The city’s top finance experts said the city should be cautious as it potentially heads into a period of stagnant economic growth — if not outright decline.
“We don’t want to take a doom and gloom approach,” said Director of Finance Kendel Taylor. “We’re not saying the sky is going to fall, but we actually don’t know. The uncertainty where everyone is sitting right now is fairly significant.”
Taylor said that, as the city begins to plan for Fiscal Year (FY) 2024, the Department of Finance is being cautious.
“When we look at FY 2024: it’s very early,” Taylor said. “We only have a couple months of sales tax… interest rates keep going up, fuel prices, there’s a lot of uncertainty. We’re in a very cautionary stage.”
While the city’s economy is continuing to grow, Taylor said that’s going more slowly than she’d like. While the city averages 4% economic growth, Taylor said her office is estimating only a 2% change.
“We’re still an attractive place to live, we’re still economically sound, but it’s not what it’s been for the last few years,” Taylor said. “We’ve seen a lot of growth in the past year… but really we’ve just gotten back to pre-pandemic levels. That means we missed two years of anticipated growth. It’s a weird environment… It’s something where we have to just be cautious.”
Along with that slow growth, Taylor said interest rates have gone from 3% to 7%, meaning it’s more expensive to buy a house in Alexandria today than it was a year ago.
Vehicle assessments, meanwhile, remain high. The city approved a one-time tax relief for car owners to keep their tax from skyrocketing after vehicle values shot up during the pandemic. Taylor said the city is still monitoring those values this year to see if a repeat of that one-time relief might be needed.
“It’s too early to really know what’s going to happen with vehicles, but values remain high,” Taylor said. “We made an assessment adjustment in 2022 to mitigate those increases. We’re going to keep watching that over the next few months to see what’s the right approach to vehicle values in 2023.”
In brighter news, Taylor said sales tax and meals tax figures have remained strong, exhibiting a commitment from the community to supporting local restaurants and businesses. Those tax levels were restored to pre-pandemic levels in the summer of 2021.
The hotel tax has slowly been crawling back. Taylor said in July the city was within 10% of where the hotel tax was pre-pandemic. In August, it was within less than 1% of pre-pandemic levels.
At the same time, Taylor warned that optimism over tax levels returning to pre-pandemic levels ignores the bigger concern that the city has still lost two years of economic growth.
“It’s great to see that hotels are getting back to pre-pandemic levels,” Taylor said, “but we would have typically seen a few percentage points of growth.”
Kevin Greenlief, assistant director of finance, said the revenue from FY22 was good and FY23 has revenue increases baked into it, but the keyword for FY24 is caution.
“In the second quarter of 2022, [chief financial officers] are beginning to be pessimistic about GDP growth and potential impacts of a recession,” Greenlief said. “The popular term right now is a pasta bowl recession’: a long recession but not a deep one. I’ve seen ranges from a -.4% GDP growth to a .1% positive growth. There’s a lot of debate right now about whether there will be a recession. The smart money seems to think so, but they’re not looking like the sky is falling, it’s that [growth] is going to be flat.”
As the city plans for the future, City Manager Jim Parajon said some of that will involve looking at how much office conversion the city allows. While the city has had numerous positive office conversions — from restaurants to schools — Parajon also warned against throwing the baby out with the bath water. Maintaining some level of office space could be the better long-term play, even if it means losing some revenue short-term.
“The conversion approach for outdated office makes a lot of sense, but I want to be careful that we don’t lose good office space to conversion,” Parajon said. “That’s really important, and that may mean we play out a cycle or two in the economy so we’re looking at a balance of commercial to residential.”
Even when offices do come back, Parajon said they may not resemble the sea of cubicles from the pre-pandemic days.
“We’re likely to see smaller footprint office components with lifestyle office elements,” Parajon said. “They all feed really well into Alexandria because we have an amazing lifestyle here and that’s enticing to a company that needs to recruit and retain talent.”
