This last week marked the time for the News-Press’ annual ‘State of the City’ interview with the mayor of the City of Falls Church.
With economic woes felt around the world, Mayor Nader Baroukh has been at the helm of Falls Church, leading the City through austere times with caution and a fair amount of number crunching.
Since taking the office of mayor July 1 of last year, Baroukh says his goal has been to stabilize the City’s tough financial situation – exacerbated by a bad economy and water litigation with Fairfax County – through enhancing commercial development to bring in new revenue, as well as devising strategies of long-term financial planning. With some big commercial development projects on the horizon, and multiyear budget forecasting plans in place, Baroukh is proud of the progress made this past year, but still sees room for improvement.
A resident since 2005 along with his college sweetheart, Bernadette Fancuberta, Council member since 2008, and avid City cyclist, Baroukh has gotten to know Falls Church both as community member and public official.
For its ongoing annual State of the City interview, this reporter spoke with Baroukh about the City’s financial picture, City Council’s efforts to improve the City’s economic sustainability, and why he’s just not ready yet to give the City an A-level grade.
N-P: What are the three most pressing issues facing the City of Falls Church?
NB: The three major issues that we’re facing are first meeting the City’s commitment to excellent schools and City services in a manner that is financially sustainable over the long haul. In the last couple of years, we’ve had significant revenue shortfalls that have resulted in tax increases and budget cuts for the City. In the meantime, we’ve also drawn down our fund balance. Throughout the last year, we’ve made significant improvements to the budget process. The innovative thing we’ve done this year that hasn’t been done in the past is providing the City Manager fairly extensive formal guidance before he actually provides a budget. That has been helpful. We also request that the City begin doing multiyear forecasting. This was really a new way of doing business. It, in my view, provided for a better framework for decision making ultimately. In the course of the next year, we’re going to continue making improvements to our financial planning process, including the budget process. Overall, with the improvements to financial management, we’ll be able to provide for greater stability – protecting jobs in the schools and City Hall, and ensuring that the services for our citizens are provided in the long run. The second pressing issue facing the City is economic development, and that is attracting high-quality businesses, offices and development that will reduce the ultimate tax burden on our residents and homeowners. Third is strengthening our relationships within the region as well.
N-P: In what direction is the City moving as far as commercial development?
NB: I think we are starting to see positive signs. We’ve seen a great deal of interest coming forward from developers in the City, and I think there are a couple of reasons for this. One, I think we’re starting to see some overall improvements in the economy, but I’m cautiously optimistic on that front. Two, I think the City has a great strategic location – close to Metro, close to Washington, D.C., near two major airports, our excellent schools and our services that we provide our citizens and our businesses. A couple of examples of how we’re seeing that improvement now is that we are seeing the Gateway project, that was recently approved, and we recently had a ceremonial groundbreaking for the Northgate project. The Council recently approved amendments to the development conditions for the Hilton Garden Inn project. That project is before the Planning Commission for the site plan approval, and we hear from the developer that the expected break ground and get underway this coming fall. We’re anticipating the annual revenues will be somewhere between $430,000 and $640,000 a year. That project is about 110 hotel rooms with an in-house restaurant. We are also in the process of economic development, and looking at our economic opportunity areas. We are undergoing our Small Area Plans, which we hope will help developers understand what the City is looking for in terms of quality of projects, density and types of uses. I’m very excited that Jim Snyder is with us, heading up our development planning office. We plan to seek primarily commercial uses in our commercial districts, and that’s going to be the key. Some examples of the opportunity areas that we are talking about are such things as the North Washington Street corridor, the South Washington Street corridor, the Eden Center area, the Gordon Road triangle area, and the City Center area as well.
N-P: Have there also been considerations for residential development?
NB: I think that there will be some residential development. Certainly my focus – and I know the focus of some members of Council – is that we really need to look at ways of beginning to market the City as a commercial area, with offices, and so we are making strides to do that. That is one of the major reasons why we hope the Gateway project will come to fruition. One of the reasons the City Council approved that project was that it provides a very attractive development, about 83,000 square feet of office space, and there is a residential component to that, but it is tied together though the entitlements. We worked extensively with the developer on that. So with that, I’m hoping that once that project gets underway that it will spur other interest and will result in more offices within the area. And that’s going to be really key as we begin to look at how we become economically sustainable over the long run and lessen some of the burdens that are placed upon our tax payers.
N-P: What obstacles stand in the way of development in the City, and what aspects promote development in the City?
NB: We’ve seen a lot of interest in our community for residential development by the developers, and I think that is a testament to our excellent School Board, and the City and City Council’s commitment to ensuring that all the children within the city receive an excellent education. Again, its proximity to D.C. is a huge draw, and again we are trying to market the City more along the lines of commercial. As far as what are the obstacles that we are seeing, I don’t think per se that there are any obstacles, but it is really about getting the City known for being an office and a retail draw, and it’s about getting the first office project going. What I anticipate will happen is that other developers will see that, and once we do have a successful project, that will just raise interest in the development community.
