Author Archives: James A. Bacon

Anyone Remember the Coal Ash De-watering Controversy?

Bremo Power Station de-watering test results. Click for legible image.

Environmental controversies are flying so fast and furious in Virginia these days that it’s hard to keep track of them all. As for last year’s disputations, they are quickly forgotten. Remember, for instance, the wrangling over Dominion Energy’s plans for de-watering coal ash ponds at its Bremo and Possum Point power stations?

After intense negotiations, riverkeeper groups, the Southern Environmental Law Center, Dominion, and the Department of Environmental Quality settled upon a protocol for treating and monitoring the quality of effluent before it entered the James River and Quantico Creek. How has the arrangement worked out? The absence of headlines this year is one clue. The water-testing results posted on Dominion’s website provide another.

The tests, which cover pH, suspended solids, oil & grease, hardness and 15 heavy metals and other compounds, show that the water treatment process is cleaning the water to the point where the presence of most pollutants is impossible to detect.

At the Bremo station, only arsenic and chloride appeared in measurable quantities among the three samples taken in early May, and the concentration of both chemicals is less than one-tenth of the Environmental Protection Agency’s permit levels.

Possum Point power station de-watering test results. (Click for larger image.)

At Possum Point, five chemicals appear in large enough quantities to be detectable, but all are safely within prescribed bounds. One chemical, thallium, nudges up close to the permit limit but does not go over.

I don’t purport to have any expertise in these matters, but it looks as if the arrangement is working as it should. If you want to browse through a year’s worth of test results, click here.

This is far from the end of the story, of course. Dominion still must obtain permits for de-watering its Chesapeake and Chesterfield facilities. The results at Bremo and Possum Point suggest that Dominion has the de-watering process firmly under control.

However, the company has yet to receive solid-waste permits for disposing of the coal ash after it has been de-watered. Dominion wants to pursue a cap-in-place approach while environmental groups want the utility to bury the material in landfills. That issue will take longer to resolve. Among the uncertainties is determining the extent to which underground water picks up contaminants while migrating through the coal ash pits. Getting answers will require a different testing protocol than the one used for the de-watering process.

The Nightmarish Complexity of Environmental Regs

As far as I’m concerned, the environmental regulatory process governing the proposed Atlantic Coast Pipeline and Mountain Valley Pipeline is incomprehensible. And that’s a bad thing. If only a handful of regulators, industry players and environmentalist activists can navigate the layers of bureaucracy and thicket of rules, the public is the loser.

In the latest hoo-ha, the Department of Environmental Quality (DEQ) has back-tracked on public statements regarding how it will regulate erosion and sediment control of pipeline construction crossing steep mountain slopes.

On April 6, DEQ issued a press release stating that “in addition to utilizing the U.S. Army Corps of Engineers nationwide permit 12 for wetland and stream crossings, DEQ will be requiring individual 401 water quality certifications for each project.” The next day, DEQ issued another press release stating that the department “has provided water quality certification for the U.S. Army Corps of Engineers 2017 Nationwide Permits.”

Got that? Me neither.

Needless to say, that bureaucratese is unintelligible to the normal human being, and even to spokesmen and reporters whose job it is to translate the gobbledygook. In response to inevitable media inquiries asking what the April 16 press release meant, DEQ spokesman Bill Hayden said that DEQ would require certifications for each individual pipeline segment that crossed or affected any waterway. That meant hundreds of certifications. That is what the Richmond Times-Dispatch understood, what the Roanoke Times understood, and what I understood.

But DEQ Director of Operations James Golden is now saying that Hayden had spoken before he had been briefed by “technical” staff members at DEQ. (So explains the Times-Dispatch today.) DEQ will rely upon a U.S. Army Corps of Engineers national permit. Rather than duplicate the Army Corps’ work, Golden told the T-D, the state’s individual certifications will focus on “upland areas” outside the Army Corps’ jurisdiction.

