Development
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.
Wheaton Metro. Photo by the author.
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.
A draft of BF Saul's plan for downtown Wheaton.
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."
Lot 13 today.
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.
Local businesses in downtown Wheaton today.
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.
 | A planner and architect by training, Dan Reed is interested in suburban retrofits. Dan works for the Friends of White Flint, writes his own blog, Just Up the Pike, and serves as the Land Use Chair for the Action Committee for Transit. Dan lives in Silver Spring.    |
Comments
- Young kids try to assault me while biking
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- Endless zoning update delay hurts homeowners
- Redeveloping McMillan is the only way to save it
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- Vienna Metro town center won't have a town center
* More office workers around during the daytime
* More jobs in Wheaton so that residents don't have to commute too far (many people I know in Wheaton commute to either downtown DC, Northern Virginia, or Bethesda).
* Better public transportation to reduce traffic
* More walkable urban village areas
* An organic food store such as MOM's or Whole Foods
* A public indoor swimming pool
* Better promotion of Wheaton's amazing restaurants and local businesses.
by I love Wheaton on Apr 5, 2012 1:41 pm • link • report
by Wheatoner on Apr 5, 2012 2:20 pm • link • report
by WheatonBee on Apr 5, 2012 4:33 pm • link • report
by Cyrus on Apr 6, 2012 1:09 am • link • report
My first reaction to the PHED proposal was not favorable. I read Wheaton Calling's piece and shared the exasperation. It rubbed me the wrong way that the Council all of the sudden had enough interest in Wheaton to scuttle all the work that has gone into the B.F.Saul plan. When it comes to Wheaton the Council only gets inspired when it becomes a tug of war with the executive.
I know some people get bent out of shape when we look to Bethesda and Silver Spring when thinking about redevelopment in Wheaton. But I wonder what the precedent is in the county for doing it the PHED's way? I remember when the platform was built above the buses in Bethesda (don't know what role the county played in that tho). And the B.F.Saul partnership has obvious parallels with the Peterson deal in SS. Where is an example of the county building a public space and a public building that sparked redevelopment? Rockville? Shirlington? This isn't rhetorical - I'm honestly asking.
by Dave in Wheaton on Apr 6, 2012 9:22 am • link • report
The only precedents I can think of for using government office buildings as the catalyst for redevelopment are the Reeves Center on U Street and the Eisenhower Valley in Alexandria, which is what made me initially skeptical of the plan to relocate Park & Planning to Wheaton.
The bigger issue to me is whether Class A office space (which is what most new office buildings are, the same way that most new apartments are "luxury" apartments) is viable in Wheaton, which I don't think it is now. While Discovery helped make Silver Spring a more attractive location for offices, it's worth noting that there had already substantial office development in the area going back to the 1960's. Wheaton doesn't have that.
Not that Wheaton couldn't become a viable center for offices, but I think it'll take longer than people assume. Keep in mind that the county anticipates most of its job growth will continue to happen along 270, and has zoned for a lot of it in places like White Flint.
by dan reed! on Apr 6, 2012 9:53 am • link • report
I'm no expert in the market for office space to say the least.
But one of the things I can't figure out about this PHED vs Leggett fight is the council's implication that all we might get is a platform. I assume that if the county builds the platform they will do so only if there is some guarantee from B.F.Saul that they will build on top of it? And if so, why would B.F.Saul be planning all this mixed use development including a bunch of office space if they didn't believe in the market for it? And if the developer is betting on the market with far more $$$ than the County, why should I think Leventhal has greater insight into market forces than B.F.Saul?
by Dave in Wheaton on Apr 6, 2012 10:58 am • link • report
So the developer may be betting on Wheaton, but the county is still putting up a lot of money, far more than the $42 million Leggett's made it out to be.
by dan reed! on Apr 6, 2012 11:03 am • link • report
by Dave in Wheaton on Apr 6, 2012 1:49 pm • link • report
In addition, the article infers that by developing Parking Lot 13, BF Saul will require less subsidies. But nothing in the Executive’s proposal includes subsidies for BF Saul. Any subsidies are the domain of the County Council and are speculations of Council staff.
It is also important to mention that the Executive’s proposal is not limited to the platform. BF Saul will also build a hotel and office building with the County occupying a portion of that first office building and the remainder of that first building having private office tenants. In additional, BF Saul will market an additional 600,000 square feet of private investment atop the platform. The County Council alternative is consistent with a much more limited view of Wheaton's potential. It would simply build an expensive County office building at a cost far in excess of the platform cost.
by Jonathan Fink on Apr 6, 2012 3:37 pm • link • report
by Chelsea Johnson on Apr 7, 2012 9:38 pm • link • report
Jonathan and Chelsea, I would love to see the County Executive's CBA for building on the platform. Is it available online? Looking at the WRAC homepage and the county's page on Wheaton redevelopment, I don't see anything about it, whereas I found the County Council's staff report fairly easily (it's linked above).
by dan reed! on Apr 8, 2012 9:49 am • link • report
It seems to me that bringing in gov't agencies from Rockville and Silver Spring is like "borrowing from Peter to pay Paul". What impact will moving thousands of people from Silver Spring to Wheaton have on the recent redevelopment of Silver Spring? Are our tax dollars just going in a cycle? Bethesda then Silver Spring then Gaithersburg, then then Rockville then Wheaton, then.....