N-P: How is the City maintaining and improving upon its schools?
NB: First of all, we’ve recently had some high marks on the Washington Post Challenge Index, which is simply one indication of the strength of our schools. We ranked #1 out of 28 or so school divisions in the region this year, with George Mason High School doing very well. We have some of the highest on-time graduation rates of any school system in Virginia and our schools success not only is about academics, but also about athletics. We’ve won several state championships in 2010, and from what I understand, over half of our student athletes maintain a 3.5 GPA or higher, which is just absolutely phenomenal. One of the aspects that was very rewarding for me to work on – and was a huge success this year for the Council, the School Board, the Planning Commission and the Long-Term Financial Working Group – is working through a process of seeking ways of addressing the school capacity needs in a way that still was affordable for the City. Working together, we applied for zero-interest QSCABS to expand the Thomas Jefferson Elementary School, and we are anticipating that is going to be a project that is going to cost about $5.95 million, and we were awarded $3 million in QSCAB bonds, which will ultimately significantly reduce the cost to the taxpayer. And that will go a long way to help meet some of the capacity needs that the schools face.
N-P: Do you feel that residents and businesses are comfortable with the current tax rates?
NB: I think if we were to know the answer to that, it would be too late. It is really difficult to gauge that as an elected official. Over the last several years, we’ve raised taxes. We’ve had to deal with sharp falling revenues due to the economy, the water litigation and other issues. In the meantime, we’ve also cut spending, frozen employee salaries, and reduced staff by about 14 percent. We’ve made changes to how we do business as well, such as outsourcing trash pickup to try to be more cost effective. We’ve done this while trying to maintain the quality of services that the City provides to its residents and insuring quality education to all students, and I think we’ve been successful in doing those things. We’ve worked very closely with our schools and School Board in developing multi-year financial planning models that we are now putting into place, and we’ve continued to work on expanding our commercial tax base in order to lessen the burden. All of these actions we think have been critical in putting the City on the path to long-term financial stability and sustainability.
N-P: Where would you like to see the tax rates?
NB: To me it’s not just about the tax rate, it’s about what’s happening with our residents as far as their job situations and their personal income situations. It’s a number of factors that go hand in hand, so I don’t purely look at the situation of our taxes by focusing on what the tax number should be. To me, it’s a more complicated process than that. You have to evaluate where people are with the values of their homes and their other expenses, andwhat their income levels are looking like. From speaking to members of the community this past year, I know we have a lot of dual-income families in the city, some with one spouse maybe working less, or one spouse having losing a job or having had their salaries or incomes reduced, and that’s definitely affected the amount of taxes that they can bear. There is also a sense in the community that our residents want quality services and they want quality schools, and they understand that ultimately affects their property values as well.
N-P: What are the greatest budget concerns for the City of Falls Church in the coming year?
NB: There are three major budget concerns I have as we move toward the budget process this year. One is, and I don’t think that any of these are necessarily unique to the City of Falls Church, I think the first one obviously is being faced by many, many local jurisdictions and states throughout the country, and that is addressing employee pension systems and compensation and benefit issues in general. That’s one that we are going to have to continue to tackle over a number of year. Two is meeting our long-term capital needs for schools and for the general government side as well. Three is, I think we and other localities are going to be facing challenges due to state and federal funding level cuts that will put local governments and schools in the position of having to cut services or service levels or raise taxes, so I think we’re going to get some pressure from those cuts as well.
N-P: How would you evaluate your first year as mayor?
NB: I think it’s been a year of hard work. A lot of that time for me over the last year and for Council has been spent developing new processes and new approaches to addressing the city’s challenges. We’ve developed an improved budget calendar, working with the School Board to do that, that streamlines the process while at the same time provides greater input for our citizens. We’ve incorporated long-range financial planning into the budget process. Working with staff, a multiyear financial forecast model was created and was used for budgeting purposes and for CIP purposes. We provided budget guidance to the City Manager earlier in the process, which was key, in my view. The Council also identified economic development opportunity areas, through area planning, and we prioritized them, and we’re working now on that process of actually bringing the plans forward, and again that will be done with citizen input. We’ve developed and formalized a Council committee process that we did early on during my tenure and that allowed the Council to be proactive in addressing business, but also gave each Council member, or various Council members, responsibly in various areas of interest to them. We developed a policy on economic development incentives to help encourage the right kind of development for the City, and that was formally adopted this year, and we are doing things to help existing businesses grow and succeed here in the City.