Asked why DEQ took nearly seven weeks before correcting the widely published remarks, Golden conceded that “in hindsight, DEQ should have tried to provide additional clarity.”

DEQ’s statements never added up to environmental groups, and they made an issue of the seeming discrepancy between the April 16 and April 17 press releases. After endeavoring to understand what it all meant, I headlined the resulting post, “A Brain-Frying Foray into the Regulatory Maze.” In what was surely one of the least-read articles in the history of Bacon’s Rebellion, I tried to sort through the difference between 401 certifications and Permit 12, general permits, individual permits, blanket permits and more. (I never got around to explaining 404 permits, which are relevant somehow.)

Despite the fact that I tediously double-checked information in the article before publishing, I still got stuff wrong — or so says David Sligh with the Dominion Pipeline Monitoring Coalition, a former regulator himself. But I found his correction so incomprehensible that I just appended it whole to the post, and let readers figure out what it meant.

Bottom line: I don’t think harshly of Hayden for disseminating inaccurate information. He was probably as confused as I was. (Well, not that confused. But pretty confused.) Where DEQ fell down was in not correcting the inaccuracies when they began circulating in the media. Frankly, the fact that they didn’t do so makes me wonder if DEQ officials above Hayden knew exactly what was going on.

One conclusion seems unavoidable: When the regulatory system is so full of jargon, is so complex and has so many interlocking pieces that career administrators of DEQ can’t communicate the story accurately to the public, something is wrong with the system.

How to Dismantle the Poverty-Industrial Complex

Marland Buckner

Marland Buckner

Richmond’s new mayor is young, energetic and bursting with ideas. At 36 years old, the James Madison University-educated Levar Stoney represents a new generation of African-American political leadership. He has one foot in the minority community and one in the creative class. His top priority to date has been to restore competence to a city administration plagued by corruption and ineptitude. Now there are signs that he may entertain refreshing ways of thinking about how to deal with poverty.

The traditional Democrat Party urban machine approach has been to spend more money on all manner of government “programs” and “urban renewal” projects that over the years have done little to reverse the scourge of inter-generational poverty and despair. Judging by an op-ed in today’s Richmond Times-Dispatch by Marland Buckner, who served on Stoney’s transition team, City Hall may be open to rethinking that paradigm.

Buckner, co-founder of MB² Solutions, a public policy strategy firm, writes of a “poverty-industrial complex” that encompasses the public housing sector, public schools, and the criminal justice system. It’s not clear exactly how he thinks these institutions have failed the poor, but he advocates four strategies that can help dismantle it.

Evidence-based decision-making. “Evidence-based decision-making,” writes Buckner, “means embracing the tough, costly work associated with evaluating city programs. This is turn requires technology tools and training to ensure that city employees can generate actionable intelligence for decision makers.” Unfortunately, he adds, the city administration is equipped with “technology firmly planted in the 20th century.”

Anti-poverty market research. “Businesses rarely succeed by failing to pay attention to customers,” Buckner says. “The same holds true in anti-poverty policy making. When well-intended programs are built without sufficient attention to what people seeking to lift themselves from poverty actually need, results fall short and disappointment abounds.”

Regional anti-poverty commitments. The Richmond region should pursue anti-poverty programs on a regional basis.

Impact investing. “We cannot tax, spend, or cut our way to helping households achieve self-sufficiency.” Tackling poverty, Buckner says, “demands policy innovation beyond simply asking, “which taxes do we raise or what services must be cut?” He sees impact investing as an alternative — using private dollars to fund social programs that, if successful, create economic value.

The idea of impact investing is appealing, but I would like to see more concrete examples. The only ones that come immediately to mind are not terribly encouraging, such as the privatization of public housing projects by non-profit entities. Still, Buckner is thinking differently, rather than wedding himself to a failed status quo.