As a tax payer it seems that we must redevelop an area and constantly sustain and continue to grow the area of redevopment. Silver Spring is great, but any merchant will tell you it can always be better.
Wheaton is unique and small business oriented. So how do we make lemonade out of our precious lemon. In my opinion no hotel is needed. Maybe a small Courtyards by Marriot would suffice. Wheaton has a lot of restaurants so why not make build on that and develop the "Night Life" aspect with a Restaurant Row and nightclubs? Have flags of all countries flying along the streets and and make it a worldclass culinary "go to spot". With most of the business being night oriented it would also reduce the increase of rush hour traffic.
Many people in Wheaton don't want more growth. They just better use of of the existing facilities and removal of those wooden light poles to make the place more visually appealing.
by Tony Gentilcore on Apr 8, 2012 5:02 pm • link • report
Yes, I am a WRAC member, but I am writing on my own behalf as a Wheaton resident AND someone who follows your Just Up the Pike blog. I do not work for the County, so I cannot guide you as to where to locate the information you are seeking. However, considering your past experience with working with Council Member Leventhal I assume you should know where to find this information and/or who to contact for information relating to the County Executive's proposal. I think you should have made that effort before publishing his article. Furthermore, its my understanding that DGS sent a letter in response to the article providing him with the correct information regarding their proposal. Is this correct? If so, why haven't you updated with that information? Lastly, all of WRAC meetings are open to the public and the minutes are available, which reflect months and months of discussion and presentations regarding the B.F. Saul proposal and the County Executive's position.
by Chelsea Johnson on Apr 9, 2012 3:59 pm • link • report
The article states that $42M would only cover the cost of the platform. This is inaccurate. The $42M covers the cost of the platform, the relocation or interim bus operations, the construction of a new public town square on Lot 13, new bus bays that comport with future RTV facility needs, lease costs associated with the relocation of the Regional Services Center as well as other miscellaneous expenses like staff resources and public art.
The article states the County Council's alternate proposal would cost $55M -- $2.5M for the town square and $5.6M for an underground garage. This is grossly underestimated. While the town square construction is estimated to cost $2.5M, the underground garage would exceed $19M. The Lot 13 is a Parking Lot District facility and the PLD is required to be made whole on their property. In other words, the new underground garage would need to replace all of the existing surface parking spaces. The PLD would require 205 (an entire level) to replace the surface spaces. Add the future development on Lot 13 and the garage would need to be at least three levels at 205 spaces per level. Executive staff estimates the cost to be approximately $31,000 per space or $19M for 615 spaces (3 levels). Further, a new office building on Lot 13 to be constructed by Montgomery County would exceed $46M by nearly $30M. Other published estimates grossly misjudge the public costs of constructing an office building on Lot 13.
The article notes that 1,600 workers would come to downtown Wheaton's 415,000 square feet of County office buildings. This is inaccurate. The Council's PHED Committee proposal only suggests funding for one office building - an either/or scenario. As such, the required space would only amount to 150,000 square feet for a new building -- not 415,000. If the building were to be a new MNCPPC headquarters, they have 400 employees. If it were an office building for DEP and DPS, they have 100 and 200 employees respectively.
The article states that the County is positioned to subsidize rents for a GSA tenant. This is inaccurate. BF Saul and the County Executive's staff have not entered into any agreement to subsidize rents for a GSA tenant nor is the County Executive staff considering any such arrangement. That said, it has been a long practice in Montgomery County to incentive economic development initiatives by subsidizing rents, i.e. Silver Spring and NOAA. It is important to note however, that those incentives are County Council actions and not those of the Executive.
The article states that the County has not performed a cost benefit analysis as part of the Executive proposal. This is inaccurate. In fact, there have been several iterations of fiscal impacts and analysis completed throughout the public process. The fiscal impact was provided to the County Council and it was evident that the impacts are positive over the long term. Further, the fiscal impact simply evaluated the Executive CIP proposal's effect and did not include the greater positive benefits from development that is generated as a result of fostering a new market.
Regarding the Urban Land Institute recommendation: The 2009 ULI recommendation was made before the Safeway/Patriot high-rise, mixed-use project became a reality and before County resources were considered to build a platform over the Metro site. The ULI recommendation, in fact, differs from a 2008 International Downtown Association study, which recommended that development on the Metro site and Parking Lot 13 be major element of Phase I redevelopment. That study recognized the need and importance of such County support. "Panelists believe that the CBD could support more {Office development}, though perhaps not on the scale of Bethesda or Silver Spring. Because the CBD is an untested market for Class A commercial office space, the County will have to play a key role in attracting commercial office development to the CBD. It may need to be a pioneer by locating a significant department in Wheaton's CBD, either as a tenant in a private sector development or as a county facility that could anchor additional private sector development."
by David Dise on Apr 11, 2012 1:47 pm • link • report
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