City of Alexandria, Virginia
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MEMORANDUM
DATE: JUNE 4, 2026
TO: THE HONORABLE MAYOR AND MEMBERS OF CITY COUNCIL
FROM: JAMES F. PARAJON, CITY MANAGER
DOCKET TITLE:
TITLE
Resolution Approving the Term Sheet for the Redevelopment of the Potomac River Generating Station (PRGS) Property and Authorizing the City Manager to Negotiate and Execute Agreements to Implement the Project.
BODY
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ISSUE: Consideration of a potential public infrastructure investment to catalyze environmental clean-up, private investment, and economic activity of the long-vacant 18.87-acre site located at 1300 North Royal Street.
RECOMMENDATION: That City Council adopt the resolution attached as Attachment 3, which includes:
1. Authorization for the City Manager to negotiate and execute a performance agreement and any other related agreements, financing documents, and other instruments necessary or appropriate to implement the project and the terms of the Term Sheet, with content not substantially different from that which is outlined in Attachment 1, in order to induce redevelopment of 1300 North Royal Street, the former Potomac River Generating Station site.
2. Authorization and direction for the City Manager, subject to the receipt of landowner petition and compliance with all other legal requirements, to bring forward for Council consideration and first reading at a future legislative meeting, an ordinance creating a Community Development Authority.
3. Other related direction and authorization from the City Council related to the project.
BACKGROUND: PRGS is an 18.87-acre site comprised of a defunct coal-fired power plant, constructed from 1947 to 1957 to support the energy needs of the Washington D.C. area. PRGS required 33 tons of coal daily to operate when first opened, and for several years the facility was the single largest source of air pollutants in Northern Virginia. Its closure in 2012 was a culmination of efforts by residents and the City for more than a decade. Since the power plant’s closure in 2012, there have been no uses on site, and it has remained inaccessible to the public. Redevelopment at this site has been planned since the PRGS’s closure.
In September 2017, the City Council adopted the Old Town North Small Area Plan (OTNSAP) after an eighteen-month community planning process. At the time of the plan adoption, many details about the site were unknown and no future owner/developer had been identified. The OTNSAP included an illustrative concept to integrate the site into the fabric of Old Town North, expand open space and incorporate key principles identified in the planning process. The OTNSAP recommended rezoning from UT (Utility) to a Coordinated Development District (CDD). Key principles included extending retail, arts and cultural uses into the site, meeting sustainability targets, and creating significant open space along the waterfront and rail corridor.
In late 2020, the HRP Group, specializing in complex redevelopment projects, purchased the site and began developing conceptual plans for City review and approval of a CDD Conceptual Design Plan. That process involved community outreach and meeting with stakeholders, including civic and neighborhood groups, the Urban Design Advisory Committee, the Parks and Recreation Commission, the Waterfront Commission, the Environmental Policy Commission and the Alexandria Housing Affordability Advisory Committee, over the course of a year before the CDD was approved in July 2022. Following CDD approval, HRP Group developed the Infrastructure Development Site Plan (IDSP) for City review and approval, which took one year and was approved in June 2023. HRP is currently engaged in the City planning review process for the first phase of development which includes Blocks B and C, the Waterfront Park and the Rail Corridor Park. HRP has conducted site tours and led community engagement with neighbors and other stakeholders as a part of the planning process.
Based on the power plant deconstruction, abatement, site preparation and infrastructure costs, HRP Group requested that City staff review a potential opportunity to utilize City investment, in the form of tax incremental financing, to enable transformation of the site into a vibrant mixed-use development. In total, the realization of the plan would encompass up to 2.5 million square feet of commercial and residential development with a projected capitalization of approximately $2 billion, and more than five acres of publicly accessible open space on site as well as off-site improvements. The total redevelopment is estimated to generate over $1 billion in tax revenue over the proposed financing period and help realize the vision of the OTNSAP.
