Fairfax County board OKs agreement to settle tax dispute with Sheraton Tysons Hotel owner

Let speculation about the future of the Sheraton Tysons Hotel begin, as the conclusion of a tax dispute that ended up in court could allow the property to move forward.

The Fairfax County Board of Supervisors agreed to accept a settlement agreement following a closed-door meeting on Tuesday (Dec. 7) to resolve lawsuits filed by the owner of the 449-room hotel (8661 Leesburg Pike), which permanently closed in April 2020.

Constructed in the mid-1980s, the Sheraton was one of a handful of union-run hotels in the Commonwealth, which contributed to higher operating costs, including for employee benefits.

Sheraton property owner JBG Smith, a Maryland-based real estate development and investment firm, filed lawsuits against Fairfax County in 2019 and 2020, contesting years-old property tax assessments.

The company’s lawyers argued that the county’s mass appraisal process failed to take the site’s higher operating costs into account. The suits had been headed for trials in 2022.

The county declined to comment on whether it has changed any appraisal policies or procedures due to the error. Board of Supervisors Chairman Jeff McKay’s office deferred questions to a county attorney, who cited a tax law, arguing settlement details couldn’t be released due to confidentiality.

The county also said the matter “remains in litigation.” The county suggested yesterday (Thursday) that the property’s assessments in 2016 and 2017 would be modified.

A county property database has stated the owner’s annual real estate taxes were around $252,092 for 2021.

Court records indicate that JBG Smith, identified as JBG Tysons Hotel LLC, sought compensation between $100,000 and $500,000 for each case.

Crescent Hotels & Resorts, which managed the Sheraton, issued a layoff notice for 171 workers, effective April 3, 2020, as the COVID-19 pandemic rocked the U.S. hospitality industry. Later that year, the hotel launched a liquidation sale of furniture and other items.

John Boardman, a representative for Unite Here Local 25, a union for D.C. area hospitality workers, said employees received closing pay as part of their now-expired collective bargaining agreement around six months ago.

“Our contract also provides that if all or part of the property is reopened as a hotel operation, then individuals who were formerly employed have a right to return to work in their previously held jobs,” Boardman said, adding that while the contract is no longer in force, the return-to-work provision runs in perpetuity.

The former Sheraton building occupies 5.8 acres of prime real estate off of Route 7 in Tysons West. JBG Smith has not publicly shared its future plans for the site, but rising property values could make it ripe for redevelopment.

Photo via Google Maps