Shields Proposes 20 Cent Tax Increase, Cuts in Services
By GEORGE BROMLEY
Falls Church Times Staff
March 9, 2010
Faced with a record deficit, City Manager Wyatt Shields recommended a 20 cent increase in the real estate tax rate at last night’s meeting of the Falls Church City Council. The increase will raise the average home owner’s property tax bill $976 or 15%. The rate now is $1.07 for every $100 of assessed value. The current median home value in Falls Church is $587,300.
Although the rate increase likely is the highest in City history, it is insufficient to close the FY 2011 budget gap, so Mr. Shields proposed cuts in staff and services to bridge the difference.
Sixteen positions will be eliminated through early retirement or vacancies. Employee contributions to retirement funds and health insurance will increase, resulting in cuts in take home pay from 1.6 to 5%. The current pay freeze also will remain in effect. Additional savings will be achieved through staff reorganization.
Service cuts include closing the library on Sundays and reducing hours by one hour on weekdays, saving $45,000. The community center will close an hour earlier on weekends and a half-hour earlier on weekdays. Urban forestry contracts will be cut back, as will street sweeping. Cuts in information technology will save $65,000.
Uniformed police patrol, storm water maintenance, and local matches for federal grants will be preserved. Employee pension funds will remain fully funded. The GEORGE bus system also survives, though with reduced hours and increased fares. Its net cost to the general fund is $120,000.
Water rates will remain steady for the fifth straight year. City sewer rates also will remain unchanged. Some recreation and permit fees will rise but not significantly. The meals tax, personal property tax, and decal fees will not increase.
Overall, the proposed $64 million budget is slightly smaller than that for the current year. General government costs are projected to decline by $2.3 million (7.1%) and school costs by $1.3 million (4.5%). Primary City expenditures are 43% to education, 11% to public safety, 8% to public works, and 7% to recreation and parks, which includes the library.
Sixty percent of the City’s revenue is derived through property taxes. Mr. Shields noted that this is a larger share than in years pastg because most other revenue sources are decreasing. Federal and state funding is declining and the $2 million transfer from the water fund to the general fund has been eliminated due to the recent Fairfax Circuit Court decision against Falls Church. The absence of the transfer equates to 7 cents on the property tax rate.
Photo-red has not been implemented and now only two, rather than four intersections, are projected to have cameras. Sales tax revenues are down $715,000, partly due to state corrections to the tax rolls, however meals taxes are expected to increase, in part due to new restaurants opening in the City.
Mr. Shields reported that assessed values in Falls Church are down 6.4% overall. Specifically:
Single family - 1.6%
Townhouses – 1.6%
Condominium – 9.6%
Commercial - 13.4%
Apartments - 12%
Assessed value of new construction, which peaked at $128 million in 2007, is projected at $40 million in 2010, only 20% of which was commercial. On the other hand, improvements to residential properties have remained stable.
School Board Vice Chair Joan Wodiska followed Mr. Shields presentation, noting that the schools are facing similar reductions in funding while coping with increased enrollment. The Board’s proposal includes instituting new fees totalling $76,000, including pre-school peer partner charges, higher parking fees for students at George Mason High School, and athletic fees. The equivalent of 10 positions will be eliminated, partly through reducing staff hours. The schools’ communications function will be consolidated with the City’s. Anticipated student enrollment in FY 2011 is 2,032. The cost per pupil, without benefits, is $13,715.
Mr. Shields then briefly reviewed the Capital Improvements Program, most of which is grant funded. He stressed that the City must take steps to insure that its fund balance is restored to its appropriate level before undertaking major capital projects as proposed in the CIP. The minimum level for the fund balance is 8%, though the targeted level is 12%. However, that level may not be achieved until FY 2014. One of the capital improvements proposed by the Planning Commission is the replacement of the Property Yard storage shed which was a casualty of the February blizzards.
Vice Mayor Hal Lippman and Councilman Lawrence Webb both called the proposals “sobering” and Councilman Dan Sze stated they left everyone “gasping for breath”, but Mr. Lippman was confident Falls Church would weather the crisis. “I really think we’re going to get through this and the City will be just fine.”