N-P: Are there any decisions you regret, or any decisions you are proud of, that were made during your first year as mayor?
NB: The one thing that I’m very proud of is how we’ve handled a very difficult budget situation. In the past, the City had dramatically drawn down its reserves due to short falls as a result of the recession as well as compliance with a court order as a result of a return on equity because of the water litigation. I think the Council as a whole has taken bold and difficult decisions, and we’re beginning to right the financial ship of the City and put the City in the right direction as far as where we’re headed with some of the fundamentals. What is different than in past years is that through the budget process improvements such as providing formal guidance to the city manager and multiyear financial modeling – none of which is all that sexy – is that it prevented or helped mitigate significant last-minute surprises where there were changes that ended up being made, which were all manageable in my view. In the past it has been a little bit different, where last-minute cuts were made that were rather disruptive and hastily made in some ways, and I think with an improved process we’ve avoided that. There are some concrete results of the actions that we took. In FY12, the City budget actually dedicated funds to rebuild the fund balance, which had been drawn down. By the plan that we put together, by FY13 the fund balance will be above the City’s policy targeted at 12 percent of revenues. This is really important because it helps restore the financial health of the City and allows the City to be in a better position to withstand potential downturns in the economy. It also lets us meet long-term needs such as CIP. While we face all these difficulties in the course of the last few years, some of the rating agencies have held their high ratings of the City and our City bond rating has been high throughout this period. I think part of this is due to the City’s strong action to restore the fund balance, reduce spending, and raise necessary revenues to fund education and support City services. There’s been a lot of shared sacrificed, both by employees and taxpayers, to really improve the city’s financial picture. For example, we’ve increased the tax rate by three cents, from $1.24 to $1.27, and a lot of that will be used for fund balance restoration and future capital needs for the schools and public safety. There has also been an increase in employee contribution to pension and other benefits, the average City employee has experienced a decrease in take-home pay for about the third year in a row, and we’ve downsized the government staff by about 14 percent since 2009, which is resulted in much higher workloads for our dedicated staff. It’s important to know that what makes our City great in large part is because of their dedication. Ultimately I think the FY12 budget and the capital improvements program was a product of a great deal of discussion and compromise in the end, and I believe the budget really does meet the critical needs for the city.
N-P: How has the way you see the City changed when comparing seeing it as a resident to seeing it as the mayor?
NB: I think the one thing that has changed is, when I was a resident I had the opportunity to have some interaction with the staff and really appreciated the work and dedication and how open and responsive they were, something I found very appealing to the City to begin with, and working with our staff as mayor my appreciation has just simply grown. I think we have a great little city and I think it’s made possible in large part because of the work the men and women of our city do every day, and much of that work goes unnoticed, but it’s really what makes life very pleasant, is because of the services that the men and women of the city, they do those things every day.
N-P: How has Falls Church City weathered the recession?
NB: I think we have weathered it well, but that doesn’t mean we’ve weathered it without sacrifices. I think the city’s economy suffered decreases in home values and sharp decreases in commercial values as a result of the banking crisis, similar to other localities in the recession as well. Moving forward, we’ve begun to see business activity pick up in the last year and we’ve been working hard to attract investment in the city that will help in the future. For example, earlier this year we formally adopted new policies which give the city the opportunity to provide new incentives for commercial redevelopment, those programs include tax increment financing, or TIFs, or virtual TIFs, industrial revenue bonds and business licensing incentive programs, and through those mechanisms under various circumstances I think some of those tools will help as well, and I hope moving forward that the overall economy will continue to recover and grow, but I do think that there will be challenges for the region, as the federal government continues to deal with its debt problems, and the city governments and schools will need to be very careful about our budgeting and long-term financial planning in light of the challenges I think we will continue to face.
N-P: Last year during your state of the city interview with the News-Press, you gave the City a B+ grade. What grade would you give the City now, and what factors influence your decision?
NB: I would, I would give, I have to smile when I say this a little bit, but I would give the city a B++. I think we’re making marked improvements, but I don’t think we can give ourselves an A yet, I think there is more work that needs to be done in such areas as economic development, so I think we’ve made lots of improvements, but we have a little bit more to do.
N-P: What can citizens do, and what can Council members do, to make the City of Falls Church a better place?
NB: I think we have great, great talent within our citizens of our City. There are a couple of things that are very important to the City of Falls Church. One, the City has got a great location, but more importantly, it’s a wonderful place to live because of its people, its citizens, its staff, but also all of those individuals in our community who volunteer to contribute to the life of the city. Examples of this are the neighborhood tree program, stream stewards, library volunteers, trash pickup day, and of course our boards and commissions. And what I would ask all of our citizens to do is to be involved, provide me and the City Council with your feedback and how we can best serve you and our community.