Capital improvements, projected for implementation over the next five years in the City of Falls Church, will press the City to its fiscal limits, Assistant City Manager Cindy Mester told the City Council Monday.
She said that a projected total of $68 million in expenditures on maintenance, renovation and construction of the City’s infrastructure will increase the City’s debt to the maximum limit, allowed to retain its current bond rating, by 2013.
She added that contributions to the projects from the City’s operating budget will also lower the fund balance to the edge of its “safe zone” by the same year.
The report startled some Council members. Councilman Dan Sze called it, “daunting, if not downright frightening.”
Others were quick to indicate they may put some projected improvements on indefinite hold. Those would include a $16 million renovation of City Hall and $30 million for the construction of a new school. They constitute $46 million of the total $68 million projected as needed during the next five year period.
Councilman Dan Maller, noting, “We are facing a serious situation,” remarked, “I would never go forward with (the City Hall and school projects) without being strongly persuaded by facilities studies.”
Vice Mayor Lindy Hockenberry agreed. “I concur,” she said. “I detest renovations. You never get enough out of them.”
Councilman David Snyder expressed concern for, “the long term fiscal sustainability of the City,” adding, “We need to get a read from the bond rating agencies about the implications.”
Ironically, Mester’s projection included a reduction in the estimate of the cost for the new school from $50 million to $30 million, even though the actual cost may be closer to $50 million by the time funds are needed to build it four years from now.
The projection also does not include an array of transportation improvements that were to be funded through the Northern Virginia Transportation Authority. Since that funding mechanism was deemed unconstitutional by the Virginia Supreme Court, all projects associated with it were pulled from the City’s Capital Improvement Plan. They will be put back in, contingent on whether the Virginia General Assembly achieves an alternative funding mechanism at its special session next month.
Major components of the five-year plan include maintenance and routine replacement of the City’s water and sewer lines, police department radio upgrades, storm water improvements (with 28 miles of pipe in the City, the plan calls for replacing a thousand feet per year), $6 million toward the City Center parking garage, athletic fields and Roberts Park upgrades, $800,000 for Big Chimneys Park improvements, $500,000 for other parks in the City, and $175,000 for a new skate park in the Cavalier Trail Park.
By 2013, the bonding portion of the total $68 million will bring the City’s annual debt obligations to 12% of its total annual expenditures, the upper limit set by a City ordinance passed a decade ago that has helped secure the City’s first-rate bond rating.
The City’s on-going fund balance will also drop to 12% of annual expenditures, a low water mark also set as a limit by City statute for the same reason.
Funding for the capital improvements, in addition to bonding and the use of fund balance, will be augmented by dedicating one-percent of the annual operating budget to them.
The Council will vote on whether to approve the City Manager’s proposed capital improvement plan in May.