Mayor Robin Gardner suggested that a citizen volunteer corps might be established to assist in maintenance duties such as cutting grass or painting rails. She cited parents shoveling the Mount Daniel school playground after the recent snowfalls as an example.
The first reading of the budget is scheduled for the next Council session on March 22. Town hall meetings will be held on March 20 and April 10. Second reading and formal adoption will take place on April 26.
The proposed budget is available at the City’s website.
By George Bromley
March 9, 2010
“Mayor Robin Gardner suggested that a citizen volunteer corps might be established to assist in maintenance duties such as cutting grass or painting rails. She cited parents shoveling the Mount Daniel school playground after the recent snowfalls as an example.”
Nice idea, but it is difficult to envision this type of volunteer work occurring on a regular basis, which is what would be needed.
Within our city limits there are over a dozen Girl Scout Troops, several Cub Scout Packs, and at least three Boy Scout Troops, all of whom are always looking for meaningful community service projects. Perhaps the City Staff could compile a list of suitable volunteer work to help these groups meet their service requirements, and maybe even pave the way for a longer term volunteer commitment to the city?
This isn’t going to be a one-shot fix. Falls Church, like most states, cities, & towns have a fundamental structural problem which MUST be addressed.
Long ago, Civil Servant “cash” pay was quite a bit less than Private Sector pay in incomparable jobs. This justified a better pension & benefit package.
Per the US Gov’t BLS, cash pay alone is now higher in the Public Sector than in the private sector. This justifies AT MOST comparable (but certainly NOT better) pensions & benefits.
More valuable Public Sector pensions comes from multiple sources: (1) higher formula per year of service, (2) basing pensionable compensation on the final 1 year instead of 3 or 5 years of service, (3) including post retirement COLAs, (4) arbitrary end-of-career promotions or excessive raises to “spike” the pensionable compensation, (5) allowing the soon-to-be retired to load up on overtime includable in pensionable compensation, (6) including payouts of unused vacation, unused sick days, uniform, parking, and other miscellaneous “allowances” in pensionable compensation, etc.
In MOST Corporate Pension Plans NONE of the above are included. Why? Because the cost would have to be paid for by the employer, and none of these being really justified, employers are not foolish enough to waste THEIR money this way.
In the Public Sector ALL, of the above are generally included/allowed. Why? Our Politicians aren’t spending THEIR money, their spending YOUR money (via your taxes) while they curry favor for campaign contributions and election support.
Sometimes, Corporate Sector Pension Plan sponsors realize that the plan is no longer affordable, so they reduce cost via formula reductions, increases in the retirement age, etc., for NEW employees and for FUTURE years of service for CURRENT (yes CURRENT) employees. This is ROUTINE in the Private Sector and is allowed by ERISA (the Federal Law that governs Private Sector Plans).
Just as in the Private Sector, CURRENTLY EMPLOYED workers in the Public Sector have already “accrued” pension benefits for PAST service. To this will be added benefits for FUTURE years of service. However, in the Public Sector (and there are variations from State to State) the ability to reduce the pension formula for FUTURE years of service for CURRNT employees is “questionable”.
Of course, the employees and their Unions say it cannot be reduced for anyone already employed (even for those very recently hired). There are many variations, e.g., NJ’s Office of Legislative Service said that cannot be changed only for current employees who already have 5 years of service. In some States, the rules that govern such potential Plan changes are in the State Constitution. In others, in Laws/Regs., and in others via Court Case law.
One important consideration in examining the DIFFICULTY in reducing pension for (FUTURE years of service ONLY) for CURRENT employees is that the legislators, judges, and staff (such as in the NJ example above) that “opine” that such reductions are not allowed are THEMSELVES participants in these same pension Plans and would be negatively impacted by such formula reductions.
Hence, they are hardly disinterested parties, but come with a built-in conflict of interest. These persons should not be making decisions that favor THEM (as beneficiaries of their own decisions) but add to the taxpayers’ burden.
