Insight Property Group intends to redevelop the now-shuttered1 Macy’s at 685 & 701 North Glebe Road in Arlington, VA into a 16-story building with 553 apartment units, a 38,400sf organic grocery store and 2,000sf of in-line retail space. Construction at the two-acre (87,365sf) site will include two levels of underground parking and one level of above grade parking, according to an Arlington County profile of the project. An employee of a nearby store stated today that he believes Whole Foods Market will be the grocery tenant.
According to Andrew A. Painter, “[i]n exchange for transferring density from the Haven [apartments] site to the Ballston Macy’s site through the County’s Transfer of Development Rights process, Insight [Property Group] agreed to commit the Haven’s units as Committed Affordable Units, record a historic easement to preserve the Haven’s architectural integrity, and make a series of sustainability and maintenance investments at the Haven site.”
According to the International Council of Shopping Centers (ICSC), a strip center is an “[a]ttached row of stores or service outlets managed as a coherent retail entity, with on-site parking usually located in front of the stores. Open canopies may connect the store fronts, but a strip center does not have enclosed walkways linking the stores. A strip center may be configured in a straight line, or have an “L” or “U” shape.” Strip centers are also known as strip malls. The U.S. has more than 68,000 strip centers from coast to coast, according to CNBC (citing data from ICSC). Strip centers range in size from 5,000sf to over 100,000sf, according to Wikipedia. ProjectionHub states that the average strip center is between 7,000sf and 20,000sf.
Traffic to strip centers was up 18 percent in 2022 compared to pre-pandemic numbers, according to a RetailStat analysis of 2,500 properties (reported by Audacy). RetailWire—citing data from Placer.ai—reports that foot traffic was found to be down one percent at strip centers in 2023 compared to pre-pandemic 2019 levels. That compares to a decline of 2.3 percent across U.S. shopping centers, with visits declining 5.8 percent at indoor malls and 8.5 percent at outlet malls, according to the report. Data from Marcus & Millichap (reported in GlobeSt) indicates that during the past three years, demand in the unanchored strip center subsector more than quadrupled new space delivery, compressing vacancy to 4.7 percent — the lowest recording since 2003. An average of 10,000 new leases were executed annually for 1,000sf to 5,000sf spaces at strip centers during this same period, according to the report.
In its Q–2 2024 retail market report, JLL notes an increasing focus “toward strip centers, particularly from an investment perspective.” The report states further that “[w]ith many centers located close to daily needs destinations, they often benefit from increased traffic and steady income from service-based tenants like medical offices and F&B tenants.” According to a March 2024 report, CBRE Econometric Advisors (“CBRE EA”) estimates the retail sector cap rate (the average for all markets covered by CBRE EA) to be 6.4 percent.
On April 23, 2024, the Chicago-based operator of Foxtrot and Dom’s Kitchen & Market announced the closure of all store locations amid plans to file for bankruptcy, according to Forbes. Chicago Reader writes that one thousand people were out of work with hours’ notice. The decision affected 33 Foxtrot locations across Chicago, Austin, Dallas, and Washington, DC, along with the two Dom’s stores in Chicago, according to Axios, which reports that the upscale hybrid market-cafés were popular local spots for artisanal snacks and gourmet food, as well as good places to work remotely.
Foxtrot Market and Dom’s Kitchen & Market agreed to merge last year under a new entity called Outfox Hospitality (“Outfox”), according to Specialty Food News. Progressive Grocer reports that during the week of May 13, 2024, Outfox filed for Chapter 7 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware, claiming that it cannot pay its creditors and listed its value and liabilities between $10 million and $50 million, with a range of 5,001 to 10,000 creditors. The report also states that on May 10, 2024 (prior to filing for bankruptcy) DLA Piper—the law firm that works with Foxtrot creditor JPMorgan Chase & Co.—conducted an online auction of Foxtrot’s assets and that a private holding company called Further Point Enterprises made the solo and winning bid ($2.2 million) for Foxtrot’s assets.1
According to The Real Deal, Mike LaVitola,2 who founded Foxtrot in 2013, is believed to be working with New York-based Further Point Enterprises to reopen multiple locations in Chicago and Texas. However, the new Foxtrot ownership isn’t planning to reopen any Washington, DC stores, according to the report (citing “sources”). C-Store Dive reports, citing a May 31 court filing with the U.S. Bankruptcy Court, that Further Point Enterprises has entered into lease agreements for six of Foxtrot’s former stores in Chicago. The six locations that Further Point has leased were part of the group of 15 Foxtrot stores whose assets it acquired in the May 10 online auction, according to the report (citing information from the bankruptcy court filing). Eater Chicago reports that on Wednesday, June 5, LaVitola announced plans to reopen 15 stores in Chicago, Dallas, and Austin this summer, with more than half of these 15 stores located in Chicago, and with the stores in Chicago’s Old Town and Gold Coast neighborhoods slated to reopen in six to eight weeks. The reopened stores will maintain Foxtrot’s layout and merchandising as well as its focus on small, local vendors, according to C-Store Dive (citing a company spokesperson).
