Development at Dulles? Share the Wealth, Colin Mills, RCA President, Reston Patch, February 13, 2013

Last week’s RCA Board meeting was a highly productive one.  We reviewed our Strategic Plan to note the progress we made in 2012, we selected our Citizen of the Year, and we approved Dick Rogers’ report about the Wiehle station opening and the traffic headaches it will cause.  We also issued a letter about a recent under-the-radar move by the Metropolitan Washington Airports Authority (MWAA) Board that could have huge ramifications for the development around and funding of the Silver Line.  It’s that letter I want to tell you about this week.

As you know, Phase 2 of the Silver Line will include a station at Dulles Airport.  But what you might not know is that the next station west on the line, Route 606, abuts the north edge of the airport property.  Well, the MWAA Board recently noticed this fact too.  They also noticed that they had a significant amount of undeveloped land on the west side of the airport property along Route 606.  All told, there are about 3,000 acres of developable land within the Dulles Airport property.  That land only figures to get more valuable now that there will be a Metro line nearby.

What’s more, MWAA is exempt from paying federal and state taxes.  Which means, presumably, that any development on airport property would likewise be exempt from those taxes.  Loudoun County’s currently picking up the tab for building the Route 606 station, and if they need to build any supporting infrastructure for the proposed airport development, that would be on their dime as well.  MWAA wouldn’t even be paying taxes to offset those costs.

Needless to say, this would be a gold mine for MWAA, and the Board is eager to pursue this opportunity.  Who can blame them?  There’s just one small hitch: MWAA’s lease on the airport property specifically states that the airport land can only be used for “Aviation Purposes.”  What does that mean?  The lease agreement spells out that the property can be used “for aviation business or activities, of for activities necessary or appropriate to serve passengers or cargo in air commerce, or for nonprofit, public use facilities.”  Hmm, nothing in there about for-profit, non-aviation-related commercial development.  That could be a problem.

Fortunately for MWAA, they figured out a solution: amend the lease!  In January, the MWAA Board passed a resolution calling for an amendment to the lease which would modify the meaning of “Aviation Purposes” to include use “for a business or activity not inconsistent with the needs of aviation that has been approved by the Secretary [of Transportation].”  Problem solved!  MWAA didn’t have the authority it needed, so they granted it to themselves (subject to the Secretary of Transportation’s approval).  I should try that the next time I want a raise at work.

If this lease amendment is allowed to stand, it would have major ramifications for the development of the Silver Line.  Loudoun County, which entered into the Phase 2 agreement only reluctantly and after much deliberation, is not only on the hook for building the Route 606 station, but now any development around the station would have to compete with development on the airport property, which is exempt from federal and state taxes and thus has a leg up.  Would Loudoun have signed on to the agreement if they knew their development would have to compete with MWAA?

And what about the Dulles Toll Road users – you know, the ones currently slated to pay three-quarters of the cost of Phase 2?  Our tolls are going to be soaring to pay for the Silver Line, which will enhance the value of the airport property and make this commercial development feasible.  And what happens to the profits from that development?  As far as we can tell, it’s MWAA’s to keep; we have seen no indication that this development revenue would be used to pay for the Silver Line and relieve the burden on Toll Road users.  (We’ve asked our contacts at MWAA about this, and they haven’t responded to date.)

We at RCA believe that it’s fundamentally unfair for MWAA, which is a not-for-profit operation designed to provide aviation services, to garner all the benefits of this development without paying its fair share.  The Silver Line is designed to benefit everyone in the region, not to enrich MWAA at the expense of Toll Road users and Loudoun County taxpayers.

Given this, we propose a solution.  If MWAA is allowed to proceed with commercial development on airport property, it should be required to share the income with its Silver Line funding partners (namely, Fairfax and Loudoun Counties and the users of the Toll Road) in the same proportions detailed in the “funding partners” agreement for the Silver Line.  By our calculations, that means MWAA would be able to keep about 5% of the income, a little more than a quarter of it would go to the counties, and the remainder would be used to buy down the Silver Line construction debt, thereby reducing tolls on the Toll Road.  After all, if MWAA is permitted to take advantage of our investment in the Silver Line this way, it should share the proceeds with its fellow investors.

The Silver Line is a major investment in our region’s transportation infrastructure.  It is only equitable to ensure that all of us share in the benefits of this investment.  If the parties to MWAA’s compact and lease agreement believe that allowing commercial development on airport land is the best way to maximize our investment in the Silver Line, that’s fine.  But it can’t just be a windfall for MWAA at everyone else’s expense.

MWAA should have to pay its fair share to the counties and to the Toll Road users. Loudoun County certainly deserves to have some of its infrastructure costs defrayed, if they’re going to need to support MWAA’s tax-free development.  And the Toll Road users deserve some relief.  This is different than wrangling money from the state or the federal government: MWAA will be directly profiting from the Toll Road users’ investment.  The least they can do is kick in their fair share.