Commercial Development at Dulles Airport May Impede Herndon’s Metro Station Area Plan

The Metropolitan Washington Airport Authority’s plan to commercially develop Dulles Airport property may lure businesses away from Herndon.

On January 16, 2013, the Metropolitan Washington Airport Authority’s (“MWAA”) Board of Directors passed a resolution proposing to amend its lease with the US Department of Transportation to allow commercial development on Dulles Airport property. (See resolution attached to article.)  At the present time, MWAA is only allowed to use the 3,000 acres surrounding the airport for aviation-related purposes.  Because this land is federally owned, it is exempt from the payment of federal and state income taxes and county real estate and business taxes, although apparently MWAA does make some type of payments in lieu of taxes on developed property.  The Town of Herndon would have a difficult time attracting new businesses here when a business owner could simply travel a couple of miles up the road to undeveloped, essentially tax-free property. 

A little history is in order.

MWAA is an independent airport authority, created by the Commonwealth of Virginia and the District of Columbia with the consent of the United States Congress to oversee the management, operations, and capital development of the Washington D.C. area’s two major airports: Ronald Reagan Washington National Airport and Washington Dulles International Airport.  On June 7, 1987, Dulles Airport was transferred to MWAA under a 50‑year lease authorized by the U.S. Congress in the Metropolitan Washington Airports Act of 1986 (“Airport Act”).  The Airport Act originally stated that “[d]uring the period of the lease, the real property constituting the Metropolitan Washington Airports shall be used only for airport purposes.”  49 USC §49104(a)(2)(A) (Excerpt of Airport Act attached).

Under the FAA Modernization and Reform Act of 2012, the definition of “Aviation Purposes” was amended to include use “for a business or activity not inconsistent with the needs of aviation that has been approved by the Secretary [of Transportation].”  This language is mirrored in the proposed lease amendment.  It’s not clear to me if the lease amendment would itself permit the commercial development proposed by MWAA or if the lease amendment would merely permit MWAA to submit commercial development plans in the future for approval.

Let’s examine what would happen if the lease amendment is approved by the US Secretary of Transportation and the proposed commercial development plans are permitted.

MWAA is presently looking at two options.  One option would be to allow private development on the north side of the future Route 606 Metrorail station in Loudoun County. Another potential development area is what MWAA calls the “western lands” — about 430 acres along Route 606 on the western edge of the airport property.  MWAA President and CEO Jack Potter has said he envisions mixed-use communities including residential and office buildings with ground-floor retail space, as are planned around most of the other Silver Line stations. (See attached Fairfax Times article.)  A convention center is also being considered.  Please note the lease amendment allowing for commercial development isn’t limited to these two areas but applies to all 3,000 acres leased by MWAA.   

MWAA’s proposed mixed-use development is precisely the type of development the Town of Herndon envisioned when it passed its Metro Station Area Plan on February 28, 2012 allowing for development of 38 acres of land adjacent to the new Herndon Metro stop.  Of course, there are existing buildings on that 38 acres.  Any new business locating in Herndon would have to factor in the cost of demolishment along with new construction.  A business owner would find it much easier to locate a few miles up the road to pristine, essentially tax-free property.  We are at a severe competitive disadvantage. 

What to do?  The lease amendment is presently sitting unsigned on the desk of Ray LaHood, the US Secretary of Transportation.  However, LaHood is leaving office soon.  Who knows whether he will sign the lease amendment before he leaves office or leave the matter to his successor.  In any event, I propose that either Herndon residents, or the Town of Herndon in an official capacity, contact the Secretary to ask that the amendment not be signed until all concerned parties weigh in.  The Reston Citizens Association has already done this. (See attached letter.) 

I personally don’t know enough about all the issues here to say today what the final answer is on this.  I do know that we at least need some time to consider how MWAA’s proposal would impact our Town’s Metro Station Area Plan.  Secretary LaHood in the past had always considered the opinions of all stakeholders before coming to any decisions.  I hope either he, or his successor, does so now.

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joe brewer May 19, 2013 at 04:24 PM
Good Deal, maybe a carbon copy to Randall Burdette---director@doav.virginia.gov
Dave Webster May 30, 2013 at 04:55 PM
Joe, I haven't received any response yet.
Bob Bruhns June 09, 2013 at 09:35 PM
If Leesburg Today was correct in that April 4, 2013 report 'Metro Garage Proposals Head for Hearing' saying that federal legislation has granted MWAA the ability to build non-aviation uses on its property, by teaming with a developer to lease the property for taxable development, then I'd like to know how and to whom the taxation would be assigned. Would the land be treated as though it is taxable by the state and county that surrounds it? And how would MWAA benefit from that? I think I smell another lie - much like the story about how the lack of any solid Tifia loan agreement isn't important, even though we have already contracted for part of Phase 2 - because no big Phase 2 construction will happen very soon. We are just being strung along, I think, until it is too late. Metro Garage Proposals Head For Hearing Leesburg Today, April 4, 2013 http://www.leesburgtoday.com/news/metro-garage-proposals-head-for-hearing/article_44d08a80-9d31-11e2-9fba-001a4bcf887a.html
Dave Webster June 11, 2013 at 12:52 PM
I had commented on this article previously Bob. To wit: This statement in the article is misleading: "Federal legislation has granted MWAA the ability to build non-aviation uses on its property, by teaming with a developer to lease the property for taxable development." The businesses themselves would pay the normal income and business license taxes but MWAA itself is still tax exempt under state and Federal law. MWAA is tax-exempt under both Virginia and federal law and thus can unfairly compete with private landowners. MWAA does not pay state or federal income taxes, county business license taxes, or county real estate taxes. Any businesses that locate on the Dulles Airport property won’t be part of a special Phase II tax district and won’t pay a dime toward defraying the cost of building the Metro Silver Line. As if that isn’t enough, MWAA is not subject to county zoning laws and has no incentive to offer “proffers” which are voluntary agreements by a landowner to go above and beyond what zoning laws require, e.g. planting additional trees in a development.
Bob Bruhns June 11, 2013 at 03:11 PM
What a mess.


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