A class action complaint filed on April 24, 2024, in the U.S. District Court for the Northern District of Illinois, alleges in part that Foxtrot Retail, Inc., Outfox Hospitality LLC, and Dom’s Market LLC (collectively, the “Defendants”), were “employers” as defined by the WARN Act, 29 U.S.C. § 2101(a)(1),3 20 C.F.R. § 639(a), and IWARN, 820 ILCS 65/5(c)4; that neither Jamil Moore (the “Named Plaintiff”) nor any members of the putative WARN and/or IWARN classes received at least 60 days’ notice of the Defendants plant closing and/or mass layoff; and that neither the Named Plaintiff nor the members of the putative WARN and/or IWARN classes received compensation for the 60-day notice period that should have been paid under WARN and/or IWARN.
The auction ended when no offers were accepted for the estimated $200,000 in assets from Dom’s Kitchen & Market, according to Progressive Grocer. ↩︎
According to a 2018 University of Chicago news release, Michael LaVitola, MBA’14, founded Foxtrot while in his first year at the University of Chicago Booth School of Business. Foxtrot is the fourth recipient of a venture investment from the UChicago Startup Investment Program, according to the news release, which also reported that the company “has received $450,000 from the university as part of their $6 million Series A round, which is led by Fifth Wall.” ↩︎
The federal Worker Adjustment and Retraining Notification Act, 29 U.S.C. § 2101 et seq. (“WARN”). ↩︎
The Illinois Worker Adjustment and Retraining Notification Act, 820 ILCS 65/1 et seq. (“IWARN”). ↩︎
China’s overall coffee sales will rise at an 8.7 percent compound annual growth rate (CAGR) during the 2022–27 time period, with hot coffee outpacing sales of ready-to-drink coffee drinks, according to GlobalData. Xiamen-based Luckin Coffee Inc. (“Luckin”) has tapped into the rising popularity of coffee in China, and it has overtaken Starbucks to become the largest coffee chain in nation of 1.4 billion, according to Global Times.
Luckin’s Q1–2024 financial report states that “[t]otal net revenues in the first quarter were RMB6,278.1 million ($869.5 million), representing an increase of 41.5 percent from RMB4,436.7 million in the same quarter of 2023.” Total net revenues in fiscal year 2023 were RMB24,903.2 million (~$3.5 billion), representing an increase of 87.3 percent from RMB13,293.0 million in fiscal 2022, according to Luckin’s 2023 financial report. By comparison, Starbucks reported total revenue of $3.05 billion in China for fiscal 2023 that ended October 1, according to a CNN calculation based on the company’s quarterly results.
In its Q1–2024 financial report, Luckin states that “[n]et new store openings during the first quarter was 2,342, including two new store openings in Singapore, resulting in a quarter-over-quarter store unit growth of 14.4 percent from the number of stores at the end of the fourth quarter of 2023, ending the first quarter with 18,590 stores which include 12,199 self-operated stores and 6,391 partnership stores.”1 Starbucks’ outlets in China are entirely company-owned, according to CNN, which reports (citing data from Starbucks) that as of the end of January 2024, Starbucks had 6,975 stores in China—a 14.5 percent increase from a year earlier. China is Starbucks’ second largest market after the U.S., according to Visual Capitalist.2
CNBC reports that Luckin and Starbucks have different pricing strategies and because Luckin “offers heavy discounts and offers,” a cup of coffee from Luckin costs 10 to 20 yuan, or about $1.40 to $2.75, whereas a cup of coffee from Starbucks is priced at 30 yuan or more (i.e., at least $4.10). Luckin has introduced menu items that appeal to the Chinese customer and elevate the popularity of coffee in the country. For example, Luckin collaborated with Kweichow Moutai3 to create the Jiangxiang-flavored4 latte which, according to a Q3–2023 Luckin earnings call, broke Luckin’s single-item sales record with 5.42 million cups sold on launch day. According to an April 8, 2024 Luckin press release, “[t]he ‘Jiangxiang Flavored Latte’, a successful product jointly launched by Luckin Coffee and Kweichow Moutai, has captured the hearts of China’s younger demographic, amassing a transacting customer base of over 25 million.” The same press release also announced that on March 29, the Luckin Coffee x Kweichow Moutai theme store opened in Shenzhen, Guangdong province.
