Facing Budget Deficit, Council Votes to Extend $2,000,000 Loan

Facing an $800,000 budget shortfall this year, the Falls Church City Council last night voted to provide a $2 million loan to the City Center South Housing LLC (also known as the Falls Church Housing Corporation) as part of an agreement to facilitate purchase of property at 360 South Washington Street owned by Mr. Thomas Sawner, CEO of Educational Options, Inc.

The resolution passed by a vote of 4-3, with Mayor Robin Gardner, Vice Mayor Hal Lippman, and Councilmen Dan Maller and Dan Sze favoring approval, and Councilmen Nader Baroukh, Dave Snyder, and Lawrence Webb opposed.

Prior to the debate City resident Ira Kaylin, retired chief risk officer of the Inter-American Development Bank, stated that in his opinion the Council did not have adequate information on which to make a decision. He cautioned that, given the ongoing turmoil on Wall Street, financial experts believe this is not the time for governments to increase their debts and liabilities. Mr. Kaylin likened the City to a minnow swimming upstream against a raging torrent.

Mr. Sawner did not concur with Mr Kaylin’s estimation of the current financial environment. He stated that in voting for approval of the loan the City would be making a prudent bet on a venture that would provide benefits well into the future.

During the subsequent debate Mr. Baroukh and Mr. Snyder questioned the timing of the decision, noting that the Council would be voting prior to an upcoming session on the state of the city budget.

Mr Snyder, who estimated the actual project cost at $14 million, stated that Falls Church was potentially risking bankruptcy or a citizens’ tax revolt.  He speculated that the City might be forced to take a wing off a proposed elementary school in order to sustain the housing project.

Mayor Gardner, in dismissing these concerns, stated that she felt the ultimate agenda of those opposing the loan was to kill the project through delaying tactics. Mr. Snyder and Mr. Baroukh adamantly denied this.

Mr. Maller suggested that a delay of only two weeks would undermine the project. He stated that the City planned so much that it risked becoming paralyzed by analysis.

Vice Mayor Lippman stated that the loan documents had been rigorously analyzed and that the City’s interests were protected to the maximum reasonable degree.

By a 5-2 vote the Council rejected a motion by Mr. Baroukh to delay action on the loan until City Manager Wyatt Shields presents information on Falls Church’s financial situation on October 20. Mr Snyder joined Mr. Baroukh in supporting the motion.

In a second action, the Council voted to select Atlantic Realty’s $4.2 million cash contribution for the Falls Church Housing Corporation project, pursuant to previously approved voluntary concessions. The resolution was approved by a vote of 6-1 with Mr. Baroukh dissenting.