Of the four strategies, evidence-based decision-making strikes me as the most important. A couple of weeks ago, I highlighted an example of how the Richmond city jail is using social-scientific analysis to guide its implementation of programs to reduce recidivism. If Stoney accomplishes just two things — restoring competent financial management to city government and instituting evidence-based decision-making — his tenure will be a success. Hopefully, Marland Buckner still has the mayor’s ear.

Where Is Politifact When You Need Them?

“Democracy dies in darkness,” declares the tag-line of the Washington Post, which poses as a defender of the country from fake news peddled by the Trump administration. Perhaps the newspaper should consider fact-checking content on its Opinion page as well.

Mike Tidwell, director of the Chesapeake Climate Action Network (CCAN), and LaDelle McWhorter, chairperson of Virginia Organizing, are certainly entitled to the opinions they expressed in a Washington Post op-ed last week. But someone should call them to account for loose and unsubstantiated assertions they made…. and I’m doubting the Post will do it.

The thrust of their op-ed is to explain why Dominion Energy, the “all-powerful corporation that has ‘owned’ Richmond for decades,” has become a political liability, mostly among Democratic Party candidates for office. In short, they declare that Dominion has behaved in a beastly manner to the environment. To be sure, Dominion has stirred up controversy as it re-engineers its infrastructure to replace coal with natural gas. Critics have raised some legitimate concerns regarding the Atlantic Coast Pipeline, coal ash disposal and electric transmission lines, among other projects. But the issues are complicated. Tidwell and McWhorter don’t do nuance.

Let’s look at four of the more egregious statements.

Dumping liquid coal ash. “Dominion … has dumped highly controversial coal ash liquid into major Virginia rivers (the James, tributaries of the Potomac, the Elizabeth).”

To say that Dominion “dumped” coal ash liquid implies an indiscriminate release of polluted water. Before the enactment in 2015 of new Environmental Protection Agency regulations governing coal ash disposal, Dominion did periodically release rainwater that had accumulated atop coal ash ponds but did not mix with the combustion residue, as permitted by state and federal law. Since then, the company has run rainwater as well as water from the coal-ash slurry through a water-treatment process that reduces pollutants to levels well below EPA limits — indeed, in many cases, to undetectable levels.

That system is working well. Environmental groups, which had a hand in negotiating the rules detailed in a Department of Environmental Quality permit, have not filed any legal complaints regarding the de-watering process at the Bremo Bluff Power Station. A judge struck down a complaint filed at Possum Point. Dominion has not yet begun de-watering its Chesterfield or Chesapeake power stations.

Coal ash burial. “The ash, which has accumulated from decades of coal combustion at nearby Dominion power plants, is already suspected in places to be leaking highly toxic substances into the rivers.

CCAN doesn’t come right out and assert that Dominion coal ash ponds leaked toxic substances into rivers. It says Dominion is “suspected” of leaking. And, technically, that’s accurate because environmental groups do, in fact, suspect that leaks have occurred. What’s missing from the statement is critical context.

For example, in a federal lawsuit, Sierra Club attorneys demonstrated that underground water has migrated through ponds at the Chesapeake power station, picked up contaminants, and emptied into the nearby Elizabeth River. But the presiding judge also found that the volumes were so small and were diluted by such a large volume of river water that the metals posed no danger to aquatic life or human health.

The toxicity of a chemical compound depends upon its concentration. Oxygen, which is essential to human and animal life, also is toxic at elevated percentages and pressures. Likewise, heavy metals that leach from coal ash are “toxic” in the sense that they can be harmful to human and aquatic life above certain levels but are non-toxic below those levels. Some of these “toxic” chemicals are required to sustain human life. For example, according to Wikipedia, zinc, one of the heavy metals leached from coal ash, “is an essential component of a large number (>300) of enzymes participating in the synthesis and degradation of carbohydrates, lipids, proteins, and nucleic acids as well as in the metabolism of other micronutrients.”

The fact that a “highly toxic” substance has leaked into the water in is, by itself, meaningless, and the use of such language is designed to scare rather than enlighten.