In terms of site criteria, Luckin stated in a fiscal year 2023 SEC Form 20-F that “[w]e primarily operate two types of stores, namely pick-up stores and relax stores, for different purposes, and we strategically focus on pick-up stores, which accounted for 98.5 percent of our total self-operated stores as of December 31, 2023. Our pick-up stores have limited seating and are typically located in areas with high demand for coffee, such as office buildings, malls, shopping districts and university campuses.” … “The majority of these [pick-up] stores generally range from 20 to 60 square meters [(215-646sf)] in size …” The filing states further: “We open relax stores for branding purposes. Our relax stores accounted for 1.5 percent of our stores as of December 31, 2023. Relax stores are generally spacious and larger than 120 square meters [(1,292sf)] in size.”5
On April 24, 2024, Luckin announced the opening of a new roasting plant in Kunshan, Suzhou City of Jiangsu Province. The press release stated that “[w]ith a total planned investment of $120 million and an annual roasting capacity of 30,000 tons, it is the largest coffee roasting plant in China to date.”
As of December 31, 2023, Luckin had 10,628 self-operated stores in operation, including 10,470 pick-up stores and 158 relax stores, according to an SEC filing. ↩︎
As of October 2023, Starbucks had 16,346 stores in the U.S., of which 9,645 were company-owned and 6,701 were licensed, according to Visual Capitalist. ↩︎
Kweichow Moutai, is a Chinese company specializing in the production, sale, and distribution of Maotai, a style of baijiu made in the town of Maotai, Guizhou Province, China. ↩︎
The 12-story, 110-unit mixed-use (multifamily and retail) building in DC’s Union Market neighborhood sold at a foreclosure auction today for $38,300,000.00. Silver Spring-based HH Fund is the purchaser. PropertyQuest (DC Office of Planning) indicates the 2024 assessment for the property (land and improvements) to be $41,068,460.
According to The Real Deal, New York-based Ranger Properties purchased the pre-development property in 2017; the development entitlement process took two years; EagleBank issued a $33.7 million construction loan in 2019; the new development delivered in early 2023; and Srinivas Chavali purchased the nonperforming loan backing the property in January 2024.
The building includes 3,463sf of retail space, a portion (1,136sf) of which is leased to The UPS Store. The remaining 2,327sf is vacant. The multifamily portion of the building is known as The Lanes at Union Market. The property is located about a thousand feet from Edens-owned Union Market, which is a food hall that anchors the Union Market District.
Reuters reports that Chinese electric auto maker BYD is evaluating locations in Mexico for a production facility. The report cites Americas head Stella Li as stating that the plant will be built in central Mexico and will take two to three years to complete. It will have a capacity of 150,000 vehicles per year, according to Li, as reported in the Detroit Free Press. In an interview with WardsAuto, Jorge Vallejo, BYD’s general director in Mexico, stated in part: “These days our focus is basically on the Mexican market. We expect to commercialize 50,000 vehicles this year and we want to more than double those sales next year.” On May 14, BYD launched its first pickup truck—the mid-to-large size BYD Shark—in Mexico, according to CleanTechnica.1
According to Asia Financial, BYD overtook Musk-led Tesla in sales for the first time ever in Q4–2023, delivering 526,409 vehicles in the October-to-December period and exceeding Tesla’s deliveries of 484,507 EVs. Reuters reports that during a January 2024 post-earning call with analysts, Elon Musk said that Chinese car companies were the “most competitive”; that they “will have significant success outside of China, depending on what kind of tariffs or trade barriers are established”; that “[i]f there are no trade barriers established, they will pretty much demolish most other car companies in the world,”; and that “[t]hey’re extremely good.”
On May 14, The White House announced that the tariff rate on electric vehicles under Section 301 of the Trade Act of 1974 will increase from 25 percent to 100 percent in 2024, stating that “[w]ith extensive subsidies and non-market practices leading to substantial risks of overcapacity, China’s exports of EVs grew by 70 percent from 2022 to 2023—jeopardizing productive investments elsewhere. A 100 percent tariff rate on EVs will protect American manufacturers from China’s unfair trade practices.” CBS News reports that the administration “is trying to keep the U.S. from emulating Europe, where Chinese EVs quickly came to account for about 20 percent of the market share, but is not considering banning Chinese-made EVs.”
