Updates from Letty – July 21, 2017
Blog posts are the personal views of Letty Hardi and not official statements or records on behalf of the Falls Church City Council
And with that, we’re halfway through the summer and down to our last two meetings of the summer. Next Monday night (July 24th) will be a biggie – 1) we’ll be casting our final votes whether to place the $120M bond referendum for a new GMHS on the November ballot and 2) whether to adopt a modified or the full CIP, which would total $218M+ in debt. This is your last opportunity to voice your thoughts to us before we vote on both matters. You can email us at firstname.lastname@example.org or speak during public comment on Monday night. I’m also holding office hours this Saturday from 9-10 am, Cafe Kindred if you’d like to chat with me directly.
Read on for the latest estimates on how much this will cost you and my thoughts on the vote. Many of you likely received an email about the Larry Graves turf conversion project, which is part of the CIP, so I’ll address that too…
For those early risers, interested in economic development, and want to join me, there are also two meetings this morning – the GMHS Economic Working Group at 730 am and the Economic Development Committee at 9 am – both in the Dogwood Room of City Hall. Economic development continues to be important to increase our city’s vibrancy and diversify our tax base which ultimately lessens the burden on taxpayers for the big capital projects we’re wrestling with (more on that below), so I’m committed to keeping the development pipeline going.
Look forward to hearing from/seeing you.
What Happened This Week:
(1a) GMHS & CIP Financing
Last week, we heard from the real estate consultants on the potential value from a land transaction for 10 acres of commercial development at the GMHS site ($43-45M from a long term lease, with various assumptions on the type and mix of development and split over several payments to the City.) The other half of the economic development benefit is the future tax revenue from the development, and this week staff shared their analysis on taxes. We could see tax benefits around FY2022 when we could assess real estate taxes on the raw land. Between FY2025-FY2031 is when the phases of development would come online and we start seeing taxes phased in – ultimately resulting in $3M in net fiscal impact each year. Why phasing, you might ask? We don’t see taxes immediately once construction starts – construction often takes 2-3 years, then businesses and residents move in over the course of several years. The numbers may be a bit conservative, especially if we encourage more density at the site, but I think they are fair estimates given that the stabilization period and tax yields are based on actual data from mixed use projects built in the City.
So what’s the bottom line to your wallets?
If we proceed with the full CIP (GMHS, City Hall, Library and other projects like Larry Graves stay on the current schedule) – the tax rate impact is estimated to be 6 cents to 13 cents, starting next year. For the median homeowner, that is about $400-900 in additional real estate taxes per year. The lower number (red line) is the amount we’d ask homeowners to pay if we sell/lease the land and everything happens as planned; the higher number (blue line) is if we choose not to sell/lease the land or if the land transaction doesn’t occur as planned.
Last month, I wrote about the reasons why I would support the modified CIP. In a modified CIP, all of the projects still happen, but sequenced to the years when we receive land transaction payments and/or old debt comes off our books. While adding economic development with a land transaction and future tax yields makes the financing picture more palatable, I remain concerned about the risk we would take on with a full CIP. We would be quadrupling our debt from $50M to $218M, which is a huge lift for a little city of our size and using different financing measures we traditionally don’t use. Nearly every public building in the City would be under construction within a 5 year period.
In the modified CIP, the tax rate impact for the median home owner is more moderate – between 3 cents and 7 cents starting next year, which is $200-500/year depending on the land transaction. Mt Daniel, GMHS, and City Hall would occur as planned. The Library would move out 3 years from FY2019 to FY2022, which is when we estimate receiving the first land transaction payment. An expansion at TJ Elementary would be funded in FY2025. For those who watch our Monday meetings, you’ll know that I bring up the elementary capacity crunch at nearly every meeting. I remain concerned that we could need more capacity in the elementary grades earlier than 2025, which is another reason why I believe we should give ourselves some breathing room with a more prudent, modified CIP for unexpected needs or opportunities that may come up.
See the list below of additional projects that would stay on schedule and others that would be delayed in a modified CIP.