North Anna 3. “Adding to Dominion’s unpopularity is its desire to build a $19 billion (yes, with a “b”) nuclear reactor at its North Anna plant. Attorney General Mark R. Herring (D) says it’s unneeded and a bad deal for consumers.”

Dominion does not “desire” to build a third nuclear unit at the North Anna Power Station. The company has spent vast sums keeping open the option to build another nuclear unit should circumstances prove necessary. In its 2017 Integrated Resource Report, Dominion offered eight possible economic and regulatory scenarios framing energy usage over the next 15 years. In only one of those scenarios — the one that cracks down the hardest on carbon emissions, requiring the closure of the Mecklenburg and Clover coal-fueled power stations (577 megawatts of capacity) — does Dominion envision the need for another nuclear unit to maintain base-load capacity. But given the fact that environmental groups such as CCAN are pushing for tough restrictions on both nuclear power and CO2 emissions, that scenario cannot be ignored. Continue reading

Liberty U Acquires Research Park, Advances Research Ambitions

Center for Advanced Engineering and Research in Bedford County. Photo credit: Virginia Hamrick Photography

Expanding its role as the economic dynamo of the Lynchburg metropolitan region, Liberty University has finalized a $4.3 million purchase of the Center for Advanced Engineering and Research (CAER) in Bedford County.

Reports “Work It, Lynchburg“:

For Liberty, the purchase of the CAER facility is an opportunity to build a new research campus on the surrounding 28-acre lot at the New London Business and Technology Center park. The space will serve as the new home for the Liberty School of Engineering and Computational Science.

“This is an exciting step for Liberty University as we expand our presence as a research university and do so at a new location in Bedford County,” Liberty President Jerry Falwell said in a news release from the university. “Our investment in this facility and our commitment to relocate our School of Engineering and Computational Sciences to this site demonstrates our goal to expand our partnerships with business and industry and offer exciting new opportunities for our students.”

Liberty plans to grow its engineering program to 800-plus students and 30-plus faculty and add new undergraduate and graduate degrees along with a new doctorate focused on energy, according to remarks made by Bob Bailey, the executive director of CAER and a member of the LU engineering department advisory board, at a January meeting of the Tobacco Region Revitalization Commission.

Evan Feinman, executive director of the tobacco commission, had described the project as in “financial distress.” An initiative of the Region 2000 economic development group, CAER was originally conceived of as “an industry-focused regional research and development center that drives the development of innovative products and processes by providing local access to university and federal research and inventions.”

Bacon’s bottom line: LU President Jerry Falwell Jr. has set his sights on transforming Liberty University into a religious-oriented, higher-ed powerhouse akin to Notre Dame University or Brigham Young University. From that perspective, acquiring the research center, relocating the school’s engineering and computational sciences program there, and reinforcing ties with regional industries makes total sense. With LU’s resources behind it, the research center could grow into an innovation ecosystem that could spawn new businesses and drive economic growth in the Lynchburg region.

That’s great news for economic development in the Lynchburg region, and it’s a positive sign for the continuing evolution of LU from its origins as a bible college to liberal arts college to online learning pioneer and, now, research university. LU’s business model is highly profitable, and it is investing its non-profit “surplus” into growth.

My main reservation is that Liberty could choose to make its education more affordable by lowering tuition instead — it could perfect a business model of low-cost higher ed that serves as an example to the entire country, thus addressing one of the nation’s major socio-economic crises. Instead, Falwell seems driven to implement a high-prestige, high-cost model of higher ed that is part of the national problem. What a shame. What an opportunity lost. But LU is a private institution, and Falwell is answerable to no one but his own board. Creating a new research university out of fallow fields is a tremendous accomplishment and a not-insignificant consolation prize.

Woo Hoo! Stewart Promises Billions in Toll-Free Projects

Photo credit: Washington Post.