As the Alexandria Economic Development Partnership works through programs aimed at helping to strengthen the city’s business communities post-Covid, some in the organization and partnering groups are working to ensure there’s a greater diversity of voices in the new order.
A new grant program, the ALX B2B Business Association Grant Program, aims to help prop up business associations across the city to make them more active and helpful for their communities. The city-funded grant program is in the process of distributing $535,000 in grant funding across eight associations.
AEDP Economic Recovery Manager Senay Gebremedhin and Kevin Harris, former City Council candidate and head of the new Alexandria Minority Business Association, said the goal of the grant program is in part to use the pandemic recovery to help address issues around diversity that predate and were exacerbated by Covid.
Gebremedhin said AEDP’s goal is to use the funding as a boost to business associations to get them to a place where they can be healthy and independently sustainable long-term, without relying on backing from pandemic recovery funding to provide higher levels of service.
“When we built out the program, we intentionally built out sustainability as a core purpose,” Gebremedhin said. “The funding was short-term, so applicants had an understanding that they needed to continue services beyond the funding period.”
The grant funding is going to eight different organizations, ranging from established groups like the Alexandria Chamber of Commerce to brand new organizations like Harris’ Alexandria Minority Business Association.
- Alexandria Chamber of Commerce
- Alexandria Minority Business Association, Inc.
- Del Ray Business Association
- Eisenhower Avenue Public-Private Partnership
- Old Town Business Association
- Old Town North Alliance
- Social Responsibility Group
- West End Business Association (WEBA)
Many of the organizations have been volunteer-led, and Gebremedhin said in the past they’ve struggled to sustain initiatives without proper funding or infrastructure support. Even among the more established organizations, Gebremedhin said nearly all of them have seen leadership turnover in recent years.
While the program distributes funding to regional associations like the Del Ray Business Association, the new Social Responsibility Group and the Alexandria Minority Business Association target specific issues within the sphere of local economic development. Gebremedhin said the Social Responsibility Group works with AEDP on communications with local business incubators.
“One of the priorities for our group is creating peer relationships,” Gebremedhin said. “The Social Responsibility Group has a much broader agenda, but our work is narrowly focused with them on one of the pillars of their agency… incubators and building resources for emerging businesses in Alexandria.”
According to Harris, not all businesses have been able to participate in influential policy discussions between the city and the business community. He said he hopes the Alexandria Minority Business Association gives new minority voices a similar chance to weigh in.
“When things are rolled out, there is some communication with other business associations to weigh in on how things are rolled out,” Harris said. “There is a need for that in the minority community.”
Alexandrians making less than half of the region’s area median income could qualify for a new program that will give them $500 per month with no strings attached.
Those living alone and making less than $49,850 per year are eligible, with the income scaling up based on the size of the household.
The program, Alexandria’s Recurring Income for Success and Equity (ARISE), was funded as part of the city’s Covid recovery.
During the pilot phase, 170 randomly selected individuals who meet certain household income limits will be selected. Those selected will be provided with $500 every month for 24 months to spend in any way they choose.
“Guaranteed income pilots have proven to impact poverty and economic inequity by enabling participants to determine for themselves the budgetary strategies that will most benefit them and their families,” the city said in a release. “ARISE will help the city test a bold, new way to ensure people have what they need to make decisions to support their well-being.”
With Labor Day coming up on Monday, a couple of the leading unions and labor organizing groups in Alexandria say they’ve seen substantial gains but there’s still work to be done.
Collective bargaining for public safety agencies was one of the leading issues early in late 2021 and early 2022. Labor activists were also critical of the city’s involvement in financing the development of the Hotel Heron in Old Town, saying the city should leverage its position to ensure better wages and treatment of employees.
The Northern Virginia Labor Federation (NoVA Labor) is an umbrella organization that encompasses unions in all segments of the economy. Virginia Diamond, President of the NoVA Labor, said the organization includes 55 different labor organizations and 70,000 members across the state.