The financial situation across the country is getting more dire, and the ROOT CAUSE must be addressed. Stated another way, we must once and for all, address the STRUCTURAL imbalance between income and revenue.
Way too much focus has been placed on the government entity’s neglect to “fully fund” the Plans. This is certainly true (to varying degrees across the nation). What is often given short-shrift is the “expense” side of the income statement. No one ever says …gee … funding a VERY generous pension plan is VERY expensive, and then moves to the logical next questions, that being, is it too expensive BECAUSE it is too generous and perhaps we such make it less generous.
But what exactly is “too generous”? Well, given that “cash” pay in the Public Sector now exceeds that of the Private Sector in comparable jobs, maybe a Public Pension Plan that is more than MARGINALLY higher is too expensive.
Above, I enumerated 6 items which make Public Sector Plans more expensive. Few people not educated in pending funding understand just how VERY valuable (and hence EXPENSIVE) these differences are. One thing is certain, the Public employee Unions know. That’s why they fight tooth-and-nail to stop changes.
Here is an accurate comparison of the costs of Public vs Private Sector retirement packages (pension plus retiree healthcare, if any) …. The value (i.e., cost to purchase the pension/benefit package) at the time of retirement of the employer-paid (i.e., Taxpayer) share of the typical (non-safety) worker’s retirement package is 2-4 times that of employer-paid share of the comparable (in pay, years of service, and age at retirement) Private Sector worker, and that multiple increases to 4-6 times for safety workers (policemen, firemen, corrections officers, etc.).
I’ll bet you had no idea that this HUGE disparity exists. Given that it does, and given that Public Sector “cash” pay by itself is higher, is it surprising that States, cities, towns are being so squeezed to fund this? Not at all.
So what is the solution? Of course Civil Servants deserve fair” pay as well as “fair” pensions & benefits, but “fair” should mean COMPARABLE to what their Private Sector Taxpaying counterparts get. Right now, this is anything but true.
The EXPENSE side of the income statement has been neglected far too long. To reach a “structural balance” we need to reduce current pensions (as well as retiree healthcare subsidies) in the Public Sector to a level comparable to that of the Private Sector. A few more progressive States & Cities (or perhaps, those in the greatest financial pain) know they must look at this and are beginning the baby steps.
But the BIG problem is the conflict-of-interest conundrum that reducing pensions for CURRENT employees will (in many cases) reduce there own pensions. So, they ONLY propose plan reductions for NEW employees. To be fair, this may be happening not because they just “cave” on addressing such reduction, but because they really believe it is not possible.
A disinterested party might look a bit harder. Perhaps we need to get opinions from outside this circle, e.g., from university scholars. Or perhaps challenges should be brought in the Federal Court system where the conflicted parties are no longer the decision-makers.
Not addressing the huge cost of future accruals for current employees is wishing-away current financial reality. The dire financial problem is here NOW. Reducing pensions ONLY for NEW employees will have little impact for 20-30 years until they begin to retire. We will never make it. But also, given that most (objective) observers agree that current pensions & benefits are overly generous (compared to Private Sector plans … while appropriately taking into account compensation levels), why should we CONTINUE to layer on MORE excessive pension accruals?
It’s been said that the first step in getting out of a big hole is to STOP DIGGING. Well, every day we allow the current plan to continue, the hole gets deeper.
Somehow we need to find the way to reduce pensions (not for PAST) but for FUTURE years of service for CURRENT employees. That, along with a significant reduction in the retiree healthcare subsidy just MAY save us.
Of course, the last word in the paragraph below (from my above comment) should have been EXPENSES, not REVENUE.
“The financial situation across the country is getting more dire, and the ROOT CAUSE must be addressed. Stated another way, we must once and for all, address the STRUCTURAL imbalance between income and revenue.”
I would have given this story a more eye-catching headline to match its significance, such as “City Manager Proposes $1000 Tax Hike for Most Homeowners”. Once again, government shows its unwillingness to do what the private sector knows is necessary in a downturn: fire unproductive or nonessential employees. It’s not a happy course of action, but it’s the taxpayers’ money they’re managing, not their own.
