Meals tax, Dominion transmission line reroute approved at public hearing

Meals tax, Dominion transmission line reroute approved at public hearing
After voting in 2016 for the transmission line alignment along the CSX railway corridor (green), council voted Saturday to switch to the route that runs along Potomac Avenue (red). (Courtesy Image)

By Missy Schrott |

Although the battle against increasing Alexandria’s meals tax from 4 to 5 percent was all but lost, local restaurateurs attempted a Hail Mary pass at Saturday’s public hearing.

The meals tax, which will go into the city’s dedicated affordable housing fund, was tentatively passed at the budget adoption May 3 by a vote of 4-3. Unsurprisingly, it was approved at the public hearing by a vote of 4-3, with Vice Mayor Justin Wilson, Councilor Paul Smedberg and Councilor Tim Lovain dissenting in both votes.

Days ahead of the final passage of the meals tax hike, several leaders in the restaurant community launched a petition in opposition that circulated in the 36 hours leading up to the public hearing, Stomping Ground chef and partner Nicole Jones said. The petition had 282 signatures and was continuing to collect more as of May 11, according to a letter to city council.

Several prominent names in Alexandria’s small business community spoke at the hearing, including Jones, HomeGrown Restaurant Group’s Bill Blackburn, Evening Star’s Stephanie Babin, Del Ray Business Association President Sue Kovalsky and the Restaurant Association of Metropolitan Washington’s Mark Tate.

A number of residents also spoke in favor of the tax, including two parishioners of the Episcopal Church of the Resurrection, for which council approved an affordable housing project in January.

Almost all restaurant representatives who spoke in opposition of the tax at the hearing said they were not opposed to affordable housing. Jones said many of her employees lived in the city’s affordable housing.

Several did say, however, it was unfair the tax targeted restaurants.

“While there’s no policy rationale as to why restaurants would be singled out to provide resources to support affordable housing, the actual reason is obvious,” Babin said. “Our industry is an easy target with an existing mechanism for taxation. Convenience, rather than sound public policy, appears to be the driving force behind this decision.”

Kovalsky said small businesses were already struggling in the city.

“As a business association … we’re looking at the difficulty of restaurants and retail businesses up and down King Street, throughout Old Town, throughout the City of Alexandria closing their doors every day,” Kovalsky said. “We feel that this is one more item that makes it very difficult to keep their doors open and keep these people employed and bring the business to the city that we have.”

Beyond harming existing businesses, Blackburn said the tax would damage the city’s “already fragile reputation” as an easy place to do business. He also spoke to the importance of making Alexandria more business friendly and growing the commercial tax base.

“We need to learn about how to grow our commercial tax base so we can solve problems other than affordable housing. Schools, pools, sewers, roads: all these things need capital, and we need to grow our commercial tax base. This decision hurts that. Long term, we’ve made a mistake,” he said.

Blackburn and Babin said they were frustrated with the process, including with the way the tax was introduced.

“The casual last-minute decision to increase [the] tax, a tax to deal with an unrelated need, feels like a slap in the face,” Babin said. “[It’s] an unmistakable sign that councilmembers do not understand or appreciate the nature of our businesses or the contributions we make to our city.”

“We’re all a little frustrated with how this happened,” Blackburn said. “This meeting here, this public hearing here, is a little bit a of a dogand-pony show, because we all know that there’s very little chance of this failing. It’s already in the budget, and to backtrack now is almost impossible.”

Mayor Allison Silberberg agreed that the process had been flawed, and said in future budget cycles there would be a public hearing in between the preliminary and final add/delete periods.

Councilor Willie Bailey, who introduced the tax, said council was doing the best it could to find a way to set aside funds for affordable housing.

“I’ll be the first to say, if the restaurants, if this was detrimental, if it’s detrimental in a couple of years from now, I’ll be the first one to pull back,” Bailey said.

The other major topic of discussion at Saturday’s hearing was Dominion Energy’s project to install a new 230-kilovolt transmission line across the city.

Dominion came before council Saturday to request changes to the project, which was first brought to the city in 2014 due to the need to meet increased electrical demand and reliability standards.

The new alignment of the line – requested by Dominion and approved unanimously by council – falls along Potomac Avenue. It replaces the previously determined and less disruptive alignment along the CSX railroad corridor, which had grown too expensive since council selected it in 2016.

Before the vote, several Potomac Yard residents spoke out against the alternative through their neighborhood.

Brian Verwee, a board member of the Potomac Yard Civic Association, said the CSX alignment is still the best route for residents in regards to traffic and construction noise.

“The Potomac Avenue route was already eliminated back in 2016 when you guys had the working group initially approve or disapprove of routes,” Verwee said. “It seems to me the only thing that’s changed is now Dominion is dangling some money to the city.”

If Dominion pursued the CSX alignment, which is estimated to cost $420 million, it would give the city about $14.6 million in right-of-way compensation. If it pursued the Potomac Avenue alignment, estimated to cost $330 million, the city would be compensated $43.3 million.

“It seems there are 43 million reasons this is being reconsidered,” Rafael Lima, Potomac Yard resident, said.

A work group commissioned by the city to revisit alignment alternatives recommended the Potomac Avenue route. Council approved the alignment unanimously, with Silberberg requesting staff continue to look into non-wire alternatives for the route.

In another docket item, council discussed amending a special tax district in Potomac Yard, an action tied to the Dominion power line project.

When the Potomac Yard Small Area Plan was adopted in 2010, two special tax districts were planned to help pay for the planned Potomac Yard Metro station’s debt service, City Finance Director Kendel Taylor said.

The first district, Tax Tier I, encompasses north and central Potomac Yard and has been collecting revenue since 2011, Taylor said. She said Tax Tier II in southern Potomac Yard didn’t have any residents when it was proposed and was put on hold.

When the revised metro station plan came to council in April, it also received a recommendation to eliminate the Tax Tier II special tax district if Dominion provided enough compensation with the transmission line, Taylor said.

Since eliminating the special tax district is contingent upon Dominion’s compensation, the ordinance requires for the tax to sunset and become null and void once the city transfers the right of way needed for the Potomac Avenue alignment of the 230-kilovat line to Dominion Energy and once the city has received at least $14.6 million in compensation.

Potomac Yard Resident Audrey Lambert said she’s spoken out before in support of repealing the special tax district on her community. She said it was unfair, however, that in order to be relieved of the special tax district, another burden was being placed on the Potomac Yard community – Dominion’s transmission line.

“One thing I’ve noticed is, whether it’s the [special tax district] or the power lines or the Metro project, the city processes at each step of the way for these projects has been flawed and nontransparent,” Lambert said. “City staff have had blatant disregard for our voices and have not worked to find constructive solutions that would benefit our community.”

Silberberg said she wished the conversations about the transmission line and the special tax district had not been combined.

“Clearly [the special tax district] predates me, but regardless, we are trying to correct the situation, and I think that that’s really the right thing to do,” Silberberg said.

Council unanimously approved sunsetting the special tax district.