Mexico’s industrial real estate market is thriving, according to an analysis published in Thornburg, which states that if just three percent of China’s industrial gross leasable area (GLA) were to shift to Mexico, the Mexican industrial market footprint would double. According to TC Latin America Partners, industrial inventory in Mexico has doubled since 2008 with vacancies hovering at just seven percent over the last decade. Commercial Property Executive reports (citing data from Fitch Ratings) that Mexico’s industrial market attracted more than $18.6 billion in foreign investment in the first quarter of 2023 alone, a 48 percent increase year-over-year.
Mexico is the world’s seventh largest passenger vehicle manufacturer, producing 3.5 million vehicles annually, according to the International Trade Administration, which further states that 88 percent of vehicles produced in Mexico are exported, with 76 percent destined for the United States. The Mexican Automotive Industry Association (AMIA) estimates that Mexico will become the fifth largest global vehicle producer by 2025, according to Prodensa.
Mexico Business News reports that in addition to a production facility in Mexico, BYD intends to invest in a new industrial complex in northeastern Brazil, which is set to be built on land previously occupied by a Ford plant that ceased operations in 2021. That plant is estimated to cost 3 billion reais (US$620 million). ↩︎
Japanese department store operator Takashimaya intends to expand its presence in Vietnam by opening a store in Hanoi, according to Inside Retail, which reports (citing Nikkei) that the company’s subsidiary, Toshin Development, has already started work on a mixed-use complex in the Vietnamese capital. Vietcetera reports that the company plans to invest around ¥2 billion ($12.9 million) in the project, which will be the first Japanese department store chain to establish a physical presence in Hanoi as well as Takashimaya’s first overseas venture in eight years. Slated to open in 2026, the Hanoi store will have 10,000 square meters of sales space and will be part of a mixed-use development that includes apartments, offices and retail space, according to Invest Vietnam.
In HCMC’s District 1, Takashimaya is an anchor tenant at Saigon Centre, a mixed-used development that was jointly developed by Keppel Land, a Singapore–based developer and Toshin Development. The Saigon Centre store opened in 2016, consists of five stories, and “involved individual sub-tenant fit-outs for over 100 brands,” according to Pure Projects. That store posted a two percent increase in revenue to three billion JP¥, during the fiscal year that ended February 2024, according to VietnamPlus.
Takashimaya currently has 22 locations—18 in Japan and four overseas.
Netherlands-based premium economy hotel chain citizenM is slated to open a new 228-key location in DC’s Georgetown, according to Donohoe. The plans indicate that the new seven-story hotel at 3401 Water Street NW (aka 3401 K Street NW) will incorporate an existing two-story building as the base and will total 80,146sf. This will be the third citizenM hotel in Washington. The “M” stands for “mobile.”
citizenM opened its first hotel in Amsterdam in 2008 and plans to operate 40 hotels and 8,545 rooms by 2025, according to its website, which lists its development specifications as: Opportunities of 3,500–10,000 square meters (40,000–110,000sf); 100–350 keys; and prime metropolitan locations, central business districts (CBDs) and terminal-linked airport sites (>35 million passengers per year). “citizenM is the first and only hotel built entirely from prefabricated rooms,” according to the company.
The Financial Times reports that the owners of citizenM including its largest shareholder Dutch pension provider APG, Singaporean wealth fund GIC and founder Rattan Chadha are exploring a potential sale, or the sale of a minority stake, as the company seeks to expand following the post-pandemic rebound in the travel sector. Morgan Stanley and Eastdil Secured are advising the owners, according to the report, which cites a person “familiar with the matter” as estimating that the company could be worth roughly €4bn in a deal.
Perónism1 has ruled Argentina for over half the time since Juan Perón’s first presidency in the 1940s. To this day, Perónists are politically powerful, particularly in the trade unions and political classes. The Justicialist Party (“PJ”) has been the largest political party in Congress almost consistently since 1987 and is the largest branch within Perónism. Alberto Fernández, who was President of Argentina until December 10, 2023, has been a member of the Justicialist Party for most of his political life. Other PJ members include Carlos Menem, Néstor Kirchner and Cristina Fernández de Kirchner.