Claiming the populist niche in the contest for the Republican gubernatorial nomination, Corey Stewart has given away a semi-automatic rifle as part of a fund-raising effort, defended monuments of Confederate generals, and bashed Dominion Energy for its coal-ash disposal plans. Now he’s added to his rabble-rousing resume by promising voters to meet Virginia’s transportation needs without raising taxes or imposing new tolls.

“We obviously have transportation needs, and the way we’re going to fund those is by finding efficiencies within existing spending in Virginia. No new tolls; no new taxes. That’s what I’m pledging,” Stewart said yesterday in a Virginia Beach news conference.

Where would the money come from to pay for projects such as two more lanes for the Hampton Roads Bridge Tunnel, costing an estimated $3 billion? Reports the Virginian-Pilot:

Stewart said he would eliminate the need for new tolls by slashing $2.2 billion from the state budget, which is about $104 billion over two years, and redirecting it toward transportation.

Under Stewart’s plan, the $2.2 billion in redirected spending would come in his second year in office. He’s proposing that on the heels of another plan calling for cutting another $2.2 billion in spending in his first year so the state could reduce the income tax rate most people pay from 5.75 percent to 4.75 percent.

Stewart did not specify what would be cut from the budget under his proposals, but said “there are billions of dollars worth of savings out of the state’s annual $52 billion budget that can be found.”

Bacon’s bottom line: This is magical thinking, and it’s wrong in oh so many ways.

First, it is a fantasy to think that billions of dollars of “inefficiencies” can be squeezed out of the existing state budget by going through by line item by line item — the only way to achieve savings under the current paradigm of government. Medicaid, a federally mandated programs, continues to grow at the expense of other programs. (Virginia, by the way, already operates one of the leanest Medicaid programs in the country.) The state is under-funding its K-12 schools based on Standards of Quality, and it has chopped per-student support to higher education. Virginia has huge unmet needs for mental health and substance abuse. It has massive unfunded pension liabilities. The list could go on and on. Anyone who thinks they can cut the income tax rate at a revenue cost of $2.2 billion and then find another $2.2 billion laying around to be reallocated to transportation is deluded.

Second, Stewart is misguided in his no-new-tolls stance. But at least he has a rationale. Quoth the Pilot:

What makes this tolling plan so absolutely heinous is that taxpayers have already paid for these roads. It’s absolutely wrong. It’s absolutely wrong to tax citizens twice for the same road. You need a third crossing, we need a third crossing here in Hampton Roads, but that project is really a state project. It should not be borne upon the citizens of Hampton Roads to pay for a project that is really meant for the Port of Virginia, which is owned by the entire state.

I would agree, it is wrong to “tax” (or toll) citizens twice for the same road. But doubling the capacity of the Hampton Roads Bridge-Tunnel would not be tolling the “same road.” Most likely the new tunnel would be set up as HOT lanes, in which motorists would continue to use the original tunnel for free but would pay a premium to use the new tunnel as a way to bypass congestion. No one would be compelled to use the new tunnel; no one would be forced to pay the toll. But everyday motorists would benefit to the extent that the tolled road diverted some traffic from the untolled road.

I also would agree that it is reasonable to ask the Port of Virginia to help pay for transportation improvements that give tractor-trailers better access to inland markets. But the most logical way to collect money from port-related activity is for time-sensitive tractor-trailers to pay tolls to avoid congestion!

Corey Stewart reflects the id of the Virginia psyche in which everyone wants transportation improvements but they want someone else to pay for them. Stewart is promising to find “someone else” to pay. Thus, roads and highways effectively become free goods — free to the motorist, not the taxpayer. In other words, Stewart is a transportation socialist. The Bernie Sanders crowd might be OK with that. But I can’t imagine the gambit will take Stewart far with the Republican Party.

PHCC Drops Agricultural Degree Programs — Why It Matters

Farm sales by Virginia locality 2012, taken from the StatChat blog. Red circle shows location of Martinsville/Henry County.

The Patrick Henry Community College in Martinsville has dropped its agricultural degree program along with certificate programs in horticulture and viticulture. Between declining enrollment in the programs and state budget cuts, it is no longer feasible to offer the courses, President Angeline Godwin told the Martinsville Bulletin.