As a general rule, I have big problems with generous public sector pension plans. However, as to Falls Church, we are generally in much better shape that most municipalities because we provided funding in good times.
As to just firing people until we reach we get to flat tax payments, that is never going to happen in this town and it has nothing to do with our elected representatives or City management. I can tell you from personal experience that our citizens want and demand good services — particularly schools. And if you think you can get anywhere without cutting school personnel, note that the schools make up the largest component of the City budget and 85% of school costs are personnel. If you want to cut the City budget in a serious way, that would mean firing teachers — and that just ain’t happening.
I do not understand how our City Manager can propose a significant tax increase to help close our budget while our City Council agrees (6-1 vote) to LOAN $2M for affordable senior housing … all on the same night.
Can someone briefly explain the financial detail or history behind the issue. I am a new resident to the City of Falls Church and would like to have a historical grasp or understanding of Falls Church City issues.
Tim, go have a look at the recent FCTimes story and comment thread for Development Authority Split over Affordable Housing Project for all the details. If you still have questions, feel free to give us a call at FCHC at (703) 241-5402.
Tim,
Thanks for your question. The previous discussion Mary Lynn refers to is here: http://fallschurchtimes.com/17815/economic-development-authority-split-over-affordable-housing-project/
You will see arguments on both sides of the issue in the comments following that story.
Thanks.
Stan Fendley
Regarding pensions- one of the problems is that we have very little local control over the pension system. The teachers and professional staff participate in a Virginia state plan. The contribution rates and benefits are mandated by the state. We can not drop out and we can not change any of the details. We had thought that the new governor would propose in his budget changes allowing us to require employee contributions, but he apparently changed his mind and did not include that requirement. The rest of the employees are in the city pension plan, so it is up to the city. I attended a meeting a few months ago with the head of the state pension plan, and he went into great detail about how underfunded the plan currently is.
Regarding health care, there is also a big issue across the country regarding unfunded retiree medical benefits. Governments are now required to examine and disclose that gap. and Falls Church has taken steps to set aside reserves to cover the amounts needed. We are probably in better shape than most localities on that one.
For current employees, the city and school system participate in the same health plan as part of a larger government pool. The city has traditionally paid more of the share of health premiums than the school board pays, although this year the City Manager has proposed lowering the city contribution so that it is closer to, but still not quite equal to the school contribution.
Ron
Is there information available with reference to how frequently the Library is used on various days of the week?
Would we interfere less with people’s use if we closed on Monday or Wednesday, for example, rather than on Sunday? It is my sense that that may be so, but I work during the week and am very seldom there on weekdays.
Hillel:
I’ve been on the Library Board since 2006 and I can tell you that there was a lot of debate over closing and shortening hours. We didn’t like the idea of closing at all or on Sunday, but when you looked at the numbers and things like custodial maintenance, Sunday was the day that made sense. There was a complicated calculation to make that included not only staff and hours, but also state aid and such mundane things as clean bathrooms. Unfortunately, after several meetings, we determined that Sunday was the best of all possible choices. The bottom line was that all the choices were bad — particularly at a time when the library’s circulation and overall use have been going through the roof.
We’ve received national recognition for excellence repeatedly and the Mary Riley Styles Library was given an award that only one other Virginia library received. Out of 7,115 libraries in the U.S. only 256 received a “star” rating and we were only one of two in Virginia and this was our **second** year in a row. See more here: http://www.libraryjournal.com/article/CA6629180.html?nid=2671&source=title&rid=585647851.
John, I, too, am curious about the Sunday decision. I avoid going to the library during the week, mostly because of work and after school commitments, but also because I’m not fond of the kids hanging out and using the library as free after school care. Saturdays are tough because of the Farmer’s Market (and thus the parking challenges), errands, and extracurricular activities, so Sunday has been our library day. Was the possibility of shortening all hours (e.g. opening later) every day considered?