Javier Milei, a self-described anarcho-capitalist, was recently elected President of Argentina and was sworn into office on December 10, 2023. Milei won Argentina’s presidential election with nearly 56 percent of the vote, defeating the country’s economy minister, Sergio Massa (a former member of the Justicialist Party). Milei is pledging economic shock therapy in an effort to resolve Argentina’s chronic economic malaise.2 His plans include shutting the central bank, abandoning the peso (dollarization of the economy),3 slashing spending, deregulation and privatization. He has also promised to cut the number of federal ministries from 18 to eight and to dismiss public officials hired in this calendar year. FT reports that on December 20, Milei unveiled a sweeping emergency decree4 that mandated more than 300 measures to deregulate the country’s economy. According to El País, during the week of December 11, “prices in supermarkets [rose] by up to 40 percent after the end of the freeze on costs for basic groceries promoted by Peronism, while the price of fuels [increased] by at least 30 percent.”
According to The Washington Post, Milei studied economics at the University of Belgrano in Buenos Aires. As stated in the Buenos Aires Times, he “also has postgraduate work in economic theory at the Instituto de Desarrollo Económico y Social and a postgraduate degree in economics at the Universidad Torcuato DiTella.” The Post reports further that Milei has taught economics and written several books, including “The Path of the Libertarian” and “The End of Inflation”; that he worked as a risk analyst for Corporacion America; and that was a television pundit.
In his victory speech, Milei is quoted as stating: “[e]nough of the impoverishing model of the [political] caste, today we return to embrace the model of freedom to be a world power.” According to the Buenos Aires Times, Milei considers the “caste” to be those who implement policies “harming people… to protect” their own privileges while arguing that they can do no other. The caste, according to Milei, “are the corrupt politicians, the businessmen living off state contracts and bribed journalists.”
A Macroeconomic Snapshot of Argentina
Argentina has a Gross Domestic Product (GDP) of approximately US$650 billion, according to The World Bank, which also reports that “[a]ccording to national statistics published in September 2023, poverty stands at 40.1 percent and extreme poverty stands at 9.1 percent.” Trading Economics (citing data from Instituto Nacional de Estadística y Censos (INDEC)) reports that in Q2-2023, the unemployment rate in Argentina was at 5.7 percent, the employment rate was 45.5 percent, and the labor force participation rate was 48.2 percent. In November, DW reported that the annual inflation rate in Argentina hit 143 percent. Consumer price inflation averaged 38.8 percent in the ten years to 2022 in Argentina, compared to the Latin America regional average of 8.4 percent. The soaring inflation rate has prompted the central bank to raise interest rates to as high as 133 percent. Argentina has defaulted on its international sovereign debt nine times, including three times during the past two decades. Almost one-third of the current total IMF lending is to Argentina, which is $44 billion in debt to the IMF, according to Vox.
The Buenos Aires Real Estate Market
According to JLL, the Q-3 2023 vacancy rate for the corporate office market of Buenos Aires was 13.4 percent. At 11,000 square meters (sm), net absorption during Q3-2023 outperformed the same period last year (4,900sm), according to the report, which states that the general asking price during Q3-2023 was US$23.10/sm/month—slightly below the preceding quarter (US$23.30/sm/month).
In Q1-2023, the average price of apartments in Buenos Aires fell by 5.41 percent year-over-year to US$1,731/sm, following annual declines of 6.03 percent in Q4-2022, 7.11 percent in Q3-2022, 6.31 percent in Q2-2022 and 7.01 percent in Q1-2022, according to Global Property Guide (citing data published by Reporte Inmobiliario). When adjusted for inflation, prices fell by 53.71 percent year-over-year in Q1-2023, according to the report.
According to Cushman & Wakefield, in H1-2022, the Buenos Aires logistics/industrial real estate market had a vacancy rate of 9.4 percent, net absorption of 150,134sm, and an average asking rent rate of US$5.40/sm/month. Mass consumption companies (mostly supermarkets) dominated the demand for industrial space, according to the report, which also states that construction projects reached 61,000sm—a level deemed insufficient to meet the 160,134sm demanded in the first six months of 2022.
