Will Huge School Bond Debt Reduce Funding for the Kids in the Classroom and City Services?

…a well informed electorate is a prerequisite to a democracy…”

Thomas Jefferson

By Sam Mabry

Mabry is a Former Falls Church City Vice Mayor

As featured in The Post over the last several months, experienced and trained financial professionals have raised serious questions regarding the accuracy and forthrightness of information presented by the City Council and School Board supporting a favorable vote on the referendum question.  The Post writers understand that financial capacity of our city because of its size is limited and that funding priority should be given to services–including the best possible classroom learning experience for our students.

Sitting Members of the City Council Are Also Apprehensive

Two Council Members voted not to send the referendum forward for a vote, including Councilman Dan Sze, who stated before his no vote that he believed due diligence had been wholly inadequate in terms of project design.

A Heavy Lift—for 30 Years—Based on “Hope” and a “Leap of Faith”

The per capita debt chart produced by the School staff–which assumes the referendum passes–illustrates the burden that a $120 Million, 30-Year debt will impose on the citizens and, consequently, revenues available for the classroom and our students.  Citizens ultimately have a finite tolerance to be taxed and that must be kept in mind when choosing spending priorities.

The Council’s arguments that the $120 Million debt is manageable, is brought into dispute by a variety of assumptions and projections. As Councilman Dan Sze pointed out before he voted against sending the referendum to the voters, hope is not a strategy for development or debt.

Vice Mayor Mary Beth Connolly, however, in justifying her position on the issue, opines remarkably that the citizens (and consequently our school kids) need to make a “leap of faith” and approve the bond.

Cherry Picking Financial and Development Assumptions

In my conversations with senior City staff, there was reluctance to project the financial impact of bond costs over the next 5 to 10 years coupled with the annual increases in operating fund requirements for the city and schools. We now understand subsequent to that meeting, the City will present some information in this regard.

Nevertheless, the Council is willing to accept one assumption–that the sale value for 8-10 acres of developable land on the George Mason site will double over the next few years producing some $40 Million. At the present time, however, commercially zoned land in the city is being sold for about $2.5 Million per acre. Accordingly, the reality that the land will sell for $4 Million to $5 Million in a few years is a real “leap of faith.”

The City Council Makes a $36 Million Contribution to Insure Passing the Referendum by Making It Appear More Affordable

Instead of being straight forward with the citizens and increasing the city’s real estate tax rate by  4 cents for a 20 year bond, the Council chose to ask you to approve bond payments for 30 years.  The 20 year bond would have saved some $36 Million over the life of the debt. In addition, since the debt would have been reduced more quickly, additional bond capacity would have been available for other city and school projects.

The Mayor Seems to Be in Conflict with Own His Development Vision

While he has stated that he wants a walkable city with a small town feel, and is therefore adverse to increased density, he is backing a development paradigm for the GMHS development that according to city documents would provide for nearly a 1,000 more apartments, another 2,000+ citizens and 200 more school students.

The Mayor and the Council, not withstanding their words to the contrary, seem committed to a densely packed city without even making provision for additional parks and recreation.

There Are Options that Should Have Been Given to the Citizens

If it were not for the high handed actions of five Council Members, we could have gone into the voting booth in November with a choice beyond a “take it or leave it” $120 Million debt, including a $60 Million GMHS rehabilitation with some new facilities and additional land for parks and recreation for use by the city residents and students. The Council has denied you the opportunity to make that choice. Depending on the outcome of the referendum vote, we may still have choices.

Special Note: And thank you, Ira Kaylin, for providing The Post with Thomas Jefferson’s wisdom and guidance.

More Next Week

5 Comments on "Will Huge School Bond Debt Reduce Funding for the Kids in the Classroom and City Services?"

  1. This is an excellent straight forward article. I would like to add that the projectd range of from 4 cent to 15 cents on the RE tax rate leaves out other costs that have not been well defined. The public has not been informed of infrastructure costs that will accompany a new school and/or development. These would include streets within the site, improved access to Route & Haycock, as well as other undefined costs such as the expense of tearing down the existing GMHS facility. These costs are not included in the $120mn for a new high school & although the projected $40-$45mn from the ground lease for development is supposed to be a net figure, City official have hedged about whether the $40-$45mn guesstimate woul include all these infrastructure costs.Also, the public should be aware that the CIP projections upon which these tax ranges are based only goe out 5 years in the future. There will be no room for other infrastructure outlays for at least 6-10 years out because there will be no more new debt issuance capacity and the $10 mn capital reserves from the sale of the water system will be used up to buy down debt under the current CIP/debt issuance scenario the Council has approved. These somewhat longer run capital projects include a contemplated expansion for Thomas Jefferson and those still unidentified but uncovered infrastructural needs mentioned above that are likely to fall between the cracks of the projected $120mn for the school and what any potential developer might be willing to absorb.