Stan, Mary, thanks for your response.
I read the article when it posted originally (and re-read it several times), and I’m still scratching my head. Obviously, one article cannot provide the entire chronology and financial detail that I’m seeking. However, this is what I’ve taken from the article. Please correct me or fill in some gaps where necessary.
In 2008, The City made a $2M loan (@ 0% interest) to the FCHC project, repayable by Dec 2009. That loan was not paid in full by its due date and a “substantial balance” was carried over to 2010.
Recently (from last Summer to the present), Mr. Young and the FCHC have asked for an additional $2M loan to couple with low income housing credits in order to complete the 350 S. Washington project. That project, by itself, was met with resistance from the owner of 360 S. Washington. As a result, Mr. Young purchased the 360 property with the plan to create sizable office space and an associated parking facility. Mr. Young is looking to utilize federal & state grants along with federal intermodal dollars (though he originally wanted FC City to become equity partners and renters in the space) to fund that portion of the overall (350 + 360 S. Wash) project.
In order for this development to begin (regardless of funding sources or totals), Falls Church must make special accomodations to the zoning restrictions in this geographic area. Additionally, when completed, one or both of the properties will realize real property tax exemptions (I assume that means Mr. Young, or any other subsequent owner, will have little to no property tax liability for this real estate/business venture).
Is this summary correct? I appreciate your help with this matter.
Tim Harrison
To follow Tim’ Harrison’s comment, as we are fairly new to FCC, I have to also question – - that the City Manager is proposing to increase my property taxes 18.7%, (20 cents over $1.07) to fund a new start housing project for 66 seniors’ units; seniors who currently do not live in FCC, and that development property will be exempt from property taxes ? And now, the City is proposing we cut short library hours?
Susan: I don’t want to be a defender of a tax increase, but no, your taxes are not increasing 18%. You need to think of this as a two part question. Part one increases the tax rate a step that keeps the amount you pay the same as previous year – this is because of the decline in the value of your property. Part two is an increase of the rate over what you paid in the previous year – this is to make up for the loss of revenue elsewhere (commercial, condos). If things like library hours were not cut, the tax rate increase would be much higher.
Like affordable housing or not, the housing project is completely separate from the tax rate increase. We can complain about it from the standpoint of future debt service in 2012, loss of tax revenue from the property involved, and for MANY other reasons, but as I understand it, the housing project has almost no impact on our taxes this year.
To Mr. Barrett above – Do you really think that there are enough “unproductive and nonessential” personnel to fire? Come on, look at the building firestorm over closing the library on Sundays. People who pay taxes want services. You can’t fire hoards of employees and still provide services at the same level.
Mr. Anderson,
I have to disagree with you. Funding for affordable housing and increasing the tax liability of personal property owners in Falls Church City are linked, regardless of the fiscal year timing. I think if you asked a Falls Church resident living in the city from 2008 to the present day whether they felt their (and it was their tax money) interest free loan (which is now in default) to the FCHC was well spent, they’d say “no”. The remaining balance from the loan would have certainly helped close the budget gaps realized today.
And now the same organization is asking me, as a taxpayer in Falls Church, if I’d be willing to lend them an ADDITIONAL $2.0M in return for a future revenue stream. You bet I’m hesitant. You bet I have questions.
Please know that I’m just trying to understand what is happening in my new home town. Arriving at a reasonable fiscal solution for everyone is always in the details, and those details are always linked someway, somehow.
Tim
If you are going to have people retirement early – then DO NOT replace them and DO NOT hire them back part time. If the city can do without the position then let the city do without the position. It is ridiculous to think you can let people retire and then bring them back. Maybe some of the top management fat can be cut as well – do we really need to fully staff the human resources department when there is a hiring freeze? Back when I first moved to Falls Church we received trash pick up twice a week and did not have to pay for our brush to be removed – my how things have changed.
