With the prospect of financing a $120 million new high school, a proposal from Falls Church City Hall staff to dash the Mary Riley Styles Library renovation and expansion project in an effort to ease the tax and debt burden on taxpayers was at least temporarily shelved by the City Council at its work session Monday night.
This Monday, the Council is expected to give a preliminary approval to a Capital Improvement Projects (CIP) package that includes the high school, $13 million for City Hall improvements, and $8 for the library renovation. But that may be far from the final word.
That full package will cost taxpayers nine cents on the City’s current tax rate of $1.33 per $100 of assessed real estate valuation. On the other hand, the package without the library component will add four cents. Both of those estimated numbers are conditioned upon the City’s ability to sell or lease its 10 undeveloped acres of commercial land at the west end school campus site for around $40 million, with such a transaction completed by 2022.
Monday’s work session reflected a conflicted community that is expecting to be weighing in heavily before the Council takes its final vote on all this by July 24. The Council is pressing to finalize gathering as much information and making as many decisions as possible prior to its deadline in early August to submit language to the Arlington Circuit Court for a November school bond referendum.
The public is expected to begin speaking out in force at this Monday’s Council meeting as passionate advocates for the library, who engineered a bond referendum victory by a wide margin last year, will be pressing to keep their project moving ahead. They’d been prepared to begin working on the library expansion next week, and that will have to be postponed until the Council is convinced to finally go ahead with it next month.
Council decisions are complicated by the fact that this is an election year when four of the seven seats on the Council will be contested on the same November ballot when the school bond referendum is expected.
As the Council was briefed by the City’s new Chief Financial Officer Kiran Bawa Monday, the City’s current debt load is $51.2 million with an annual debt service obligation of $6.2 million, equal to 16 cents on the tax rate.
The new George Mason High School, if approved by voters later this year, would add $120 million to that debt, scaled-back City Hall improvements $11.7 million, and the library another $8.7 million. Other CIP obligations add another $11.8 million and future Thomas Jefferson Elementary needs still another $15.3 million.
All that balloons the City’s debt from its present $51.2 million to $167.5 million, and annual debt service payment obligations will rise from $6.2 million to over $17 million.
The City staff’s modified plan, without the library component, is aimed at reducing the risks associated with those numbers, including their impact on the taxpayers, the general fund and land sale proceeds.
For example, debt to total household income will be one of the highest in the region, in either scenario, exceeded only by Manassas Park.
The plan forward includes a sale or lease of the commercial land at $40 million or more, and $10 million in reserves from the initial transaction that transferred the campus land to the City in exchange for its water system.
Council member Phil Duncan has been the only member to question whether or not in these circumstances the City needs to retain in a low-interest yielding bank account a fund balance, or “rainy day fund,” of a full 17 percent of the annual operating budget, totalling almost $15 million.
Duncan has argued that if a reasonable portion of that fund balance were deployed for the effort, it could add, say, $8 million a year to mitigating the cost. “This is the ‘rainy day’ that the ‘rainy day fund’ was devised for,” he argued.