The main retail corridors of the City of Buenos Aires total 1,372 stores, averaging 228 commercial spaces per corridor, according to JLL, which reports the average vacancy rate of all the retail corridors included in its survey to be 2.6 percent (as of the end of 2022)—significantly below the year-end 2019 average (6.3 percent). The retail corridors of “Santa Fe & Pueyrredón” and “Rivadavia & Acoyte” recorded full retail occupancy throughout 2022, while the Calle Florida pedestrian shopping street—a retail corridor that is dependent on office workers and tourists and that was most affected by the pandemic—had the highest vacancy and turnover rates of the retail corridors surveyed by JLL. During the last quarter of 2022, the average asking price for retail space in Buenos Aires was US$17.00/sm/month—22 percent below 2018, when they averaged US$22.00/sm/month, according to JLL. The report notes that the highest-priced corridors in 2022 were “Rivadavia & Acoyte” (US$68.90/sm/month), “Santa & Pueyerredón” (US$39.70/sm/month) and “Puerto Madero Oeste” (US$25.00/sm/month).
As Milei transitions from campaign to Casa Rosada, the following factors are likely to affect and determine his government’s level of success in helping Argentina turn the page:
1.) Political and ideological authenticity. Milei should clarify the nature of his government and commit to an ideological stance. Either Milei is a libertarian (and/or an Austrian), or he is a right-wing populist. He cannot be both, because the two are incompatible and fundamentally at odds. The burden is on Milei to show that his movement (and now his government) is different from the right-wing populist trends seen recently in other major countries of the Americas. It is acknowledged5 that Milei will need to make compromises and form alliances in order to advance his agenda. However, there is a difference between being politically flexible and astute and being ideologically feeble and recreant.
2.) Incrementalism and maturity in governance. Milei should pursue policies and methods that achieve sustainable change and growth. Reforming Argentina is a long-term process and requires a cultural shift. After identifying and committing to an ideological stance, Milei’s administration should ensure that its policies are implemented in a non-ideological, grounded, gradual and compassionate manner that aims to win the hearts and minds of Argentinians from across the political spectrum. Deregulation should be coupled with enhancements in government transparency and accountability. Privatization should go in tandem with new, vigorous measures to combat corruption. Dollarization (or the adoption of a currency peg or currency board) should occur simultaneously with efforts to preserve and improve Argentina’s social safety net.6 Furthermore, Milei’s government should take a pragmatic and sophisticated approach toward foreign policy and eschew ideologically motivated statements that oversimplify and potentially compromise Argentina’s important and complex role in the region and the world. Finally, Milei should heed the wise words of James Madison that “the advancement [and] diffusion of knowledge,” … “is the only guardian of true liberty” and ensure that under his leadership, education is a top priority.
3.) Protection of fundamental rights. In part because of Argentina’s dark past, the Milei administration should spare no effort to ensure that the fundamental rights of Argentinians are protected without exception. Particularly during periods of major reform, the freedom to exercise fundamental rights becomes sacrosanct. The rights of speech and peaceful assembly should not be constrained under the guise of public safety and order.
Collins dictionary defines Perónism as “the principles or policies of Juan Perón.” Perón served as President of Argentina from 1946 to 1955, and again from October 1973 to his death in July 1974. Perónism is also known as Justicialism. In a speech made on October 17, 1950 at the Plaza de Mayo, Perón listed the twenty truths of Perónist Justicialism which Perón stated formed the core of his Justicialist political movement. ↩︎
In 1913, Argentina was ranked among the world’s ten wealthiest countries, with a GDP per capita on par with France and Germany. Beginning in the 1930s, Argentina’s economy deteriorated notably. ↩︎
According to Vox, Milei’s team estimates that dollarization could cost around $40 billion. ↩︎
FT states further that “[u]nder Argentina’s constitution, presidents can issue ‘decrees of urgency and necessity’ on most areas of policy — except tax, penal and electoral matters and rules for political parties — when ‘exceptional circumstances make it impossible to follow ordinary procedures.’ Decrees stay in place until both houses of congress vote to strike them down.” ↩︎
In Congress, Milei’s La Libertad Avanza coalition holds 15 percent of seats in the lower house and less than 10 percent of the senate, according to FT. ↩︎
