of the earlier deficiencies. One problem that city staff identified was a lack of parking to accompany the retail space. As part of phase three, VRE will build a 550-space garage to be shared by the city and the railway.

“The nearly 50K square feet of commercial spaces built in Phase I without adequate parking was risky to begin with, developing that much retail capacity without structuring a deal to secure a commercial anchor to drive commercial success just increased the likelihood of failure,” the staff report for the phase three project reads. “Again, this is a problem that the City has had to work towards fixing with the new Phases of our Downtown Development.”

In her successful re-election campaign last fall, Rishell said that a project like this was needed to help raise revenue for the cash-strapped city government, which she said was underfunded in every department even though Manassas Park has the highest real estate tax rate in Virginia at $1.55 per $100 in assessed value.

By turning the 23 acres of city-owned land largely into residential development, Rishell said, the city is focusing on what had been successful in previous phases while helping the existing commercial space.

“We need a vibrant downtown area; otherwise we’ll never be able to lower taxes, we’ll never be able to meet the unmet needs of the city, which of course lowering taxes is one of those unmet needs,” Rishell said in a mayoral forum last fall. “The new city project is not debt; it’s lease-to-own. The lease will be paid for entirely by the personal property tax and the real estate tax of the new structures. There will be zero impact to current residents.”

Jared Foretek covers the Manassas area and regional news across Northern Virginia. Reach him at jforetek@insidenova.com

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Jared Foretek covers the Manassas area and regional news across Northern Virginia. Reach him at jforetek@insidenova.com

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