Economist: Build more high-end homes in Prince William, get better businesses

WOODBRIDGE — In 1983, things in the Washington, D.C region were about equal.

Just 36 years ago, the economies of Maryland, Northern Virginia, and Washington were all growing at the same pace. Overall, it was a company town with the Federal Government leading growth.

Fast forward to today, and Northern Virginia is securely leading the region in economic growth. And, with new announcements like Amazon’s HQ2 project bringing 25,000 jobs to Arlington and 1,100 new jobs as part of a Micron expansion — at $3 billion, Virginia’s most significant economic development deal ever — is starting to shed, albeit slowly, its company town feel.

During the recession of 2008, our region outperformed the rest of the nation in job growth. When there’s a problem with the country, Washington, D.C. is where people go to work to fix it.

However, during sequester of 2013 when the feds cut spending, it impacted the region hard, especially when it came to defense spending.

“It shows the strengths and the vulnerability or the advantages or the disadvantages of being a company town,” said Dr. Stephen S. Fuller, chief of the Stephen S. Fuller Institute for Research on the Washington Region’s Economic Future.

Fuller told the Prince William County Board of Supervisors that, in 2010, the region’s economy had a nearly 40 percent-dependence on federal spending. Today, it’s down to about 31 percent, and trending down to about 25 percent by 2030.

The region lost 25,000 federal jobs since 2010, he adds.

Since 1990, the economy in Prince William County has changed, too. There were 55,000 jobs in the county back then compared to today’s 130,000.

Economic growth in the county, as it was in 1990, is driven by retail and restaurants. During the recession, it showed no signs of decline as residents’ spending levels remained the same, and there were only minor job losses during the sequester.

“It’s a suburban county. It’s an economy driven, but not entirely by its residents,” said Fuller.

In recent years, Fuller says the county has diversified its economy as more federal contractors and lawyers have chosen to locate in Prince William County. It’s a category Fuller calls “scientific and technical services.”

“They’re good jobs,” said Fuller. “They’re not as impactful as federal jobs, but these are office-using jobs by enlarge.”

Fuller says Prince William County is expected to grow slower than its counterpart jurisdictions closer to Washington, D.C. Younger millennials moving to the region, many of which will work for Amazon, want to live in the core of the city. It’s a far cry from the single-family homes of the Prince William suburbs that date back to the 1960s.

“This is what millennials want,” said Brentsville District Supervisor Jeanine Lawson. “I have a golf course in my district not doing well because millennials don’t want to play golf.”

“You’re exactly right,” Fuller replied. “Before golf, it was tennis, then sailing. Anything that takes time to learn, or if its something where you have to start when you’re young, it’s going away. Now, if it’s gaming or coding, it’s a different story.”

But it isn’t just the exurbs that millennials are choosing to avoid.

“Tysons is even struggling. It’s too far out. And Rockville [Md.] is even struggling because it’s too far out. Bethesda [Md.] is having trouble. Silver Spring [Md.] can’t quite pull it together. The clusters, the edge cities that were written about 20 years ago aren’t all that successful, and it’s the emergence of the District of Columbia, and Arlington, which is very well positioned…”

For Prince William to grow, Fuller told the Board of Supervisors that the county should continue to expand the number of high-end homes and residents. Many of those developments should be located on the two major corridors in the county along Interstates 66 and 95, and be mixed-use developments to include office, retail, and homes.

“Having a more affluent residential growth may sound discriminatory, but it will help you grow a better retail base,” said Fuller.

For years, county leaders have debated its residential growth strategy, opting to attract businesses instead, thus increasing the county’s commercial tax base from about 15 percent to 35 percent. County leaders who argued against more residential development said building more homes equates to a need for more government services like schools and roads.

They’ve worked on an assumption that a higher-priced home generates a higher tax bill, which offsets the cost of county government services.

“…so we were thinking in a very linear way, ‘well, what’s a revenue-positive household? But that way of thinking ignored something even more important which is the residents themselves is making the county more attractive to high-end employers, and I think we missed that,” said Prince William County Board of Supervisors Chairman Corey Stewart.

Fuller’s presentation comes about a month after former Prince William County Economic Developer Jeffery Kaczmarek retired.

“If you were our economic development director, where would you start?” asked Occoquan District Supervisor Ruth Anderson.

“I don’t think you need to go out and sell Prince William County internationally,” Fuller replied. “People are coming to Washington because it’s the capital city. Once they decide to come to Washington, then they need to know why they should choose to locate here.”