Diamond said union organizing is on the rise as Virginia’s workforce grapples with the economic impact of the pandemic.
“This year NoVA Labor has seen a great upsurge in union organizing,” Diamond said. “This is a result of the impact of the pandemic on workers, as well as a generational revolt against an economy that offers young workers little hope for the future.”
Alexandria in particular has been at the forefront of union organizing in Virginia, Diamond said.
“Alexandria is a progressive community that values equity and economic justice, so there is widespread support for unions,” Diamond said. “When the General Assembly adopted a statute enabling localities to allow public employees to engage in collective bargaining, Alexandria was the first locality in Virginia to adopt such an ordinance.”
Diamond said one of the major labor concerns is wage theft and exploitation in the construction industry.
Beyond combatting wage theft, Diamond said one of the critical pieces of labor reform is offering low-income communities in Alexandria better access to higher-paying trades and careers.
“Building trades unions are reaching out to low-income communities in Alexandria to offer free paid apprenticeships leading to middle-class careers in the skilled trades,” Diamond said. “The Alexandria Democrats Labor Caucus, headed by Russ Davis and Sean Casey, bring together union members and friends of labor to publicize and educate the community on issues affecting workers.”
Diamond said a driving force behind union organizing is the dire levels of income inequality.
“Income inequality is at a level of the Gilded Age, and unionization in the private economy is at only 6%, down from 34% four decades ago,” Diamond said. “Income inequality is a grave concern to Alexandrians, and the most important vehicle for addressing this inequality is unionization. Just as factory workers in the 1930’s and ’40’s organized and built the middle class, workers in the service economy are now organizing to rebuild the middle class.”
Diamond said she’s encouraged by union victories at companies like Starbucks, Amazon, Apple, Chipotle, REI and Trader Joe’s:
The popularity of unions is now at 71%, higher than any time since the 1960’s. The resurgent labor movement is just getting started. Hopefully over the next year we will see the first union hotel, the first union Starbucks, and the first union health care facilities in Alexandria. With the support of the Alexandria community and city leaders, workers will achieve the dignity, respect and living standards that they deserve. Good jobs are union jobs, and good union jobs will enable workers to afford to continue to live in this community.
(Updated 12/14) Remember the American Rescue Plan Act? Earlier this year, the city received $29.8 million in funding to allocate toward projects across the city.
Five months later, a new report to the City Council scheduled to be presented at a meeting tomorrow breaks down how that’s been going so far. Here is ALXnow’s simplified, condensed version:
- Digital Equity Plan (funding: $120,000): The city has been working on developing a digital equity plan that will identify infrastructure, device, and digital literacy barriers in Alexandria. This is part of an overarching goal spread out across a few ARPA projects to make internet access more equitable throughout the city. The report said by the end of January a community help desk should be in operation and a consultant should be under contract to start work on the plan.
- Broadband Strategist and Policy Analyst (funding: $300,000): The city is looking to hire someone focused on community outreach for the new municipal fiber network program, as well as assisting in addressing equitable digital access. The city is currently finalizing the job announcement, with posting and recruitment by the end of January.
- Alexandria Library Mobile Hotspot Lending Program (funding: $20,000): The libraries have been working with Verizon to deliver mobile hotspots to library cardholders as part of a plan to increase internet accessibility in Alexandria. The goal is to have all mobile hotspots in circulation to library cardholders by the end of January.
Housing and Food Security
- Eviction protection program (funding: $200,000): The city is currently hiring a second housing justice attorney to support ongoing eviction prevention data analysis and planning efforts.
- Rental resiliency (funding: $312,000): Bilingual staff were working this fall with tenants and landlords to help with access to emergency resources, with the end goal of maintaining long-term housing stability and security. Outreach and assistance is planned to continue through 2024.
- Food security advancement (funding: $2.5 million): In an effort at addressing food insecurity exarcerbated by the pandemic, the city is putting together a plan to create food centers for those in need and continue food distribution. The report says the first food center location is identified and close to opening.
