Charlottesville Planning Commission gets first look at FY23-FY27 capital budget
The Charlottesville Planning Commission got a look last week at a preliminary budget for the capital improvement program for the fiscal years 2023 through 2027. Council will vote next spring to approve the first year of spending, but decisions for future years would be for future versions of Council. (November 23 presentation) (watch the meeting)
But first, what is a capital improvement program? Krissy Hammill is a Senior Budget and Management Analyst for the City of Charlottesville.
“It’s basically a five-year financing plan that contains infrastructure type projects that usually cost more than $50,000,” Hammill said. “They’re generally non-recurring and non-operational and they generally have a useful life of five years or more.”
Major items are usually funded by debt the city takes on in the form of bond sales. Investors front the money in exchange for a steady and guaranteed return. Like Albemarle County, Charlottesville has a AAA bond rating that is both attractive to investors and has a low interest rate. The latter results in a lower debt-service payment for the city.
“We are actually part of a very small group of localities that have that rating,” Hammill said. “It is the premiere marker of a locality’s financial stability in strength.”
In recent years, Council has increased the amount of spending on affordable housing initiatives, directly funding redevelopment of public housing and Friendship Court. In the past budget cycle, Council expressed a willingness to fund the configuration of City Schools.
“We had a placeholder for that project at $50 million and based on Council’s direction from a meeting in October, that has now been increased from $50 million to $75 million,” Hammill said. “The funding has been moved up from FY25 to FY24. We also know that in doing this there will need to be additional revenue enhancements to pay for the additional debt service that will be required.”
Revenue enhancements can be translated as “tax increase” and Hammill has previously told Council and the public that the equivalent of a 15 cent increase on the property tax rate may be required to cover the cost. There’s the possibility of the next General Assembly allowing Charlottesville voters to decide on a sales-tax increase with proceeds going toward schools.
Even with that possibility, the city may not be able to make any new investments for some time.
“We know that our debt capacity will be exhausted for some period of time,” Hammill said.
In the current fiscal year, debt service is just under five percent of the $192.2 million General Fund Budget. That amount does not include the amount of general fund cash used for capital projects. That number will increase.
“The plan put before you has debt service basically doubling from just over ten million to just over $20 million within a very short period of time, about four years,” Hammill said.
A draft of the next Capital Improvement Program won’t be officially presented to Council until late February or early March. Hammill documented several other revisions to the preliminary budget. At Council’s direction, $18.25 million in city funds for the West Main Streetscape were transferred to the school reconfiguration project as well as $5 million from a parking garage on 7th and Market Street.
In December 2018, a previous City Council signed an agreement with Albemarle County to provide parking as part of a multimillion project to locate a joint General District Court downtown. Subsequent Councils have opted to not build a new parking garage to honor the terms of that agreement. (read the agreement)
“We don’t have any specifics right now,” said Chris Engel, the city’s economic development director. “We’re in the midst of conversation with the county about the fact that we’re not going to build a structure and what the agreement leaves them with regard to their options and trying to figure out what’s best for both parties.”
Pre-construction of the courts facility is underway.
Another adjustment in the city’s preliminary capital improvement program is additional funding for a comprehensive plan for the Parks and Recreation Department.
“This would be to look at Parks and Rec programs,” Hammill said. “This is not the normal master plan for the parks per se master planning process, but more of a programmatic master plan.”
There are also programs for drainage issues at Oakwood Cemetery and McIntire Park as well as funding to assist the removal of dead Ash trees in the city.
Council has also approved a housing plan that asks for $10 million a year on affordable housing initiatives. Hammill said not all of the funding for that initiative would come from the capital improvement program budget. City Council will review the Charlottesville Affordable Housing Fund at its meeting on December 6.
Another item not in the capital budget is private funding for a sidewalk on Stribling Avenue. Southern Development has offered to loan the city $2.9 million to cover the cost of the project as part of a rezoning in Fry’s Spring area.
The Charlottesville Planning Commission will hold a public hearing on the preliminary CIP on December 14.
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