City Council Special Meeting/Work Session

good evening i'd like to call this special meeting of september 2nd 2025 to order we will now recess the special meeting and go into a work session see how smooth that happened um ms clark what do you have for us first the first work session item we have is a joint discussion with the school board regarding the school bonds and renovations i'll recognize jc martinez chief financial officer for the discussion thank you mayor council the city's financial advisors davenport and company llc will present for discussion an overview and update of the city's key financial programs and strategies the presentation and discussion are designed to provide an update and overview to the school board and city council on financial topics relevant to the school bonds and planned renovation schedule

for the two elementary schools and the high school roof i'd like to acknowledge kyle lux who will actually be doing the presentation along with myself thank you kyle all right thank you uh mr martinez um better mayor members of city council and the school board nice to see you all um this evening um again kyle lux with davenport uh the city's financial advisors so with with jc's intro there uh we have a presentation that's up on the screen but i think big picture what we really have is an update on the school capital program and so um we're asked to to kind of give a specific focus to that topic this evening um numerically analytically thinking through those types of topics um with a little bit of overview and then certainly as always many back and forth and questions that

you may have so i'll walk through that and jc i think you'll flip the slides over there and by all means as there's questions as we go um feel free to jump in i think the first page background again as the city's financial advisor which we've appreciated doing for i think the better part of 20 plus years of lost count exactly but um that's it's been a great partnership over those years so our our job our goal here is really to take in the information that you as an overall city with the city council school board have given us in terms of the priorities with the capital projects obviously in this case schools and review that analyze it understand what it looks like that will have an impact on whether it's on the

budget whether it's on the city's policies credit ratings so forth and so on it's not for us to tell you which projects to do it's not for us to say what's a good project or a bad project that's obviously the the purview of the governing bodies here we're really taking in the information we've been given in terms of those priorities and giving you some hopefully helpful input in terms of next steps so i think jc on the second page a little bit of background i think everybody in this room knows this but obviously last november you as a city held a referendum first referendum in a long long time for school bonds here in the city we were around for the last one in the early 2000s passed roughly 70 percent of the voters in the amount of 220 million dollars there was a lot of

planning that went into that number what you're seeing today is is sort of an evolution of that planning that was done even prior to that that referendum the projects that were a portion or meaning included within a referendum you see the page here daniels run elementary school providence elementary school and the fairfax roof replacement and so those are the projects we're given and the topic of what we will work our way through here the middle of page is obviously big numbers for the city you are triple a rated we'll talk about that but 220 million it's it's a material amount in the context of a city of your size and so a lot of planning was was undertaken leading up to that referendum at the time from a budgetary standpoint we'll talk more about this the budgetary impact of

that roughly 220 million was about 18 to 20 pennies in the real estate tax rate so that's kind of where we were roughly a year or so ago we'll give you an update on where that is today it hasn't changed much and how to maybe think about that going forward it doesn't mean it has to happen all at once it's a good barometer though to understand from a cash flow standpoint from a budgetary standpoint what does it take from a revenues of the city in order to undertake a series of projects in that scale of roughly 220 million obviously 2026 budget we're in that year it's going quickly you you know got some additional revenues by virtue of city council on that but nothing material at least as we understand it

for schools on a recurring basis for the capital side so really kind of rolling forward where we've been here for about a year plus page three again with the numbers we've been given the planning costs for the schools about three million dollars in this budget year we understand from jc and his team that's being funded from dollars already within the cip so we're not borrowing for those dollars that's been funded as we understand it within the budget within the cip and so for fyi 26 the year win right now you've got that and you're working your way through it so the real question is okay what do we do after that from a you know financial standpoint bottom of the page again an important footnote which is everything we're going to talk about in here is

schools specific obviously given the the joint nature of this workshop and so we'll make that point for the folks in the city council um if you'll have us we'll be looking obviously at the larger cip as well figure out how these puzzle pieces fit together but everything we're talking about today is just the the schools and the referendum on page four a little bit of background so i mentioned this earlier the city is triple a rated that is the highest possible credit rating that a local government can have somewhat ironically it's actually higher than the federal government up the street but you and your peers in the local government world in northern virginia many in maryland as well enjoy those top tier triple a credit ratings they are a barometer to the financial markets in terms

of the overall financial health and wellness of the city and importantly they're also a very direct input to your cost of dollars or your interest rate when the time comes to go borrow for capital projects and so you've had those credit ratings as a city since roughly 2010 which interestingly was not a good economic time period coming out of that recession the financial crisis 08-09 the city was actually able to achieve those triple a credit ratings for the first time coming out of some very rough economic time periods you've had those over the last 15 or so years and so what we'll talk about is is in a large to a large extent how the rating agency is likely to think about taking on projects like this in terms of the schools they've already had a little bit of briefing on that