I would like to comment on two issues discussed in previous comments:
1) Affordable Housing and,
2) Thoughtful’s comment on Pension Comparisons
Affordable Housing/the short answer
First: The financial engineering used by the City is far more expensive to taxpayers than has been presented in City documents. Specifically:
First: The debt service paid by the City, for the first two years, is covered by a $532,000 loan from another City Fund (called the Affordable Housing Fund). The cost of being able to claim that there is no budgetary impact for 2 years is an additional cost of about $725,000 (principal and interest) to taxpayers. Please recall that the Fund is to be repaid .
Second: The $2.0 loan to the Affordable project is so heavily subsidized that it loses $1.4 million in value by the time it is repaid to the City in year 16. Imagine borrowing $2.0 million from a bank bearing a standard market interest rate. After the loan is received the loan it is placed under a “mattress” for 16 years where it earns no interest (or in the case of the City proposal almost no interest). By the time the funds are pulled from the “mattress” it will be worth about 70% less.
Since Taxpayers are bearing the repayment cost of the $2.0 million borrowing, and the Affordable Housing project is getting the benefits of the subsidy, the difference between the two is a cost to the taxpayer.
The estimates provided above used City provided numbers and interest rates.
The $2.0 million loan is an additional borrowings to the City. The City’s budget numbers had already asumed that the short term interest free loan is repaid.
This is not a simple transaction to understand.
Pension Comparison
Thoughtful,
I enjoyed reading your technical explanation of the difference between public and private pensions. Matching employee pension liabilities, current and future, with adequate asset growth, especially employer contributions is one of the great challenges facing pension managers today.
Ron Peppe’s point that some public sector pension plans, specifically the Teachers Pension plan, are governed by state laws, rather than by market requirement has merit. Thus municipalities do not have the type of pension plan flexibility available to the private sector.
There is one other critical difference between the public and private sectors: risk appetite. A private plan can establish aggressive risk and investment parameters that can greatly reduce the likelihood of underfunding liability requirements by generating above average investment returns. The downside is this that if the asset classes selected perform poorly their plan would be underfunded, sometimes severely, requiring potentially difficult benefit adjustments. This is what happened in 2007/2008.
Public entities face a different challenge. Normally, but by no means always, public entities operate under more conservative risk tolerances. As such they will invest in relatively lower yielding, but safer assets such as Treasuries, highly rated mutual funds etc. The value of public sector losses resulting from the economic crisis, though substantial, were generally less than private sector funds that had more exposure to higher yielding but riskier assets including hedge funds and private equity.
The result is that public sector employer contributions tend to be larger than those of the private sector. In theory, however, they should produce less volatile returns making yearly and long term budget planning more predictable. The downside is that with interest rates currently so low pension obligations overwhelm the often meager returns generated by safer investments placing great pressure on municipal budgets. The most notable exception was some Universities, especially those with large endowments, for reasons worthy of a separate analysis, took substantial risks and fared quite badly when the market collapsed.
In the case of Falls Church pension and health care obligation payments have risen, and will continue to rise, for the reason mentioned above; but do not appear to be outside the norm.
That having been said the City’s fiscal situation is so precarious that there will be recommended employee contribution increase(s) for City staff and Police.
Getting back to your email, you are completely correct in stating that there is a fundamental structural problem. For Falls Church City the structural imbalances lie with over reliance on residential real estate taxes that will be increasingly difficult to raise in order to cover future expenses of which pension and health insurance costs are an important part but not the largest component.
Thank you for highlighting this important issue.
Victoria:
As with all departments, the Library has a range of potential cuts that were passed on to the City Manager. Depending on what cuts are chosen and what the mix is will decide how hours of operation are affected. What the final decision will be won’t be known till the budget is passed on April 26. I’d encourage anyone and everyone to come to budget meetings and express your opinions.
We have a joint work session This Thursday night (City Hall Training Center, 7:30 pm) between the Planning Commission, the City Council, and the School Board to talk budget. Show up. Listen (it’s a work session so there will likely be no public comment period). Send e-mails. Send snail mail. Carrier pigeons. Whatever you’ve got. Decisions will be made in the next 7 weeks so the time to speak out is NOW.
