Dueling proposals leave Wheaton’s future uncertain

Next Tuesday, the Montgomery County Council will choose a development proposal that it hopes will jump-start revitalization in downtown Wheaton.

Two competing proposals have emerged from County Executive Ike Leggett and the council for several publicly-owned properties in the area, both of which include significant office space. Leggett’s proposal is larger and enjoys community support, but it may not make economic sense. The council’s proposal is smaller, but takes a more deliberate approach to redevelopment.

While residents are impatient to see change in Wheaton, rushing into a redevelopment scheme that could harm existing businesses without quickly creating new value in is not in the community’s best interest.

Leggett’s proposal

In 2010, Leggett made an agreement with developer BF Saul to redevelop several county-owned parcels in the center of downtown Wheaton. On Parking Lot 13, located at the corner of Reedie Drive and Grandview Avenue, BF Saul would build a six-story, 250-unit apartment building with ground-floor retail and a new town square in a setup comparable to Bethesda Row.

The developer would also build a platform over the Wheaton Metro station’s bus turnaround as the base for a hotel and three 14-story office buildings. With approximately 900,000 square feet, nine times the existing amount of Class A office space in downtown Wheaton, these buildings would bring about 3,600 workers to Wheaton’s downtown every day.

Those offices would house the county’s Department of Environmental Protection (DEP) and the Department of Permitting Services (DPS), both currently located in Rockville, along with the Park and Planning Commission, currently in Silver Spring.

The county would also like to find a federal government tenant, though the rent cap on government offices will require them to subsidize rent, as they already do for the National Oceanic and Atmospheric Administration‘s headquarters in downtown Silver Spring.

Leggett wants to set aside $42 million for the project, which would only cover the cost of building the platform. It’s unclear how much it would cost to build the rest or whether the county or BF Saul would pay for it. Nonetheless, the proposal has been endorsed by the Wheaton Urban District Advisory Committee and Mid-County Citizens Advisory Board, another developer working in Wheaton, and the Gazette.

Council plan similar, but priorities are different

Concerned about the size and cost of Leggett’s proposal, the County Council’s Planning, Housing and Economic Development Committee offered a counterproposal last month. In their proposal, estimated to cost $55 million, BF Saul the county would build a new town square on Lot 13 with an underground parking garage, at a cost of $2.5 million and $5.6 million, respectively, along with a building for DEP and DPS for $46 million.

There’s also room for the Park and Planning Commission if another $46 million is found to build another building. Both buildings would contain 415,000 square feet of office space and hold about 1,600 workers.

“It is misleading to say that $42 million will revitalize Wheaton,” says Councilmember George Leventhal, who sits on the committee. (Full disclosure: I used to work for Leventhal.) “The only thing that $42 million buys now is a concrete hat over the bus bay, and if you want to relocate county agencies, the cost will go above $100 million.”

Though local blogger Wheaton Calling accuses the council of “throwing a wrench” into the redevelopment process with their counterproposal, the benefits of Leggett’s proposal remain unclear. The county’s Department of Economic Development usually does a cost-benefit analysis of major public investments, like the $4 million big-box retailer Costco received to open a store in Wheaton Plaza, but they haven’t done one for this project.

“The ‘end’ is not to build a platform, to execute a General Development Agreement, or to attract a federal tenant,” writes Jacob Sesker, economic analyst for the County Council, in a report for the PHED committee. “Rather, the desired end is to introduce land uses (to wit, office space) … that downtown Wheaton currently lacks and which the market will not provide.”

In a phone call, Sesker points out that in large-scale redevelopment projects, the best way to start is with the least challenging or expensive parts, like Lot 13. Those improvements will add value to the rest of the development, which makes the expensive parts more profitable to build later on, meaning BF Saul will require fewer subsidies.

The platform also has no direct benefit to the community by itself. “Unlike a school or a train, a platform does not teach any child to read and does not take anyone to work.” Without those benefits, Sesker says, “If it is not generating revenue, then it probably is not a good investment.”

“The County Council is the steward of public money,” adds Leventhal. “If we’re going to spend that money, it’s reasonable to ask what this will do for taxpayers. We have to be very cautious about our decision, and we need much better analysis than what we’ve gotten.”

Some still say offices just don’t make sense in Wheaton. In 2009, a group of real estate and design experts commissioned by the Urban Land Institute to offer recommendations for redevelopment concluded that there is “no inherent reason” for offices to locate there:

The panel heard from a number of stakeholders that there is a desire for more office space in the CBD, in order to bring in greater daytime foot traffic … Wheaton is not well-positioned to attract development of, or users for, new large-scale office space. There are simply too many other office centers within the region that possess greater strengths, particularly in the near-term, where so much new office space has recently been built.

Instead, the panel suggested building apartments and townhomes to draw young professionals being priced out of Silver Spring, as well as chain stores and restaurants to Wheaton Plaza to “anchor” the downtown, and developing a small music venue to take advantage of its proximity to the renowned Chuck Levin’s Washington Music Center.

On Lot 13, the panel proposed a town square and a smaller “2-3 story building” with shops and apartments. Like Sesker, they recommend waiting to build over the bus turnaround, as that site is the “most valuable” in downtown Wheaton and has “the potential for the greatest density.” This vision, particularly its focus on music and entertainment, fits in with earlier proposals for Wheaton that were well-received by the community.

No matter what the county does, they should heed the ULI panel’s warning on any development in Wheaton: “Wheaton’s strengths, such as its eclectic retail mix, are also quite fragile, and could be irreparably harmed by any redevelopment projects that are ill-conceived or rushed. Thus, the panel recommends a gradual approach to redevelopment,” they write. “An attempt to force a desired result … would not only fail, but would also end up undermining the unique identity that Wheaton already possesses.”

We’ve been waiting for a new Wheaton for twenty years, so it’s understandable some are impatient. But rushing into any project without a thorough understanding of its potential costs and benefits could destroy what people already like about the old Wheaton while limiting its future potential.