- AHDC-Arlandria flex space (funding: $2 million): The Alexandria Housing Development Corporation is using ARPA funding to expand city services in Arlandria, creating a satellite flex space within an AHDC project that would house Housing/Landlord-Tenant, DCHS, and AHD offices. The plan is currently working through meetings to assess agency needs and space requirements.
- Arlandria Chirilagua Housing Cooperative Improvement Initiative (funding: $50,000): The funding is scheduled to go to a loan/grant assistance program to help the Arlandria Chirilagua Housing Cooperative make capital improvements to buildings and improve living conditions for 286 very low-income households in Arlandria. The city is working through the red tape and finalizing a report outlining the priorities and budget of the program.
- Bridge funding for food insecurity and basic needs (funding: $1.5 million): The city has been using ARPA funding to help with food insecurity and eviction prevention. Over 69,000 locals recieved meal equivalents through the funding this year and the funding went to help eviction preventino and support for 405 households and 1003 individuals. The city has been working with nonprofits like ALIVE!, Ethiopian Community Development Corporation and Tenants and Workers United.
- Foundational support for Commercial Business Districts (funding: $560,000): After being struck down a few years back, the idea of a Business Improvement District snuck back into the ARPA plans with a program aimed at assisting in the immediate and long-term financial recovery for businesses. The program guidelines were being revised in the fall to provide multi-year funding.
- North Old Town Community Development Authority (funding: $500,000): The Alexandria Economic Development Partnership is using this ARPA funding to start building a legal structure to take ownership for artistic facilities in North Old Town. A project manager is planned to be onboarded by the end of January with initial legal documents and contracts drawn up.
- New business support programs (funding: $280,000): This project will support the creation of new businesses and jobs by offering counseling support, but it’s still under development with a project manager likely to be hired early next year.
- Alexandria guaranteed basic income pilot (funding: $3 million): This program was in the headlines for providing a monthly $500 cash transfer on a pre-loaded debit card to around 150 families for 24 months. The pilot program has been going through analysis by researchers at Howard University. The program has also hit some snags in the research partner process. A formal rollout is expected by January 31, 2022 with the distribution of funds starting in February.
- Expanding regional marketing (funding: $500,000): The Alexandria marketing is scheduled to boost regional visitation and small business recovery, with a particular focus on supporting “visitors and entrepreneurs of color.” The advertising videos and photography has been completed and is being developed.
- Alexandria Community Access and Emergency Support Grant Program ($4 million): The single largest chunk of the ARPA funding is going to a grant program that provides support for non-profit partners, giving those non-profits grant funding to continue collaborative efforts in the city. The program is broken up into different portions that cover community access — helping connect local, state and federal services to those in need — and emergency support — which offers emergency financial resources to low-income residents who aren’t eligible for government-sponsored programs or fall outside the need of those programs. The grants have been awarded and services will begin being delivered by the end of next month.
- Re-employment and upskilling project (funding: $1.1 million): The city has created employment and training specialist positions and recruited over the last month. The city is now working to engage community stakeholders for more support, referrals, and placement for those seeking jobs. The plan is to have the first group of Alexandria residents in the program vetted and enrolled by the end of January.
New data from tax collection over the summer shows a minor rebound for sales and meals in Alexandria, but while it’s a positive sign, Mayor Justin Wilson cautioned that they don’t quite tell the full picture.
In March, local sales tax revenue reached a high of nearly $3 million. Since the start of the year, sales tax revenue has been higher than it was in those respective months the last two years, but the fact that COVID-19 seemed to have a negligible impact on sales last summer indicates that most of that is driven by online sales rather than local business, which Wilson confirmed.
“Sales tax strong,” Wilson wrote on Facebook, “but driven by online sales.”
The brighter news was for the restaurant industry, where meals tax revenue overshot even 2019’s numbers in both June and July. As of the end of August, the city had collected $2.6 million in meals tax revenue as compared to $2.3 last year, which had been boosted by a strong start to the year before those figures tanked in March and April.
