Red ink at Fairfax County’s arts center in Lorton forces change
When Fairfax County acquired the District’s former Lorton prison a decade ago, leaders of a private foundation and county officials unveiled a dazzling plan to transform the historic reformatory into a vibrant artists’ colony. . .
. . . But today, the most distinctive hue at the Workhouse Arts Center is red ink. Awash in $53.7 million of county-endorsed debt, the foundation responsible for renovating the complex and running the arts center is now fighting for survival. County taxpayers are paying more of its bills, to the tune of nearly $3 million a year. . .Click here for the rest of this article.
. . . When the first $26.2 million bond was floated in 2006, former Board of Supervisors chairman Gerald Connolly boasted that the trade newspaper the Bond Buyer ranked it as a deal of the year finalist. With much less fanfare, a second bond worth $27.5 million was issued in 2010. That same year, however, the foundation reported a $558,000 drop in program revenues and a $3.32 million deficit as the economic recovery dragged on and donations lagged. . .
. . . As the foundation’s problems got worse, Fairfax increased its support. The county had already been matching donations to the foundation on a dollar-for-dollar basis up to $1 million since 2005. But the supervisors agreed to give an extra $2.2 million for debt service in fiscal 2012 and an additional $2.6 million in fiscal 2013, which begins July 1. And that was in addition to $750,000 a year in operating subsidies that, since March 2010, the county agreed to give whenever necessary for up to 15 years. . . .
The Lorton Arts Foundation, which operates the Workhouse Arts Center (WAC), uses rental revenues (& other revenue sources) to pay off its re-development debt through industrial revenue bonds issued by the Fairfax County Economic Development Authority (FCEDA). Obviously, revenues from leases, etc, have not kept pace with bond service requirements. Nonetheless, FCEDA won an award from the Bond Buyer in the southeastern US regional award for small issue bond deals, and was one of 10 finalists for national “Deal of the Year” in 2006. The bonds certainly have less luster now.
Besides the County's FCEDA issuing the bonds for this project, the County also owns most of the former reformatory's land, which is administered by the FC Park Authority. Although the WaPo article suggests that the County has no legal obligation to bail out the floundering effort, it has been doing so for several years. As both owner of the property and issuer of the bonds, it is hard to imagine that the County doesn't have at least a moral obligation to meet the bond payments. Not to pay the debt service would likely harm Fairfax County's broader credit rating.
The experience at WAC raises questions about the growing proliferation of special tax arrangements to pay for infrastructure development required to make the arrival of Metrorail work. Each of these arrangements depends, in part, on assumptions of significant property value increases to cover infrastructure development--roads, schools, parks, etc.--in Tysons and along the Dulles Corridor. Although it is quite likely that most of this anticipated revenue growth will occur, the Lorton experience shows that it is far from a certainty.