Federal Realty Considers Moving Employees Out of County Amid Frustrations with Local Officials

Federal Realty Considers Moving Employees Out of County Amid Frustrations with Local Officials

Real estate company’s CEO vents about lack of progress on White Flint’s transformation

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Grand Park Avenue at Federal Realty's Pike & Rose development.
ANDREW METCALF

Federal Realty, the Rockville-based real estate company that owns the Bethesda Row and Pike & Rose mixed-use developments, is thinking of pulling part of its workforce out of Montgomery County as its leadership fumes over a perceived lack of support from county government.

Earlier this month, the company’s chief executive officer sent County Executive Ike Leggett and the County Council a letter airing grievances related to development in the White Flint area near Pike & Rose in North Bethesda. CEO Donald Wood complained that road upgrade projects have fallen behind schedule, progress is sluggish on creating parks and civic spaces and the county isn’t adequately following through on the goals outlined in the White Flint Sector Plan passed in 2010. Moreover, the county hasn’t seemed receptive to Federal Realty Investment Trust’s push for financial incentives for a new office project, he wrote.

“We had hoped that our actions at Pike & Rose since 2010 (and frankly since our founding in this County decades ago), would have found a sympathetic and proactive ear among County leadership. It didn’t. Just the latest reminder that we’re on our own here, despite lots of words about partnership,” Wood wrote July 9. “It is no wonder that for the first time in our 50+ year history, we are strongly considering a reallocation of a portion of our workforce and capital to other areas in the Metropolitan Washington market.”

The four-page letter concluded with a list of requests—that the county condemn a piece of property necessary to complete the “Western Workaround” road project; furnish the company with financial incentives to construct a 210,000-square-foot office building at Pike & Rose; build a street grid in White Flint West; build a new Metro entrance; and build a civic green at the center of White Flint, among other items. Wood included suggested deadlines, written in bold, for several of the requests.

In response, the county’s chief administrative officer, Timothy Firestine, wrote that market forces, decisions of private property owners and strict state policies have all reined in the pace of White Flint’s transformation. These factors are largely out of the county’s hands, he said.

“Although anything can be done more quickly, there were a few assumptions agreed upon in the adopted White Flint Sector Plan that proved very problematic,” he wrote.

For example, the Maryland State Highway Administration’s traffic concerns and rigid standards slowed down the Western Workaround project, a roughly $63 million initiative to reshape the irregular road network near the White Flint Metro station into more navigable city blocks.

 

Diagram of the road improvements included in each phase of the Western Workaround (click to expand). Via Montgomery County.

Toward that end, a new street, Market Street, is being added connecting Old Georgetown Road and Rockville Pike. The plan also calls for straightening out Executive Boulevard where it meets Old Georgetown Road and extending it to the entrance of Pike & Rose, across from Grand Park Avenue.

To build this road connection, the county would first need control of property currently held by owners of the Nissan dealership across from Pike & Rose. Wood implored the county to condemn the parcels this year so that the construction work could begin.

Firestine wrote officials have been meeting with the Nissan property owners to dedicate land to the county and avoid the condemnation process, which could create a delay of two to three years.

“If no agreement is reached by the end of the summer, we are prepared to approach the County Council again to request funding for condemnation,” he wrote. “The last time this was brought to the Council, we were directed to continue to pursue dedication.”

Dee Metz, county coordinator for development in White Flint, said the dealership owners are pulling together a redevelopment proposal that includes the land dedication to the county. The project has taken some time because the developer has had to buy one of the properties needed for the plan, but it’s in progress, she said.

At this point, the county is working cooperatively with the dealership owners, but if officials were to explore condemnation, they would have to budget money for the land acquisition, Metz said.

Firestine also notes that many of the improvements envisioned by the 30-year White Flint Sector Plan hinge on when or if private property owners decide to redevelop. The sector plan is organized into three phases of development, each with benchmarks for progress on transportation improvements or public amenities. Phase 1 covers the first 3,000 dwelling units and 2 million square feet of nonresidential construction, and Firestine wrote that less than a third of this development has happened to date, since Pike & Rose is the only project to move forward in the sector plan area.

Funding for a northern entrance to the White Flint Metro station—which would make it more accessible from Executive Boulevard and Pike & Rose—and creating the civic green are scheduled for Phase 2, he added.

“Unfortunately, we don’t have control of private property or market forces,” he said.

One reason for inaction, Metz said, could be that many land owners are waiting to see what will happen with “a large company from the northwest.”

That large company is Amazon, which is said to be considering the White Flint area as a candidate for the location of its second headquarters.

But for the time being, the lack of growth in White Flint means slower expansion of the area’s tax base, depriving the county of funding needed for transportation upgrades, Metz said. Still, there is progress, she said. The first part of the Western Workaround project is complete and utility relocation for the second, larger phase should begin in coming weeks.

Firestine wrote that county officials want to talk with Federal Realty and the council about how to speed up progress in White Flint and “keep your headquarters within our jurisdiction.”

He didn’t explicitly address Federal Realty’s requests for a real estate tax holiday, reduced fees and a subsidized parking garage to “make financial sense” of plans to build an office building in Pike & Rose. Federal Realty is thinking of moving its headquarters from 1626 E. Jefferson St. in Rockville to the complex called 909 Rose, slated for a space at the corner of Rockville Pike and Rose Avenue.

Amy Ginsburg, executive director of the advocacy group Friends of White Flint, said she understands Federal Realty’s frustration and desire to see parks and road improvements materialize. She also sympathizes with the constraints the county faces because of the roles played by the state and private landholders.

“Everyone wishes the county could wave a magic wand and poof! We’d have everything that’s in the plan tomorrow,” she said. “And it sadly doesn’t work that way.”

She said “it would be bad for the Pike District and bad for Montgomery County” if Federal Realty decided to leave for another jurisdiction.

Metz said the county has been trying to work with Federal Realty on its petition for financial aid but noted that it’s been complicated because many of the county’s incentives are meant for newly arriving or expanding businesses.

A Federal Realty spokesperson did not respond to a question about how many of its employees are based in Montgomery County and said the company does not want to comment beyond Wood’s letter.

“We are committed to our work and community here and are very much looking forward to working with Montgomery County leadership for the benefit of the entire community,” the spokesperson, Andi Simpson, wrote in an email.

Federal Realty Letter to Montgomery County by Anonymous xTvyTtnic on Scribd

201807171536 (2) by Anonymous xTvyTtnic on Scribd

201807171536 (2) by Anonymous xTvyTtnic on Scribd

This story was updated to correct the photo caption. &pizza has been open at Pike & Rose since 2015.

Bethany Rodgers can be reached at bethany.rodgers@bethesdamagazine.com.

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