    • FWIW: Dr. Noonan has said the tear down costs are included in the 120m. I attended a meeting where he was asked that specific question. The rest of the unknown costs cited are still…unknown

  2. It is time for those of us who live and work in the 21st Century to oppose those who seem determined to drive this town into bankruptcy through continued support of an outdated and costly school system born in the 1950’s and nurtured by discrimination, elitism and perhaps fear! Fact—The current Falls Church City School System is unsustainable! Read Ira Kaylan’s fact-filled report at–http://thefallschurchpost.com–and see how clear and concise his points are. Compare this to the information by proponents of the referendum and see how their “facts” are exaggerated , vague and at best misleading! Example–a stated tax reduction– when is the last time we saw a reduction in any taxes? Point–at the meeting on 10 Sept. we were told that it was to be “an information only session”, not a for or against presentation. The material was presented as a marketing tool for the positive results of “Yes” votes and the negative results of a no vote. The tone from both speakers was definitely in favor of “Yes for Falls Church.” I respect the efforts but not the “home team”delivery.

    Reputable people familiar with financial projections clearly state it would take several times the acreage available for commercial businesses to raise enough revenue to support the building and maintenance of a new high school. Our property taxes are already 20% + higher than other areas and will only rise as the current school system continues with its self-absorbed methods. Progressive and responsible citizens should come forward and debate with facts, evidence and benefits of changing directions in our education system in this city. The school exists because of the city not visa versa. If the school continues to devour a larger share of the pie (76% of the budget)then what happens to the rest of the city’s structure?

    Aware and competent people see a problem developing and plan/organize actions so the option(s) are manageable rather than restrictive. A city’s officials (and Editors)should represent their citizens’ concerns with equal consideration and focus for fiscal responsibility regardless of their personal views. Our leaders need to affect changes that will secure this city’s operational and financial futures and to better prepare our citizens and students for the challenges and diversity of the present and future! Which road are we going to travel in Falls Church VA?

  3. Footnote to the above:

    I went back and re-read the financing white paper. A 15 cent increase to the tax rate, as I understand it, is the absolute worst case scenario where there are no proceeds from the adjacent land to offset the $7.4 million in year debt service. Also as I understand it, a 4 cent increase to the tax rate is the absolute best case scenario.

    So, let’s assume we wind up somewhere in the middle in a range of 8 cents or so. A lot of favorable things still need to happen. And, the rate increase is an on-going increase from year to year – – not one time and not for one year. And maybe most importantly, this increase is for debt service only and does not include any increase for operational and also non-school increases. Am I at least somewhat correct?

  4. I have made the point to some and in other outlets that the city needs to be more forthcoming in presenting impacts on the tax rate. The city’s own white paper cites the increase will range from 4 cents to 15 cents in year one depending on proceeds from the adjacent land. The city needs to present various scenarios on how this can play out so voters can have all of the information and can make an informed decision. As I understand it, if the referendum passes the very best scenario is an increase of 4 cents. The worst case is 15 cents. What the city does not state clearly, at least I have not seen it, is that increase carryovers to year 2, year 3, year 4, etc. I think there are some who think it is one time, one year increase. The city also talks a lot about the 4 cent scenario and little is said about the 15 cent scenario. I think the powerpoint presentation devotes one slide to this unless I missed more coverage. If I am correct, much more is needed. My guess that at least in year 1 the increase will be much closer to 15 cents and the same amount will carryover to year 2 and possibly beyond. And of course, all of this is debt service and not operational costs. And do you really believe the the schools will tighten their belts and not ask for more money so that will be another penny or two so that only increases the tax burden. Where will the money come from for all other non-school, non-debt service needs? What am I missing in what I have stated above?

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