The remediation and proposed redevelopment will transform the defunct 18.87-acre former coal-fired power plant site into a mixed-use, walkable neighborhood with arts and cultural uses and forward-thinking sustainability targets on the City’s waterfront. Under Goal Area 1. Place-Based Development of the City adopted ALX Forward Economic Growth Strategic Framework <https://www.alexandriava.gov/ALXForward>, Old Town North is identified as one of the City’s catalyst sites to prioritize large-scale opportunities that encourage bold, transformative investments to spur mixed-use development, to enhance Alexandria’s quality of place, and to generate new revenue. Consistent with the Economic Development Investment Decision Matrix adopted as a part of ALX Forward, the City’s financial involvement meets the City’s “but for” requirement (i.e., the project has a financial gap and would not be feasible as envisioned without City investment). Additionally, the proposed transaction structure as described below boosts future debt capacity via increased tax revenue and mitigates any impact to the City’s AAA credit rating.
The site must be made “ready,” which will require the deconstruction of the coal-fired power plant, remediation, and infrastructure improvements to be sequenced as vertical development occurs. To help finance a portion of these site-readiness costs, the Developer has requested City participation through a tax increment financing (TIF) structure implemented in two phases, together with the creation of a Community Development Authority (CDA) to issue bonds and provide additional security for the financing. Unlike City general obligation bonds that are secured by general fund revenues and the full faith and credit of the City, any City investment for eligible improvements under section 15.2-5158 of the Code of Virginia will be structured and facilitated through the issuance of revenue bonds (“Revenue Bonds”) by the CDA. The Revenue Bonds are proposed to be repaid from a portion of eligible TIF revenues (real property tax, retail sales and use tax, meals tax, and transient lodging tax) generated from the site. Other tax revenues generated by the redevelopment (personal property, business tangible, business and professional license, utility, real estate transfer and other miscellaneous taxes) would not be pledged to repay the Revenue Bonds and will remain available to the City’s general fund.
To further strengthen the financing structure, the City intends to “backstop” the TIF revenues with special assessments to be imposed on the taxable property within the CDA district. The special assessments will provide a secondary source of funds to cover the debt service paid on the Revenue Bonds if eligible TIF revenues are insufficient to timely pay such debt service. Under Virginia law, the special assessments may only be imposed upon the request and agreement of the owners of the land comprising the CDA district and can only be collected and applied as approved by a CDA. Thus, establishment of a CDA is a critical component of the financing structure because it enables the City to access this additional layer of security. The City has successfully utilized a similar financing structure with the CDA for the Landmark Mall Redevelopment.
In discussions with the developer, City staff also reviewed the request to utilize City investment to achieve two of the ’City Councils strategic priorities <https://www.alexandriava.gov/city-council/city-council-priorities> - strengthening our economy through infrastructure investment in a defunct site to return it to active tax revenue generating use as noted above and advancing housing options. The City’s investment aims to catalyze the conversion of a challenging site to mixed-use development while also meeting Alexandria’s need for housing with the creation of up to 2,000 units as permitted by the CDD.
The Developer’s affordable housing commitment will be delivered in three forms:
• Delivery of on-site affordable units, included in all residential phases of development (~60 units)
• Contribution to the Affordable Housing Trust Fund
• Public-Private Partnership (PPP) to construct a dedicated +/- 100-unit affordable building (100,000 SF).
• In the approved CDD, the affordable housing contributions may be used as a source of funding for the 100,000 SF all affordable P3 project. The Developer has proposed using the affordable housing contribution to create a pathway to the on-site all affordable housing P3 project.
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During the April 28, 2026 Legislative Meeting, the City Manager introduced details regarding possible City investment and public benefits. Additional information and opportunities for community engagement were provided on <https://www.alexandriava.gov/PRGS>.