Just echoing what John said: now is the time to speak up. One easy way to weigh in is the budget comment website the school board created-
http://www.fccps.org/board/budget/fy11/
At that site, you can post comments directly, and you can also read all the comments submitted via mail, email or via the web site directly.
You can post a comment there and read all the other comments. The comment are non censored (if you want proof of that, read the most recent comment that essentially said the poster does not intend to vote for me for city council because the school board appears to be hiding things and did not make bigger cuts!).
Ron
Susan and Tim – I’ve been in Falls Church for almost two years and it takes a while to understand all the details related to some of these issues (I’m still learning a lot). The affordable housing issue seems particularly complex.
Tim’s summary isn’t correct in several areas (we’re talking about only one block of $2M – it was originally going to be used to help buy 360 but is not slated to be used to develop The Wilden on the site of 350, and Bob Young’s new building at 360 won’t be exempt from real estate tax – just the new 350) but shows how hard it is to sit down from scratch and figure out what’s going on.
For high level affordable housing questions I’ve found this short FAQ to be helpful: http://www.handhousing.org/fallschurchhousing/faqs.html
Sometimes I’m tempted to try and write up a detailed FAQ about this specific project – but it would take a long time and I don’t even know all the details or history. A lot of info about it has been put out there but not in any particularly organized or unbiased way.
My (probably biased) summary of the situation is that FCHC has been working hard for many years to develop a building (or buildings) dedicated to affordable housing. The current plan is the closest they’ve ever gotten to getting something done – and the federal tax credits (i.e. money) are hard to turn down. The project will be expensive (as all 6 story buildings are) and since it is for low income residents it won’t generate a ton of revenue. How this translates to the taxpayer’s bottom line is complex and the source of a lot of debate. Related to that debate is the moral/social/community value of providing this kind of housing. My personal slant on the issue mostly has to do with the location of the project and how that might impact future uses of that general part of the City. I guess that doesn’t really answer any of your specific questions – sorry!
Charlie makes a good point about tax rate vs. taxes – however, since my assessment has remained unchanged since I bought my house two years ago the proposed tax increase is in fact an 18.7% increase for me (and quite a few others).
Thanks, Andy and Others. Despite our failure to meet as I’ve invited you to review all the missing pieces in your education about the history of FCHC’s mandate to create affordable for its public partner, FC City Council, you have really sunk your teeth into this issue and we’re honored to appreciate all you now have learned and are willing to support in the completion of The Wilden senior housing development.
As a “foreign/outsider” newcomer to FC City in 1977, I remain empathetic to all who arrive and try to catch up with “the Falls Church way” as the trains are moving out of the station and changing tracks all the time. Let me just say: FCHC was created in 1981 to serve as the City’s affordable housing arm. We have been privileged to hold that private/public partnership role with all due respect to our benefactors and public enablers. The Wilden is our last hurrah. We have expended carefully stewarded resources for such a time as this. We wanted to develop a non-age restricted facility at the same time, but the economy and heavily weighted competition in NoVA were against our success in both deals simultaneously We won the competition in the seniors/disable category. That is the hand we were dealt and it is the $8 mil federal subsidy hand we are playing.
We know this is a trying time for FC taxpayers to feel comfortable supporting a venture that seems to be taking away from your tax dollar for purposes which you personally value more highly.
The truth is the 350/360 properties will pay their fair share of taxes during the budget year 2011 which is now up to bat for approval. They will pay the same taxes and additional construction permits/fees revenue for the 2012 budget year.
In 2013, The Wilden will require $40,000 from taxpayers for general City services–it will pay its own trash pick up as does any other commercial property. About FY 2015, the General Fund will need to pay the debt for the $2mil AH bond the City has already budgeted to float. That debto will be repaid–a small amount each year beginning in 2012 and by year 16 100% That is money the city would have never had to invest or use for any other purpose, so the time value of money loss is really not relevant in this circumstance. There is no $2 mil AH loan fund to stick under the City’s mattress nor use for another purpose.
