At its work session tonight, the Falls Church City Council undertook a passionate, often noisy discussion on how to best deploy the some $14 million in net cash expected to come to the City as a result of the sale of its water system approved in a public referendum last month.
Despite the wishes of some on the Council, once it was realized that the funds will not come into the hands of the City until after the new Council (including three new members elected last month and excluding three members leaving at year’s end) is seated, a push to vote on locking in how to deploy the money next Monday was dropped.
Instead, Mayor Nader Baroukh, realizing the legal limits to such an approach, suggested the Council adopt a set of policy guidelines for the use of the money at its next meeting on Dec. 9. Those guidelines, he suggested, including 1. the preservation of the principal through use of some form of investment, 2. the achievement of an optimal rate of return on it, and 3. being mindful of the Council’s obligation to the public trust in its use of the funds.
The policy guidelines, which are expected to be voted on by the Council next Monday, were reflective of the concern of all on the Council and the City staff that the $14 million cash windfall not be used for on-going operational fund purposes, or returned to the taxpayers in the form of a tax refund.
It was suggested by City Manager Wyatt Shields that investing the money in the City’s pension fund or in an endowment trust would enable the City’s derive income from the principal that could range upwards to $1 million a year, mitigating against the impact of anticipated major capital improvement projects (like the construction of a new high school) on the residential real estate tax rate.
While it was noted that the return on such an investment would be higher if the money were placed into the City’s pension fund, that principal would no longer be accessible to the City for any other use, should any needs arise. An endowment would yield less annually (depending on interest rates), but would remain accessible.
It is expected that number of discussions and public meetings will be held early in the New Year to elicit preferences of the Falls Church public before amendments to the City budget are made incorporating the new Council’s judgment on how best to use the money.