DISCUSSION: Following the City Manager’s presentation at the April 28, 2026 Legislative Meeting, there were multiple opportunities and forums provided for community engagement. The Developer hosted a virtual community meeting on May 4, with about 370+ registrants and 170+ attendees. The attendees asked questions about deconstruction, remediation, construction, TIF proposal, transportation and parking, design, open space, and community benefits. During the Alexandria Housing Affordability Advisory Committee (AHAAC) meeting on May 7, AHAAC endorsed the affordable housing plan for Blocks B and C, part of Phase I of the development. On May 26, the Developer hosted a second virtual community meeting, with about 180 registrants and approximately 120 attendees, focused on topics related to project phasing, arts and cultural uses, environmental remediation of the site, and the power plant deconstruction plan. Amendments to Coordinated Development District Concept Plan for the entire development and the Development Special Use Permits for Block B, Block C, the Waterfront Park and the Rail Corridor Park were recommended for approval by Planning Commission during the hearing on June 2, 2026.
The following summarizes the principal terms of the future development and performance agreements(s) for which City Council authorization will be requested at the June 13, 2026 public hearing meeting. If approved on June 13, 2026, the City Manager would be authorized to execute agreements substantially consistent with the Term Sheet (Attachment 1). The Term Sheet includes a number of protections, performance requirements, and enforcement mechanisms, including items that respond to comments and questions raised through the community engagement process regarding the proposed City investment.
I. Project Overview
• Main Components
o Development of +/- 2.5 million square feet of mixed use, commercial, and residential development in conjunction with demolition and environmental abatement/remediation of the existing power plant site (the “Project”).
§ The Property is planned to be developed in multiple blocks, which are identified as Blocks A, B, C, D, E, and F in the City Council-approved Master Plan Amendment Nos. 2022-00002 and 2022-00001 and Coordinated Development District Conceptual Design Plan No. 2021-00004 for the Potomac River Generating Station (the “Development Approvals”).
§ Total estimated private investment: $2 billion +/-.
o Development of approximately $290M in public infrastructure, including public open space, public roadway and street improvements, utilities, pedestrian and bicycle facilities, site readiness, and related supportive improvements and scope necessary to facilitate the above (“Public Infrastructure”).
§ Phases:
• Phase I: deconstruction of the power plant, associated environmental abatement and site remediation, site infrastructure, associated open space for Blocks A, B, and C.
• Phase II: site remediation, site infrastructure and associated open space for Blocks D, E, F.
II. Public Infrastructure Financing
• Financial Overview
o The City will structure and facilitate the issuance of $135M in net infrastructure proceeds from revenue bonds (the “Bonds”) to support eligible Public Infrastructure improvements associated with the Project. This bond issuance is independent of the City’s bonding capacity.
o No more than $70M will be allocated to Phase I of the Project.
o The remaining revenue bond balance will be allocated to Phase II of the project, provided that the Developer satisfies all terms of the future agreement(s) and performance criteria.
o Funds can only be used for Public Infrastructure, not any private development.
• Reimbursement Model
o The Developer will be responsible for all costs up front and will take on construction risk.
o The Bond proceeds will reimburse Developer for eligible costs only after the work or a portion thereof is completed and verified.
o Payments to the Developer will be conditioned on meeting agreed Project milestones and availability of funding.
o Upon completion, and subject to inspection and acceptance by the City, the Developer shall dedicate to public use and convey or provide public easements to the City, and the City will accept ownership or easement rights of, the Public Infrastructure improvements.
• Tax Increment Revenues to Primarily Fund Debt Service on Bonds
o The City expects to appropriate and transfer a portion of specified incremental tax revenues generated from the Project-limited to real property, sales, discretionary meals, and transient lodging tax revenues-sufficient to fund the debt service payments on the Bonds (“Tax Increment Revenues”). Any such transfer shall be subject to annual appropriation by City Council.
§ The Bonds will be repaid through new revenue generated by the Project, not existing City revenue.
§ Tax Increment Revenues will not include non-discretionary meals tax (1% for affordable housing) and 3.2 cent carve out from real property taxes (1 cent for housing and 2.2 cents for transportation).
o CDA “Backstop.” The City expects to create a Community Development Authority (“CDA”), governed by a board appointed by the City Council, to issue Bonds and work with the City to structure how the Bonds are repaid.
