The Commonwealth Transportation Board (CTB) approved Wednesday an $80 million loan from the Virginia Transportation Infrastructure Bank to pay for transportation improvements relating to the 400-acre Kincora real estate development north of Washington Dulles International Airport.
The proceeds will be used to extend Gloucester Parkway and Pacific Boulevard for the purpose of relieving congestion on Route 7, Route 28 and Waxpool Road. The $2 billion mixed-use project is zoned for 4 million square feet of office space, 500,000 square feet of retail, 1,500 condominiums and apartments, hotels, a health club and a performing arts center.
John Lawson, CFO of the Virginia Department of Transportation, described the project as the “number one transportation priority for the county.” (See his presentation.) The loan will be channeled through the Industrial Development Authority of Loudoun County and secured by a deed of trust on the Kincora property. The loan, which will be locked in at an interest rate of 2.83%, represents 100% of the transportation financing. The project “could not be undertaken at this time without VTIB assistance,” Lawson said.
Under a February 2010 Community Development Authority proposal, NA Dulles Real Estate Investor LLC outlined plans for issuing $98.6 million in bonds, which included the cost of building the roads as well as water, sewer, electric and gas improvements, upon approval of the Kincora rezoning application. At that time, NA Dulles hoped to obtain private-sector financing in “early 2011.” That money never materialized.
The loan will offer a significantly lower rate than is available from private markets, the Loudoun Times-Mirror quoted Loudoun Supervisor Shawn Williams as saying. Without the loan, he said, it likely would have been 10 to 15 years before funding could be put in place. Also, reports the Times-Mirror, Loudoun County Chairman Scott York, a Republican, was “instrumental in vouching for the loan.”
Of the three transportation projects financed so far by the infrastructure bank, this is the first wrapped around a real estate project. No CTB member questioned the propriety of using state funds to help finance a private real estate project. No one asked if the transportation improvements would be needed were it not for the Kincora project itself. No one probed the wisdom of using state funds to subsidize development near the periphery of the Washington metropolitan region while all market indicators suggest that development is shifting closer to the urban core. The board voted unanimously to approve the loan.
As an aside: Norton Scott, a Great Falls-based development company that has a financial stake in Kincora, has donated $2,500 to the Loudoun County Republican Party and $7,500 to Citizens for Virginia’s Future, a “pro-business” PAC, this year.