But transient lodging tax figures remain abysmal: $776,805 total as compared to $312,598 last year. Regionally, hotels have faced an uphill battle toward recovery, with hotels around the region estimated to lose $2.3 billion in revenue this year.
Last year, Kendel Taylor, the city’s director of finance, warned that full economic recovery from the COVID-19 pandemic could be at least two years away. While the numbers are promising, Wilson warned there is still more work to do to get the city’s businesses back on track.
(Updated 3:15 p.m.) As part of an ongoing mission to help boost the city’s economic recovery, a Virginia program being administered locally by the Alexandria/Arlington Regional Workforce Council offer to match signing bonuses for small, local businesses currently hiring new employees.
Liz Bolton, interim director of marketing and communications for the Alexandria Economic Development Partnership, said the grants are available to any business with fewer than 100 employees in Arlington or Alexandria. The grant program provides matching grants of $500 to create a $1,000 bonus for the new W-2 employees who are paid $15 per hour or more.
The bonus is applicable for any employee hired after May 31 up to a maximum of 25 new hires.
“Employer must match the full amount and provide funds directly to new hires,” the program website said. “This can be in either one lump sum or in installments to cover the ongoing costs of childcare, transportation, or other barriers to re-employment. Verification of how funds are used by the new hire is not required.”
Arlington and Alexandria employers can apply for the grants online.
In a newsletter, Mayor Justin Wilson noted that from last July to this April, there were 514 eviction judgements in the city and 1,128 evictions that were pursued but eventually dropped or dismissed. There are 257 cases pending.
On the bright side, Wilson also noted that 845 residents were assisted by the city’s outreach efforts at the courthouse, and more were aided with the city’s rental assistance program.
“The City has assisted 3,458 households with $9.9 million of emergency rent and mortgage assistance,” Wilson said. “Our residents have received another $7 million in rental assistance funds through the Virginia Rent Relief Program.”
Most of that funding has come from local, state and federal funding, but Wilson said the city has also gotten support from churches and non-profits like Christ Episcopal, St. Paul’s Episcopal, St. Vincent de Paul, Casa Chirilagua and ALIVE!.
“We have had landlords who have partnered with the City to keep their tenants housed and a General District Court that has been committed to assisting throughout this process,” Wilson said. “While these efforts have not been perfect, the partnerships that have been developed, expanded and exercised have been absolutely crucial in keeping our residents housed and maintaining family stability during a horrific time for our community.”
According to the city website:
The U.S. Department of Housing and Urban Development has extended the Foreclosure and Eviction Moratorium for FHA-insured mortgages through June 30, 2021, and provides a 180-day extension to the deadlines for the first legal action and the reasonable diligence time frame from the date of the moratorium expiration.
Alexandria has gotten knocked down, but is looking to get back up again in 2021.
In a report outlining the city’s response to the dire fiscal impact of the coronavirus pandemic, the Alexandria Economic Development Partnership (ADEP) outlined the allocation of grant funding to businesses in the city. Beneath lingering concerns about the years it will likely take to return businesses to a pre-pandemic levels of vitality, the report outlined some of the major new tenants and changes coming to the city in the next year or two.
AEDP’s optimism for these new economic boosts for the city is also twinged with a touch of uncertainty for what the future of the city’s office usage looks like.
Potomac and North Old Town
One of the biggest changes is the new Institute for Defense Analyses Headquarters under construction at 730 E. Glebe Road near the Potomac Yard Metro station. The building will be a 370,000-square-foot office space, relocating the offices from the Mark Center in the West End to a larger, more accessible site.
“It’s one of the things that’s visible as you come into Potomac Yard,” said Stephanie Landrum, CEO of AEDP. “The other two office buildings were delivered over the course of the last year behind it and behind that is the Metro. The cluster of those things is starting to visibly tell the story of what Potomac Yard is morphing into.”
Landrum said Potomac Yard epitomizes the kind of living, breathing change that’s part of living in a growing city.
