The Falls Church City Council in Virginia voted Tuesday night to approve controversial tax incentives for a new movie theater, a few weeks after the city’s planning commission recommended against the incentives.
Under the structure of the tax incentive, the first $20,000 in ticket tax revenue and $10,000 in concessions tax revenue each year would go to the city; the rest would go back to the developer, Mill Creek Residential Trust. That arrangement would last 30 years and revenue collected by Mill Creek would be capped at nearly $500,000 per year.
The theater would be part of a mixed-use development near West Broad and West streets called Founders Row. It would include seven screens, an arcade and a bowling alley.
In late September, the city’s planning commission recommended against the project because of the tax incentive structure.
“Helping the developer pay for a theater — that just seems very unusual. And I don’t recall ever and I’ve been in planning for a while, where a developer got incentives for a movie theater,” said planning commissioner Derek Hyra.
At Tuesday night’s meeting, Council member Deborah Schantz-Hiscott addressed residents who were concerned about shouldering the load for a private development.
“The taxes that we’re talking about today are taxes that are paid by those folks who attend the theater,” she said. “So, if you’re not attending the theater and you’re not paying taxes on those tickets, you are not contributing to the taxes that are going back to the owner.”
If the theater makes more than $13 million in any given year, concessions tax revenues will not be given to the developer for that year. If the theater makes $13 million four years in a row, the concessions tax revenues will no longer be given to the developer.
There are also certain milestones Mill Creek must meet in order to keep the incentives. In order to keep the project on track, the city can cancel the agreement if the developer misses deadlines for lease execution, submission of design drawings and the opening of the theater.
Mayor P. David Tarter said that even with the incentives, the project will generate substantial tax revenue and help reduce taxes for people who live in Falls Church.
“What I would say to folks who say, ‘Why do you offer incentives?’ I would say it’s to bring economic development to this city,” he said. “It’s to give us a complete community where we can walk to entertainment, where we can walk to the grocery store, where we can walk to services and buy things and not just be a bedroom community where you drive someplace else, and so the movie theater, I think, will draw people in.”
WTOP’s Luke Lukert contributed to this report.