City secures $50 million state loan for Potomac Yard Metro

City secures $50 million state loan for Potomac Yard Metro

By Erich Wagner (File photo)

City officials received a boost to their hopes of building a new Metro station in Potomac Yard last week, as Gov. Terry McAuliffe (D) announced Alexandria would receive a $50 million low-interest loan for the project.

The Commonwealth Transportation Board approved the loan, to be administered by the Virginia Transportation Infrastructure Bank. The loan adds to the number of sources city officials plan to use to pay for the project, which is projected to cost between $200 million and $270 million.

The new station would sit along the Blue and Yellow Metrorail lines, between the Ronald Reagan National Airport and Braddock Road stops.

City council had set up a special tax district in the Potomac Yard area, as well as a requirement that new development projects in the neighborhood contribute to the funding. Councilors lauded the state loan because it reduces the need to borrow through the normal bond-buying process.

City Councilor Paul Smedberg, who serves on the work group tasked with preparing a plan for the Metro station, including site selection and working with the National Park Service, was hopeful that the loan will spur more investment in the project.

“I think this loan’s terms — the 2.17 percent interest rate — are extremely favorable in terms of repayment,” he said. “And it will substantially induce the project to move forward toward implementation. It just jump starts this whole thing for us.”

By comparison, the loan’s 2.17 percent interest rate over 30 years is far less than the already historically low general obligation bond rates the city secured in November 2014, which carried an effective interest rate of about 2.72 percent.

City Councilor Tim Lovain said the most important part of the new financing is that the money is immediately available.

“It’s up-front money,” he said. “So we won’t have any delays in the schedule. With some of the other financing sources, like the special tax districts, it’ll take time to generate the funds, so this kind of up-front money will help us a lot and reduce the need for other kinds of borrowing.”

As for the process of choosing which site and design, Smedberg said the city is still in a holding pattern, waiting for an official response from the National Park Service, who has jurisdiction over part of the land proposed for the project. But officials hope to be able to choose a preferred location this spring.

“It’s been pretty clear, as it already has been reported, that the ‘B’ site is a preferred location for economic development and everything,” he said. “Yeah, it costs more, but it really does provide a lot more square footage and a lot more potential for commercial redevelopment going forward.

“But we’re just waiting to hear back from the park service on the environmental study, so hopefully very soon we’ll be able to move forward.”