§ If Tax Increment Revenues are insufficient to pay debt service on the Bonds for the Public Infrastructure, then the CDA could apply a special assessment (additional tax) on properties within the Project area only and use that revenue to cover any shortfall.
III. Developer’s Requirements
• Timeline Requirements
o Phase I: The Developer shall commence construction by December 31, 2027, and complete construction by December 31, 2030, including all Public Infrastructure and private development. The City Manager may, in his sole discretion, extend the commencement and completion deadlines for up to 24 months, upon a showing that Developer is diligently pursuing the Project and is in compliance with all applicable agreements. In no event shall the commencement date be extended beyond December 31, 2029, or the completion date beyond December 31, 2032.
o Phase II: The Developer shall commence construction by December 31, 2030, and complete construction by December 31, 2034, including all Public Infrastructure and private development. The City Manager may, in his sole discretion, extend the commencement and completion deadlines for up to 24 months, upon a showing that Developer is diligently pursuing the Project and is in compliance with all applicable agreements. In no event will the commencement date be extended beyond December 31, 2032, or the completion date be extended beyond December 31, 2036.
o The Parties shall negotiate enforcement mechanisms in the future agreement(s) which may include ineligibility for Bond proceeds and other remedies if the foregoing timelines are not met, subject to reasonable cure provisions.
• Financial Requirements
o Developer will be responsible for initially funding all costs for all Phases.
o Developer/Developer’s Lender(s) must invest a minimum of $110M in Public Infrastructure in Phase I, including costs spent to date, before receipt of any Phase I Public Infrastructure financing proceeds.
IV. Affordable Housing P3 Project
• In order to support the financing of the contemplated on-site affordable housing P3 project described in the Development Approvals, the affordable housing contributions provided by the Developer may, in the sole discretion of the City, be used as a source of funding for the P3 project. Any Affordable Housing Trust Fund contribution provided by the developer after the first Certificate of Occupancy will increase in amount over time, based on inflation, at a rate equal to the lesser of: (i) CPI + 100 basis points or (ii) 5% per annum. In the event the CPI is less than 2% for a given year, the assumed CPI for that year will be 2%.
o The full Affordable Housing Trust Fund contribution, including increases, must be used for the Project’s affordable housing project, or paid to the City, no later than June 30, 2034.
§ The City Manager may extend this timeline up to 24 months if the Developer is making good-faith progress.
o The Developer shall, in coordination with the City, identify and secure the City’s approval of the Affordable Housing developer, with qualifications and through a selection process acceptable to the City, as will be further defined in future agreement(s), prior to commencing vertical construction of Phase II of the Project.
o The solicitation process for the Affordable Housing developer shall commence prior to any Phase II Bond issuance.
V. Workforce Development Commitment
o The Developer will support local workforce and apprenticeship programs, including partnerships with the City and Alexandria City Public Schools, to benefit residents and students.
The creation of the Community Development Authority will require a landowner petition and future public hearing for an ordinance to the create it.
FISCAL IMPACT: For the City, the PRGS redevelopment would generate approximately $1.095 billion in tax revenue over the financing period. After deducting debt service of $320 million for the infrastructure improvements, the net gain for the City to pay for general citywide services is approximately $775 million.
ATTACHMENTS:
Attachment 1. Term Sheet
Attachment 2. Additional Community Feedback
Attachment 3. Resolution
STAFF:
Elizabeth Bolton, Director - Strategic Communications, Alexandria Economic Development Partnership
Bonnie Brown, Deputy City Attorney
Ebony Fleming, Director, Office of Communications & Community Engagement
Julian Gonsalves, Strategic Projects and P3 Director
Kevin Greenlief, Director, Department of Finance
Stephanie Landrum, President and CEO, Alexandria Economic Development Partnership
Paul Stoddard, Director, Department of Planning & Zoning
Aspasia Xypolia, Interim Director, Office of Housing