Many people might view this flotsam in the torrential current of news coverage as utterly without interest. To Bacon’s Rebellion, the story is imbued with deeper significance in at least two ways.

Market-responsive education. First, it shows how at least one community college is responsive to market forces. Each degree program is the functional equivalent of a product line. The agriculture/horticulture/viticulture product line wasn’t selling in the Martinsville-Henry County area and could not be operated at a profit. So PHCC eliminated the program. Wise decision. As the map above shows, there was not enough farming activity in Henry County in 2012 to register any farm sales. While there still may be some hobby farms, career farming in that part of the state appears to be a defunct vocation.

Virginia’s colleges, universities and community colleges offer literally thousands of product lines — everything from two-year degrees in agriculture to four-year degrees in Tibetan language studies. Some programs are in greater demand than others. Some programs are more “profitable” than others — profitable in the sense that the share of tuition revenue attributed to class enrollment exceeds the cost of employing faculty and administrative overhead to teach them.

Public colleges and universities in Virginia must seek approval of new degree programs by the State Council for Higher Education in Virginia — and SCHEV does not act as a rubber stamp. The council scrutinizes requests and sometimes sends them back for revision or reconsideration. But once an institution gets the OK for a degree program, SCHEV does not monitor its ongoing progress. I have seen no evidence that even the Boards of Trustees of the institutions themselves track the enrollment numbers in degree programs. Do college administrations even compile these numbers? Surely, they do, for they must have some rational basis for deciding how to allocate resources for hiring faculty. But if they do, the public never sees these numbers.

The PHCC article reminds us that some degree and certificate programs fall out of favor. PHCC made a good business decision by shutting down three for which demand had evaporated. But note this: The college acted out of the necessity caused by cuts in state support. Would it it have acted otherwise? Who knows?

My question is this: How many other zombie degree programs are there in Virginia’s system of higher education that are shuffling around half-dead? Could Virginia’s colleges and universities combat runaway costs by chopping out the deadwood?

The decline in farming. The second lesson to learn from this seemingly innocuous article is that inhabitants of what we think of as “rural” Virginia appear to be losing interest in pursuing rural livelihoods, the most notable of which is farming. Based on farm sales, the only part of Virginia where large-scale agricultural operations takes place is the Shenandoah Valley.

When we think about rural economic development in Virginia, one would think that farming would be a major underpinning of the economy. After all, one thing rural Virginia has is a lot of land. Inexpensive land. And Virginia has water. We don’t have to fight wars over water rights like farmers do in California and the Inter-Mountain West. As manufacturing jobs dry up, why aren’t people turning back to farming to make a living? Is the work too hard — it is work that Americans don’t want to do anymore? I don’t know the answer. But the question seems important to ask.

Virginia Voters Back Pipeline by Nearly Two-to-One

Question: Do you support or oppose building the Atlantic Coast Pipeline?

Registered voters in Virginia favor construction of the Atlantic Coast Pipeline (ACP) by an almost two-to-one margin over those who oppose it, according to a poll released by the Consumer Energy Alliance (CEA) today. Fifty-four percent support the controversial project strongly or somewhat, while 31% oppose it.

Eighty-three percent of voters say they consider “energy issues” to be very or somewhat important in the upcoming gubernatorial election. Forty-eight percent say that are more likely to support a candidate who “favors more infrastructure projects like the Atlantic Coast Pipeline” while 27% say they would more likely prefer a candidate opposed to the pipeline.

The poll of 500 Virginia voters was commissioned by the CEA, a non-profit, non-partisan trade association for the purpose of “providing reliable, affordable energy for consumers.” The organization strongly supports the pipeline. Dominion Energy, the managing partner of the ACP, is a member. (See the questions and results of the Virginia polling here.)