To the extent that Milei is a Hayekian, it should be noted that Hayek was not opposed to the concept of a social safety net (see, e.g., Bernard Levin in conversation with Friedrich Hayek (“What we can but can only in a wealthy society is to assure for all a certain minimum below which nobody need to fall.”); seealso, Law, Legislation and Liberty, volume 3, chapter 3, p. 55 (1979) (“The assurance of a certain minimum income for everyone, or a sort of floor below which nobody need fall even when he is unable to provide for himself, appears not only to be a wholly legitimate protection against a risk common to all, but a necessary part of the Great Society in which the individual no longer has specific claims on the members of the particular small group into which he was born.” … “It is unfortunate that the endeavor to secure a uniform minimum for all who cannot provide for themselves has become connected with the wholly different aims of securing a ‘just’ distribution of incomes.”)). Hayek’s views regarding the nature and breadth of a social safety net and/or a universal basic income are subject to debate. ↩︎
On March 23, 2023, the Supreme Court of Virginia issued an opinion in Berry v. Board of Supervisors (Record No. 211143) reversing the Fairfax County Circuit Court (hereinafter, “Circuit Court”) and finding the county’s 2021 zoning ordinance adopted in March 2021 (“Z-Mod”) to be void ab initio. According to the opinion, on March 3, 2021, the Fairfax County Planning Commission voted to recommend that the Board of Supervisors of Fairfax County (the “Board”) adopt Z-Mod. Two days later, citing the open meeting provisions of the Virginia Freedom of Information Act (“VFOIA”), David Berry, Carol A. Hawn, Helen H. Webb, and Adrienne A. Whyte, resident taxpayers of Fairfax County (collectively “Residents”) filed a “Verified Complaint for Declaratory Judgment and Temporary/Preliminary and Permanent Injunctive Relief,” seeking to enjoin the Board from adopting Z-Mod at an electronic public hearing which was scheduled for March 9, 2021. The Residents alleged that the Board lacked the authority under Virginia law to consider and vote on Z-Mod in an electronic meeting, and, as such, any resulting action or approval concerning Z-Mod should be declared void ab initio. During the March 9 meeting, the Board considered the adoption of Z-Mod but deferred its ultimate decision until later in the month and on March 23, the Board met electronically and voted to adopt Z-Mod. The Residents appealed the Circuit Court’s decision dismissing their claims against the Board.
In discussing the appropriate remedy, the Supreme Court of Virginia stated in part: “By failing to hold the meetings at which Z-Mod was considered and ultimately adopted in compliance with VFOIA’s open meeting requirements, the Board’s actions prevented the public from participating in the manner required by VFOIA, and thus, potentially limited public participation and input into the process. As such, the Board’s failure here is analogous to the circumstances in our prior cases in which a zoning ordinance was adopted despite the failure of the locality to provide the statutorily required public notice. In such cases, we have held that such ordinances are void ab initio.”
First, VFOIA, by its very language and stated policy, supports the Berry decision. VFOIA states that “[b]y enacting this chapter, the General Assembly ensures [emphasis added] the people of the Commonwealth ready access to public records in the custody of a public body or its officers and employees, and free entry to meetings of public bodies wherein the business of the people is being conducted.” Va. Code § 2.2-3700(B). The statute goes on to state that “[u]nless a public body or its officers or employees specifically elect to exercise an exemption provided by this chapter or any other statute, every [emphasis added] meeting shall [emphasis added] be open to the public and all public records shall be available for inspection and copying upon request.” Va. Code § 2.2-3700(B). A meeting that fails to comply with VFOIA’s open meeting requirements does not ensure the people of the Commonwealth free entry to meetings of public bodies wherein the business of the people is being conducted, and it conflicts with VFOIA’s statement that every meeting shall be open to the public. If such a meeting (or action taken at a meeting), that is violative of VFOIA, cannot be declared void ab initio, then VFOIA’s stated policy is rendered trivial.
Second, the Berry decision brings potency to VFOIA. A law is only as effective as its enforcement mechanism. The ability to seek a declaration that an improperly held meeting (or action taken at a meeting) is void ab initio creates an impetus for compliance. Virginia’s public bodies are more likely to take an astute, responsible and deferential approach toward VFOIA under such a regime. If Berry stands, VFOIA’s open meeting requirements, as set forth in Va. Code § 2.2-3707, are likely to become more meaningful and impactful. The authority of public bodies to act becomes inextricably linked to compliance with VFOIA. Such a linkage sends a clear and unambiguous message that the “affairs of government are not intended to be conducted in an atmosphere of secrecy since at all times the public is to be the beneficiary of any action taken at any level of government.” Va. Code § 2.2-3700(B).