As an aside – the Planning Commission, which plays a big role in the CIP, voted 4-1 this week to recommend we adopt the modified CIP.
Important note #1 – operating budgets: While 3 to 7 cents/$200-500 per year for the modified CIP seems more modest compared to earlier estimates, note that this is just the real estate taxes needed to fund the capital projects. The other side of the City budget is the annual operating budget, which funds priorities like city services and teacher salaries. A big assumption is that operating budgets from general government and the schools are funded from revenue growth only and no additional pennies on the tax rate are needed. For reference, we forecast 2.5% growth in revenue and in order to keep operating budgets also at 2.5% – that would require a lot of restraint by everyone. While no one has made any promises, I am heartened to hear the City Manager, Superintendent, and the School Board chair share their commitment to fiscal discipline needed to take on the CIP, full or modified.
Important note #2 – $120M cost of GMHS: I’ve also fielded many questions regarding the cost of a new GMHS and why it has to cost $120M. Having been a part of the working group on school options, I can attest that the full span of options from do nothing to renovation to phasing to new construction was thoroughly explored. Ultimately, the new construction option presented made the most sense, for various reasons. Perkins Eastman, who was the architect that provided the feasibility study and cost estimate for the $120M option, did offer some potential cost savings measures (from page 10 of the Superintendent’s memo and pages 62-69 from the feasibility report here) that are based on benchmarking our school vs neighboring school systems. In my opinion, using benchmarking data to decrease costs seems wiser than trying to value engineer and cut costs later in the project, without shortchanging a school that should last us 50+ years. For example, Perkins Eastman showed us data that the size of the new auxiliary gym per student would be larger than everyone else’s and if we decreased it, it could save $1M. While I think new construction is the best option we have – like operating budgets, we have a shared responsibility to ensure we’re being prudent in cost of the new school and I would love to see more work to bring down the $120M.
(1b) Larry Graves Turf Conversion
I’ve been fielding emails and questions about an email you may have received regarding the Larry Graves turf conversion project and the concern that it would get delayed in the modified CIP option. As a youth sports parent, I know first-hand about our field shortage and absolutely share the sentiment for more playing fields, especially ones that can used year-round, and in general more green space in the City. I also think converting Larry Graves to turf could help with high school sports that could be displaced if GMHS gets approved in the referendum.
That said, the decision is not whether we support the Larry Graves project or not, or GMHS vs Larry Graves, or GMHS vs library. As a community, we need to be cognizant not to pit projects against each other. Let’s not take sides. Standalone, every project in the CIP has merit and benefits everyone in the community. In an ideal world, we could do it all, and all at once. The decision, to me, is more a matter of timing and prioritization now that we have a cost estimate for a new GMHS added to an already very ambitious set of capital projects. I believe sequencing projects is the financially responsible step, minimizes risk, and ultimately ensures we can do each project successfully. If the commercial development is on track, we get land payments or tax benefits earlier or greater than forecasted, I will be the first to advocate to getting more capital projects done earlier.
(2) GMHS Town Hall
Wednesday night’s Town Hall was by far, one of the best attended town halls I’ve seen, especially on a summer evening. The video and materials (mostly covering the topics I’ve written above above) will be posted here soon – help spread the word to friends and neighbors so they can be informed and make their voices heard too.
Also coming soon will be FAQs about all aspects of the project that we’ve been collecting the past several months.
(3) Bike Share
If you missed yesterday’s meeting about bike share coming to Falls Church next year – no worries. You can still suggest City station locations on the Capital Bikeshare Crowdsourcing Map: http://www.cabistations.com.
What’s Coming Up:
- Today, July 21 – GMHS Economic Working Group (730 am, Dogwood)
- Today, July 21 – City Council’s Economic Development Committee (9 am, Dogwood)
- Saturday, July 22 – Letty’s Office Hours (9-10 am, Cafe Kindred)
- Monday, July 24 – City Council Regular Meeting – **final City Council vote for referendum language & CIP Amendment**
- Monday, August 14 – City Council Regular Meeting (last regular meeting of the summer before our recess)