A little to the south, Landrum said there is a similar transformation taking place in Old Town North.
“In Old Town North, where there’s a pretty significant cluster of activity,” Landrum said. “We’re starting to see this really cool mix of reimagined buildings, like conversion of the Crowne Plaza and 801 N. Fairfax — where chamber of commerce used to be — and conversion of American Physical Therapy building; and that sort of investment combined with brand new — like Gables, The Muse, and the bus barn construction.”
Unlike Potomac Yard, where much of the old commercial space is being demolished to make way for the newer development, Landrum said development in North Old Town requires a more subtle touch.
“With Old Town North, it’s not plowing everything and starting over,” Landrum said. “It’s a patchwork of redoing existing and building new stuff. [When it’s finished] you will see architecture from the 1940s and from the 2020s. It’s a cool and interesting story.”
In the West End, the belle of the development ball has been Landmark Mall, where Inova is slated to anchor a large new mixed-use development with a relocation and expansion of its Alexandria hospital.
“All West end residents want is a central gathering place, a town center,” said Landrum. “Now, at Landmark, they will be able to replicate the same successful mix of uses [as Potomac]. What’s awesome about Landmark is having an economic driver in the hospital. There will be doctor’s offices and other health-related spin-off businesses that want to be in proximity.”
But Potomac Yard and Old Town are boosted by Metro accessibility that helps to make them regional destinations. Landmark doesn’t have that level of transit accessibility today, though development may benefit from the area’s close proximity to I-395.
Landrum said the city is currently working through plans of boosting transit accessibility to Landmark, though convincing Metro riders to hop from the train onto a bus is often a difficult prospect.
“The city is adding alternative modes of transportation,” Landrum said. “For bus rapid transit (BRT), there’s one in Potomac Yard that is still in its beginning stages of ridership. Before the pandemic, we started to see positive momentum there. For the West End, we’re hoping for a similar line to connect Van Dorn Metro to the Pentagon Metro. What we’re trying to do is provide people with as many options as possible.”
One of the advantages of the hospital is that it gives the surrounding developments what might cynically be called a captive audience.
“Honestly, that’s why landing Inova was critical,” Landrum said. “It’s a thing people figure out how to go to if they need to.” Read More
A new report from the Alexandria Economic Development Partnership showed that the 22314 zip code — Old Town and Carlyle — received more funding in business grants than the rest of Alexandria combined.
A breakdown of grant dollars by zip code showed that Old Town and Carlyle businesses received $3.5 million in grant funding. The next closest was the 22304 zip code in the West End, totaling $1.1 million.
That funding would be centered in Old Town isn’t too surprising, considering that’s where roughly 50% of the city’s businesses are located. AEDP President and CEO Stephanie Landrum told ALXnow last year that’s also where around 60% of the grant applications come from, despite an effort by the organization specifically to reach out to non-Old Town businesses and encourage them to apply.
The rest of Alexandria, combined, received $2.4 million in grants.
In total, AEDP distributed $6.4 million in federal and local grant funding to 648 Alexandria businesses.
The grants were fairly evenly split between male and female-owned businesses — 46% and 44% respectively — with 9% not identifying their gender and 1% identifying as trans or non-binary.
Roughly 74% of the funding went to businesses with less than 25 employees, which were a focus of AEDP’s grand campaign.
The report also showed that 47% of businesses that received grants were white-owned, followed by 21% as Asian-owned businesses. Black-owned businesses in Alexandria comprised 11% of grant funding, and Hispanic or Latino-owned only 8%.
Overall, the report also took stock of the pandemic’s devastating impact on local businesses:
- 81% of small businesses reporting very-to-extreme disruptions to business operations
- 77% of small businesses reporting year-over-year revenue declines
- 9.9% Alexandria unemployment rate in April 2020 (an increase of 7.9% from April 2019)
- $30.2M projected loss of business and consumer-based tax revenue in the City
Photos via AEDP