Proposed Commercial Tax Discussion Revived In Falls Church

FALLS CHURCH, VA — Before the city's budget process gets underway, Falls Church City Council will again have discussions on a possible commercial and industrial tax to provide transportation funding. The item will be discussed during Monday's City Council work session at 7:30 p.m.

The proposed surtax on commercial property would provide revenues for eligible transportation projects under state law. State law allows localities to charge an additional property tax up to 12.5 cents per $100 of assessed value on commercial and industrial use properties.

That surtax would be on top of the real estate tax of $1.23 per $100 of assessed value on taxable properties in the city. Properties with residential uses would be excluded from the surtax, including multifamily properties, single-family homes, condominiums and townhouses.

The commercial and industrial tax had been proposed by City Manager Wyatt Shields during last year's budget process. But the tax with a rate of 5 cents per $100 of assessed value was not adopted by City Council, which requested further study.

While Monday's discussion on the tax will not result in action by City Council, the tax could be considered through the upcoming fiscal year 2024 budget process.

According to the City Council meeting documents, one cent of the proposed commercial and industrial tax would generate $91,800. The assessed value of commercial and assessed property under the tax is $918 million. If the tax were adopted, city staff would recommend putting revenue into a special transportation fund that could fund projects like new sidewalks, expanded bicycle facilities, the city's obligation to Metro's capital fund and other transportation expenses allowed under the state law.

In the past, the city has used regular tax dollars for transportation needs such as new sidewalks and payments to Metro. Fairfax County, Arlington County and Fairfax City have a commercial and industrial tax to support transportation projects.

The discussion comes before Shields will present the fiscal year 2024 budget proposal for the City of Falls Church on March 27. Budget adoption is scheduled for May 8 following work sessions and public hearings.

At Monday's work session, City Council will also discuss proposed zoning changes for "T zones" also known as transition zones between commercial districts and single-family homes. Zoning changes are being proposed as a strategy to provide more housing variety, allow more neighborhood-serving retail and encourage reinvestment from larger builders in the city.

READ MORE: T-Zone Proposal Heading To City Council After Planning Commission OKs