Third, Virginians expect, and the law demands (in both letter and spirit), that public bodies be trained and competent in VFOIA procedure (see Va. Code §§ 2.2-3704.2(E), 2.2-3704.3 and 30-179(2)). Public bodies do not always comply with VFOIA’s training requirements. The Berry decision is likely to improve compliance. According to the VFOIA Council, “just as § 2.2-3704.2 does not require any specific subject matter or other contents for training FOIA officers, § 2.2-3704.3 and subdivision 2 of § 30-179 do not require any specific subject matter or other contents for training local officials. However, our training presentations designed for local officials do cover both records and meetings issues as well as other topics such as FOIA remedies.” The important takeaway is that the VFOIA Council offers training presentations that cover meetings. It is incumbent upon public bodies to seek the training they need to comply with the law. Even if the VFOIA Council has neither expectation nor presumption that the government officials, members and staff identified in Va. Code §§ 2.2-3704.3 and 30-179(2) are competent in VFOIA’s open meeting requirements (a concerning prospect in and of itself), the expectation of Virginians and the demands of the letter and spirit of the law remain.
Fourth, in those likely rare and sporadic situations when a declaration of void ab initio produces costly consequences, Virginia’s courts are (or should be) empowered1 to equitably adjudicate those matters—the adjudication of which could have the added effect of producing healthy and substantive public debate. Such situations are going to be the rare exception, and the exception should not dictate the rule. The General Assembly should not enfeeble VFOIA and give public bodies a pass to be heedless just because of occasional and seldom-occurring costly situations that may arise because of the Berry decision.
Fifth, Berry should stand and its remedy ought to be subject to a two-year statute of limitations. It is unclear whether a mechanism and procedure permitting the declaration of a meeting (or action taken at a meeting) as being void ab initio could coexist with, and be limited by, a statute of limitations. The inherently permanent status of “void ab initio” (having no legal effect from inception) is distinct from, and likely can be restrained by, a statute of limitations, which acts as a procedural bar to bringing a claim. Virginia case law2 related to court orders may or may not be applicable to ordinances and meetings. At least one other jurisdiction has noted3 that a statute of limitations applies to a cause of action claiming that contracts were void ab initio. Furthermore, even if under current Virginia law, a petition or lawsuit seeking to declare as void ab initio, a meeting (or action taken at a meeting) of a public body is not subject to any statute of limitations, legislation could potentially change this.
A neutered VFOIA moves the Commonwealth away from government transparency and accountability. If the General Assembly legislates to dismantle, defang and debilitate Berry, it will send the message that Virginia’s government can operate outside the scope of its authority and do so with impunity. If, on the other hand, Berry is permitted to stand, it will elevate standards, protect public access to the meetings of public bodies, and promote due process.
“[VFOIA] essentially represents a mechanism by which those who ultimately hold sovereign power (i.e., the citizens of the Commonwealth) may obtain an accounting from the public officials to whom they delegate the exercise of that power. See Va. Const., Art. I, §2; Va. Code Ann. §2.2–3700(B).” McBurney v. Young, 569 U.S. 221, 228 (2013). For the betterment of the Commonwealth, the General Assembly should strive for a robust VFOIA and let Berry stand.
Two cases referenced in Berry are illustrative: Town of Jonesville v. Powell Valley Village, 254 Va. 70, 77 (1997) (“We agree with the Town’s assertion concerning the prospective nature of the decision and direct that the holding in this case — that adoption of a comprehensive plan is a prerequisite to the adoption of a zoning ordinance — is limited to the instant case and shall operate prospectively only. We disagree, however, that suspension of the decision in this case is consistent with, or required by, our previous cases.”) (internal citation omitted); and City of Alexandria v. Potomac Greens, 245 Va. 371, 378 (1993) (“Alexandria represents that it routinely has enacted zoning amendments following only one notice for the public hearings before the Planning Commission. In oral argument, Alexandria asserted that an affirmative answer to the third certified question would nullify all zoning amendments since 1950. We direct, however, that our decision today shall be limited to the present case, shall operate prospectively only, and shall not affect other amendments enacted prior to our decision in this case.”) (internal citation omitted). ↩︎
“[A court] order is void ab initio if entered by a court in the absence of jurisdiction of the subject matter or over the parties, if the character of the order is such that the court had no power to render it, or if the mode of procedure used by the court was one that the court could not lawfully adopt. The lack of jurisdiction to enter an order under any of these circumstances renders the order a complete nullity and it may be impeached directly or collaterally by all persons, anywhere, at any time, or in any manner.” Singh v. Mooney, 261 Va. 48, 49 (2001). ↩︎
“Appellants’ first contention, that no statute of limitations applies because the contracts were void ab initio, is meritless. Assuming that the contracts were void ab initio, [1] a three-year statute of limitations would apply.” Woodruff v. McConkey, 524 A.2d 722, 724 (D.C. 1987) (footnote omitted). ↩︎