Good News Going Into Heavy Period Of Incurring Debt
Falls Church City Manager Wyatt Shields announced to the F.C. City Council Monday night that it was learned earlier today that the Wall Street bond rating agency Standard & Poors has boosted the City’s bond rating to AAA, its highest rating.
The rating boost derived from the City’s recent move to issue $19 million in debt for a diverse array of capital improvements.
“It was noted by the agency that the City’s ability to meet its reserve policy, to balance budgets, to enjoy strong financial management, to fund its local pensions and to successfully sell its water system on good terms and with strong public approval,” Shields said. “It has been our ability to make tough decisions with an eye to long-term goals that has brought us to this point.”
“This is exciting news that validates our prudent financial decisions,” Mayor Nader Baroukh said.
The S&P upgrade adds to existing ratings of AAA by Fitch and AA-plus by Moody’s, Shields said.
It was noted that the City’s next major bonding effort is not expected before 2016 and at that point the City can expect an interest rate of 4.5 percent, Chief Financial Officer Richard LaCondre reportedly said.
The City’s ambitious Capital Improvements Plan (CIP) contemplates well over $100 million in bonded indebtedness in the next five years to build a new high school, and to make major improvements to City Hall, the Mary Riley Styles Public Library and the Mt. Daniel Elementary School.
At its work session next Monday, Dec. 2, the Council will discuss how to make the best use of up to $14 million that it will net from the sale of the City’s Water System to Fairfax County, a measure approved by voters in a referendum earlier this month.
Council members discussed at this Tuesday’s meeting the importance of making the right decisions about how to apply that one-time cash infusion to help maintain the long-term sustainability of the City. A consulting firm will be on hand next Monday to help the Council in its deliberations on the matter, which are expected to be undertaken with considerable care and gravitas.
Monday’s work session will be the last for Council member Ron Peppe, who comes off the Council at the end of December, having served on the City School Board, including as its chair, and then elected to the Council in 2009. He did not seek re-election this year, although it would not be out of the question for him to jump back into the fray when the next City Council election occurs in just two years.
In another important step to improve the City’s budgeting process, the Council gave preliminary approval Monday to a measure to align the City’s tax collection and fiscal years. Currently, fiscal years run from July 1 to June 30, and tax collection years run from January 1 to December 30.
The current non-alignment situation owes its roots to the mid-1990s, when the City Council then followed practices common in those days to enjoy the benefits of a third tax collection in a 12-month period by pushing back the collection date from July to June. That provided a one-time windfall for that Council with its fiscal pressures at the time.
However, it set up a anomaly whereby the Councils since have had to build their annual fiscal year budget based on projections into a future year, with carryover funds calculated as “surpluses” in budgetary line-items, inviting confusion.
Not only has the public been frequently confused by the practice, it was noted at a recent meeting by Mayor Baroukh, but even Council members have been confused by their own actions to designate and then deploy a “surplus.”