Prepping for Charlottesville’s FY23 Capital Improvement Program

The release of Charlottesville’s property tax assessment for 2022 have given budget staff a clearer picture of how much additional tax revenue will come in due to the assessments. That will provide more clarity on a potential increase in the real estate tax rate to cover a capital improvement program that will include $75 million for school reconfiguration, more funding for affordable housing, and other increases that have been sanctioned by the most recent City Council prior to this one.

Before we go too far with that, a subcommittee of the House of Delegates’ Finance Committee has recommended denial of a bill from Delegate Sally Hudson (D-57) that would allow Charlottesville to hold a referendum on a one-percent sales tax increase. (HB545) They also recommended “laying on the table” for another bill that would have allowed all localities to do so (HB531). Both votes were on party lines. More General Assembly updates in a moment. 

The current Council had a lengthy discussion about the capital budget at their retreat on Wednesday. Krisy Hammill is a senior budget analyst with the city.

“The current draft of that five-year plan totals $157 million of which roughly $124 million of that could be bonded,” Hammill said. 

View the presentation to learn more

That means the city can float bonds for the project and pay back the money over time through debt service payments. The city continues to have a triple AAA bond rating which keeps interest payments lower . 

One topic at the work session was whether Council wanted to continue to move forward with several items. and she gave an overview of projects previously approved that have not yet moved forward. 

“Right now we have an authorized but not issued list of roughly $66 million,” Hammill said. “This is just a running list of projects that if you go back through prior [Capital Improvement Programs], this is a list of of projects that were designated in that bondable portion. 

These range from $4.43 million in an account for undergrounding utilities, $6.7 million for the city’s share of the new General District Court, and $3 million by the 250 bypass fire station. Hammill said some of these projects are already in the works and Hammill said it’s not a safe bet to eliminate the line item. 

Last year, Council signaled an unwillingness to proceed with a major project to build a parking garage at the corner of 7th Street and East Market. $1 million remains in the unspent area. 

Mayor Lloyd Snook was elected to Council in 2019 and he related his experience so far. 

“I will tell you from my own personal perspective that once we’ve said yes to it, I kind of forget about it,” Snook said. “I assume it’s going to get done.” 

Snook said he was not sure of the utility of seeing the list. Hammill said decisions by previous Councils can always be revisited as new information is known.

“West Main Street is a perfect example of that,” Hammill said. “If we had looked at this list last year, it was a higher number because we had $18 million and a quarter on this list for West Main Street. We know that there was design work and some preliminary steps but for all intents and purposes, no work really happened there and we as we started talking about the school project and how could we get to where we need to be, that was a perfect project that sort of bubbled to the top that’s like hey! Here’s a big number we’re sitting on. Where are we with this project? Let’s reevaluate.” 

Hammill said at this point in the process, Council has the opportunity to ask questions to continue to request more information before a final decision is made. Snook said he would like Council to be given more frequent updates on where capital projects stand. Hammill said staff is working toward that goal. 

Hammill also said the draft capital budget includes some recommendations made by the Planning Commission.

“There was a recommendation to restore the funding for sidewalks,” Hammill said. “We did put money back in to level-fund that with 2022. One of the other recommendations was to add more money back in to mitigate the Ash tree removal process. That is now fully funded at the requested rate.”

Staff also reduced funding for the economic development strategic fund. 

The draft CIP for the next five years anticipates about $185 million in capital spending. That will likely require an increase in the city’s debt service to about $23.1 million each year. That’s double the current amount, according to Kevin Rotty, a financial advisor` working with the city. 

“We’re currently paying about $11.9 million in our FY22 budget,” Rotty said. 

Additional revenues will be needed to cover up the difference. At the retreat, staff wasn’t prepared to recommend a tax rate. 

There are also $126 million in requests that are not currently funded. They also said there won’t be any room for additional new projects for many years. Councilor Michael Payne posed this question.

“Our current proposed CIP would mean anything in the unfunded list such as [Piedmont Housing Alliance’s] affordable projects… wouldn’t even begin for be possible for us to begin funding until 2031?,” Payne said. 

“I would say basically yes, that’s a good summary,” Hamill said. 

“I would agree,” Rotty said. “Very good summary.”

Charlottesville’s budget cycle for FY23 continues next week with a joint session with the School Board on February 2 and a budget work session on February 3.

Before you go: The time to write and research of this article is covered by paid subscribers to Charlottesville Community Engagement. In fact, this particular installment comes from the January 29, 2022 edition of the program. To ensure this research can be sustained, please consider becoming a paid subscriber or contributing monthly through Patreon.

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