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2 Belt-Tightening Moves Proposed For Capital Plan

Reflecting trends throughout the region, the recent years’ explosive growth in real estate values in the City of Falls Church cooled dramatically during 2006, and a meager 3% growth will present major challenges as the annual budget for the coming fiscal year is hammered out in the next four months.

The first concrete data showing a precipitous decline from a 17% annual growth in the last fiscal year to 3% in the current one was presented by Assistant City Manager Cindy Mester in a presentation of the proposed capital improvements budget to the Planning Commission Tuesday.

Earlier this decade, annual growth topped out at over 25%, and the 17% growth in the last fiscal year, ending last June 30, was higher than anticipated then. But since July 1, the growth has cooled to what City officials now project will be 3% overall for the remainder of the current fiscal year.

Most of the 3% growth, Mester noted, comes from new large-scale mixed use projects currently under construction on the City’s commercial corridors. Without that, the net growth would be nil, she said. A modest growth rate of 3.5% annually is now projected over the next five years, less than half the earlier projection of 8%.

While Falls Church School Superintendent Dr. Lois Berlin will not present her proposed budget for the coming fiscal year until the School Board’s meeting next Tuesday, and Acting City Manager Wyatt Shields will not present his Citywide operational budget recommendation until after the School Board votes on its formal budget request in mid-March, City Hall has already signaled significant belt-tightening measures in its recommendations for the capital improvement (CIP) budget.

The two measures will both delay improvements and squeeze operational funds. One calls for instituting a new policy that 1% of the annual operating budget will go to supplement the CIP budget. The other limits all storm water-related improvements to money that can be secured through outside grants.

City Hall’s proposed CIP budget for the coming fiscal year includes as its largest single item $2 million that it projects can be leveraged for as much as $35 million in affordable housing development and retention in the City.

But as a five-year projection it also includes some anticipated big-dollar items in the coming years, including $8 million for a City Hall renovation in FY 2009 and $50 million for projected school construction and renovation efforts in FY 2012.

Mester said the $50 million is a mere “place holder” number at present. But if it turns out to be anywhere near what’s necessary, it would require a doubling of the City’s debt from $38 million to $82 million and would press the City’s legal limits for debt (5% of the total taxable real estate value) and annual debt service (12% of total annual government expenditures).

In an effort to more precisely determine the capital needs of the school system by 2012, the proposed CIP budget includes $550,000 in the FY 2007 budget for “facility planning” studies.

The Planning Commission will hold two public hearings, on Jan. 16 and Feb. 5, before making its final recommendation on the CIP budget Feb. 20. That will then be included, along with the School Board budget, in Shields’ calculations for his recommended overall annual budget to the City Council, which will have until the end of April to make final decisions on the size of the budget and new tax rates.

Shields said he will get official projections of real estate-generated revenues from the City Assessor, Mel Peterson, around Feb. 1, although he told the News-Press Tuesday that he “is still feeling pretty good about” the earlier projection of a 3% overall rise in the stream.

Real estate owners will not receive their individual property assessments until later in February.

The fiscal squeeze facing the City of Falls Church in the coming budget cycle is far from unique compared to other jurisdictions in the region and nationally, it was noted. In fact, the 3% projected increase may be stronger than any of the immediate neighbors to the City, Mester suggested.