Clearly, the results are favorable to the ACP, which has encountered stiff resistance from environmentalists and landowners along the pipeline route. In rolling out the poll to the media, CEA made no secret of the fact that the timing is designed to stiffen the backs of gubernatorial candidates who favor the project. Tom Perriello has made opposition to the pipeline a major issue in a tightly contested race for the Democratic Party nomination against Lieutenant Governor Ralph Northam.

In past posts I have noted biases, both pro and con, in polls that framed questions to elicit answers from respondents that their sponsors were looking for. This poll shows no obvious sign of such of bias. Here are the two key questions:

I’d like to talk now about energy issues. Have you heard or read anything about a proposed natural gas pipeline from West Virginia to public utilities in Virginia and North Carolina, or is that not something you have heard or read about?

And:

As you may know, there is a proposal to build a 600-mile Atlantic Coast Pipeline to bring natural gas from West Virginia to public utilities in Virginia and North Carolina. Do you strongly support, somewhat support, somewhat oppose or strongly oppose building the Atlantic Coast Pipeline?

The polling sample seems reasonably representative of the Virginia population: 74% white, 16% black, 36% Democrat, 27% Republican, 23% conservative, 16% liberal. The margin of error due to sample size is +/-4.4%. The polls results do not provide a geographic breakdown.

While supporting the ACP, voters gave even stronger endorsement of “renewable energy projects, such as solar and wind power” — with 69% strongly in favor, and 20% somewhat in factor. Weaker majorities favored expanding offshore oil and gas drilling in U.S. waters, and generating electricity using coal-fired plants.

Dominion has been criticized for its influence in state politics during this campaign season. Another questions asked: “As you may know, Dominion is one of the companies that has proposed the Atlantic Coast Pipeline.” Seventy-eight percent said that Dominion’s involvement would have no influence on their support, either way. Ten percent responded they would be more likely to back the pipeline; 8% said they would be more likely to oppose it.

Remarkably, despite intensive media coverage of the pipeline controversy, 47% of respondents replied that they had not heard of the ACP.

Retrofitting Alexandria: Another Office-to-Residential Conversion

This Stovall Street property within Alexandria’s Hoffman Town Center is due for a makeover, says the Washington Business Journal.

Washington, D.C.-based Perseus Realty has contracted to acquire a six-acre site in Alexandria’s Hoffman Town Center with plans to convert an obsolete, 610,000-square-foot building into a residential-dominated mixed-use project. Reports the Washington Business Journal:

The effort, if approved, will entail the addition of 25,000 square feet of ground-floor retail, conversion of two lower floors into parking and the construction of upper floor additions that raise the building’s height from 150 to 200 feet. Perseus representatives were not immediately available for comment. It is unclear how many units the building might include when complete. …

The Perseus project comes as Alexandria considers whether, and how, to encourage additional office-to-residential conversions. In Eisenhower East, for example, a 2003 small area plan sought a 50-50 split between commercial and residential. But now, city staff and the Alexandria Economic Development Partnership are of the belief that for the community to thrive, it will need 2 to 3 times more residential than office.

Conversions have had a net positive fiscal impact for the city, generated significant private investment, and changed obsolete office buildings to a “higher and better use,” according to a report produced by AEDP, city staff and consultant TischlerBise. These projects take excess office space off the market and shield aging office buildings “from potential years of high vacancy, special servicing, or foreclosure.” …

There is a downside to conversions, in that residential requires far more city services than office. According to the study, for every dollar of tax revenue generated by an Alexandria multifamily project, 38 cents are needed to support that project with government services while 62 cents are available for general budget use. With office, only 12 cents on the dollar are needed for services and 88 cents are available to the general fund.

Bacon’s bottom line: It looks like office-to-residential conversions are the next big thing in real estate development. I’ve blogged about the trend in downtown Richmond and Norfolk, and it should be no surprise that it’s happening in Alexandria, too.