All of those numbers will be balanced out by the commercial office, tax paying deal Mr Bob Young is bringing thru his development of the 360 building. One fact that has not been brodcast. Mr. Young just wants to give back to our City that has accomodated his land investments with development approvals over the last several years. His plan for the 360 building is to cover the financing with the revenue generated as commercial office AND then donate to the City the cash flow generated each year. In addition, he will DONATE to the City for its use or resale, the building when it is fully paid off in 25-30 years.
At the same time, the combined new Site, 350 and 360 S. Washington St will begin to stimulate redevelopment in the S. Washington/S. Maple corridor. Development begats development.
I am personally sorry that new residents like Mr. Harrison and Ms. Carr seem to be seeing the glass half empty in their evaluation of “why, The Wilden?” FCHC gets out of bed each morning knowing we are serving people who belong in our community. Fair housing and our own mission do not allow us to restrict our properties from income eligible residents who do not originate in FC City, but there is plenty of documented housing costs burdens among our local residents. The experts who evaluated the “market” for The Wilden were confident there is a local market at our doorstep.
The City staff report delivered on March 8 listed many “bullets” from the document recently produced by City HHS for HUD to clarify needs and identify strategies to meet them. The Wilden demographics fit squarely into that equation.
Thank you again to engage in a dialogue among citizens who are trying their honest best to understand these complex financial parameters. When I was new to the City 30+ years ago, I certainly didn’t work that hard to comprehend all the details and complexities. You are all to be commended for that vigilant effort. Best regards, Carol Jackson, Exec Director ,FCHC
I appreciate everyone’s input with regard to my questions and concerns. Specifically, Mr. Rankin, Mr. Kaylin , and Ms. Jackson have been very helpful.
The basis for my curiosity is two-fold. As stated before, I am a new Falls Church City resident. I also develop economic analyses for the Aerospace & Defense industry, examining the life-cycle costs and benefits of major system acquisitions. As a result, I’m just trying to gather information so I can better understand the situation.
I am neither “half-empty” nor “half-full” on “The Wilden”. I simply don’t have the entire story … and I believe I still don’t.
Thanks again,
Tim
Tim,
You are entirely correct; the complexity of the project makes it quite difficult to understand from the outside. The information that has been provided is often incomplete and as a result, difficult to follow.
For example some of the figures provided regarding the cost to taxpayers don’t coincide with the figures presented by the City. In order to better understand the differences you may wish to click on to the link below which is a summary Table that was circulated to the public on Monday. Not specified in this Table is the $532k loan from the City’s Affordable Housing Fund to the City to cover the first two years of debt service. The $532,000 is repaid to the Fund at the end of the loan term.
http://fallschurchva.granicus.com/MetaViewer.phpview_id=2&clip_id=84&meta_id=5251
Please notice the last column to the table which describes, on a yearly basis the actual cost to taxpayers of the $2.0 million borrowing. The numbers do not include the impact of the Office Building since that transaction is still under negotiation; the timing and amount of possible revenue generation is still not known.
Given your expertise if you would to like to discuss, off line if preferred, an analysis of the loan’s repayment structure, accounting and financial disclosure issues as well as a cash flow analysis please let me know. These factors are integral to understanding the project but are somewhat difficult to summarize
I do agree with Carol on one important issue; that is an appreciation for all the effort citizens have made to better understand the proposed transaction which is correctly described as complex. As complex, as detailed, and admittedly, as confusing as all of the information may seem, it does serve to highlight important differences and permit taxpayers a better grasp of how their tax dollars are being spent.
I hope this helps.
Ira J. Kaylin, Former Chief Financial Risk Officer of the Inter American Development Bank
I am surprised that GEORGE bus, costing $120,000, survived the budget axe. As far as I can tell, ridership is minimal, and the services at the current reduced level probably means that ridership is even lower than it was a couple of years ago. Reducing it further would only make it even less useful… so why are we willing to give it $120,000, ahead of city jobs and salaries???
Barry will probably chime in but my understanding is that it would have cost the City more to shut down GEORGE this year. Next year might be a different story though.