As the WBJ article pointed out, the conversions address two problems. First, they find a new use for aging and obsolete commercial structures with prime locations. Second, they create new housing stock for growing populations. While apartment buildings are not as “profitable” for localities as office buildings — they generate a smaller surplus of revenue over costs — they are hugely beneficial from a Northern Virginia regional perspective. The alternative would be to build more green-field housing on the metropolitan fringe, requiring investment in new roads, water, sewer, sidewalks, etc, as well as the transportation infrastructure to move workers from exurban bedroom communities to urban job centers.

Judging by the article, the City of Alexandria has made the calculation that office-to-apartment conversions pencil out profitably. The infrastructure is already in place. And tax revenues even cover the cost of education.

Every urban locality in Virginia has large tracts of land zoned decades ago for commercial and retail uses. The rise of Internet commerce is demolishing the retail sector, especially big boxes and department stores, and the demand for office space is shrinking as corporations rationalize the excessive use of office space. (Although I must note a possible counter-current in IBM’s recent announcement that it was calling thousands of work-at-home employees back into the office.)

Localities that figure out how to retrofit aging and obsolete retail strips and office parks into vibrant, mixed-use communities will prosper in the years ahead. Those who dither will be left behind.

Why Panda Power Loves Natural Gas

Bechtel, which helped build the Stonewall station, used a 500-tire trailer the length of a football field — to deliver manufactured components to the construction site.

Yesterday I wrote about the 778-megawatt gas-fired Panda Stonewall power station starting up near Leesburg. Against the backdrop of ongoing debate over gas versus solar here in Virginia, I wondered why the Dallas, Tex., investors behind the plant were willing to risk more than half a billion dollars in equity and debt on a merchant generating facility that would sell into the wholesale electricity market.

How did these newcomers to the Virginia energy scene see the future of electricity? Aren’t they worried that solar energy will displace gas in a few years as the price of solar continues to drop and the cost of natural gas is expected to rise? Aren’t they worried their big investment will be rendered valueless? Remember, Panda has zero political influence in Richmond, and the company can’t go running to the State Corporation Commission to bail it out if the bet on natural gas goes sour.

Bill Pentak, vice president of public affairs, says Panda Power Funds owns both gas and solar facilities. “We understand solar,” he says. “We built the largest solar project in the northeastern United States, covering 100 acres in southern New Jersey.”

Panda Power Funds will invest in projects that make economic sense, Pentak says, and right now the economics tend to favor natural gas. Take that New Jersey solar facility — it produces 20 megawatts of electricity. “That’s gross. But you’ve got to convert [the electricity] from DC power to AC. You lose 10 percent in the conversion. In the real world, it produces 18 megawatts.”

Then there’s the land use to consider, he says. Solar requires lots of acreage, and it takes up land that has alternative economic uses such as farming. The Stonewall plant takes up a fraction of the space and produces far more energy — 62 times as much on one fifth the land.

Then factor in solar’s intermittent production. Solar does not generate electricity at night, and it fluctuates during the day. The more solar installed, the more gas is needed as a backup. Says Pentak:

If you have ton of solar or wind on your grid, you make it less stable. If the wind dies down or the sun stops shining, the grid operator will have to call upon power that can be quickly dispatched. It won’t be coal fired, which takes three days to ramp up. It won’ t be nuclear, which takes three weeks. All that’s left is natural gas. A combined-cycle plant can cycle up in an hour and a half. A combustion turbine can in 30 to 40 minutes.

Thus, gas will be needed both as a base-load energy source and a back-up energy source. “We think Stonewall will operate as a base-load plant,” he says. But technology has blurred the distinction between peak load, intermediate load and base-load. Combined cycle plants — which generate electricity with gas-burning turbines and recycle the waste heat to run steam turbines — can operate as a base-load power source if need be, and also can dial output up and down as required.

Battery technology is not at the point where batteries can store enough energy to meet large-scale power needs, Pentak says. Moreover, batteries are not environmentally friendly. “Where do you put spent batteries? Solar technology is promising, but it’s not there yet.”