and we've certainly been watching their their commentary on page five again a little bit of a background here what is it the rating agencies care about so when they are coming up with these triple a credit ratings for the city what are they really looking at we've tried to break that down on page five in a you know you know a pie chart if you will you get four quadrants um i won't walk through this you know sort of slice by slice so to speak but if you start with the top left one of the single biggest components of a credit rating for the city or any local government is your economic situation that counts for about 30 percent maybe 25 30 percent of the credit rating and just by virtue of where we

are in northern virginia in an area it's historically been um economically vibrant you get a very nice benefit just by virtue of where you're physically located um that's benefited you for the last 15 20 years um it is not something though that is within your direct day-to-day control so we view that you know certainly numerically as a positive but it's not something that you and city council even the school board can necessarily impact on day-to-day basis so then as you work your way around the circle the things that that the city um and the city council primarily can impact on a day-to-day basis top right is the financial performance and flexibility so what they're really looking at there is do we have structurally balanced budgets meaning do we have enough revenue to cover our

recurring expenditures do we have strong fund balances are we in compliance with our fund balance policies those are the types of things that are within yours the city council's direct day-to-day control and so that's as we start to work our way around the circle the areas that are very important to the rating agencies as they're reviewing the city's credit profile bottom right you've got management that certainly is everyone sitting here along with the city manager along with the cfo the sort of checks they look at there again go back to you have policies do you follow your policies we have a little bit in here on the policies maybe updating those are you doing multi-year planning which by definition you know us being here is

is indeed you're doing that multi-year planning um until you get very high scores as a city on that side and then the last slice of the pie bottom left is the debt side of the pie and so they've changed this terminology sometimes they call it leverage sometimes they call it debt what they're really looking at is what are the outstanding long-term obligations of the city that's both debt and pensions you as a city have well-funded pensions that hasn't historically been a concern um and so the real focus here is on on the debt side of the equation and so if we're talking now about taking on you know a material amount of new projects one of the single best ways you can do that and maintain very strong credit ratings is to make sure you're maximizing as a city those other areas of

the pie chart there so things like the finances the fund balance policies structurally balanced budgets um you know in accordance with adopted policies all those types of things and call it the other three quadrants um go a long way to helping to maintain maximize those triple a ratings while we're going through a process of uh taking on very large capital projects so we just give that as some background um pages six and seven we've just taken some snippets from the rating reports the first is moody's the second is s p i'm not going to read this word for word i think you've had this in your packet you see the strengths and the challenges they list there we've highlighted on purpose the city's fund balance

position um that is something while not directly related to the school bonds per se it's something that has become much stronger over the last 10 or so years and it is something that helps to counterbalance the fact that you as a city are embarking on some large generational types of capital projects and so if we have just a couple takeaways from the moody's page on page six and we'll flip the page on page seven to s p it is the importance of fund balance in the credit rating process again maybe not directly related to how do we pay for school projects or any capital project but it is very important to how the rating agencies look at your financial flexibility they're going to look at a city like fairfax and say

okay if we've got very strong fund balances we have as a city more capacity to would absorb challenges surprises whether it's economically or locally and so that's something that they care meaning the rating agencies care a lot about so as we flip one more page we'll really get into the specifics here this evening so the school bonds the school projects that were identified and planned approved via that referendum what does that look like in terms of of dollars again the dollars numbers that were given to us so you can see the bottom of the page the breakout there between the three projects and this is laid out purposely on a fiscal year basis i think the best estimate that the you know the school engineers have at this point

um to help us as your advisor working with excuse me jc to understand what dollars do we need and what fiscal year and helps us plan annually to kind of build up to that time period so what you start with in 2026 is 2 million 981 713 just round that off and call that three million dollars that's that three million i reference that is in your budget in your cip already funded for planning and so that's sort of taken care of that first little slice of the pie what you then move on to though is you move into fy 27 28 29 are clearly more material dollars in 2027 about 22 million 2028 another 22 million and then you get to 2029 getting up to roughly 100 million dollars in that year and so the i think the process and the time period for us to be here now in september i guess

it is september august a couple days ago but it went quickly is to start thinking about uh your next budget cycle which would be here quickly knowing that'll be fy 27 and that's when those dollars start to creep up from 3 million up to 22 million and so we want to be here proactively to help uh guide some of this discussion because it'll need to be as these numbers play out as they're laid out here that'll need to be part of the fy 27 budget discussion in a serious way how is it that the city plans to go forward with that next phase which is roughly 22 million um the plan that's been laid out takes us in increments so it doesn't take all 220 million at once it's obviously three projects they're just going to

have their own dynamics and so we're taking that incrementally um on basically an annual year with your budget cycle if if i can kyle just a quick note that's not listed on this sheet but for fiscal year 2026 as kyle noted about three million dollars was budgeted and appropriated in in fy 26. i will make a statement that in discussions and collaboration with the school board specifically the previous superintendent the school roof was actually a part of fy 26 that 4.5 million was actually pushed out as a way to make a concession to ensure that we were able to have a balanced budget for fy 26. they identified a reappropriation of a school activity in the cip previously i think hopefully council remembers that

and that's sort of where that three million dollars came from but originally the mosley report or those projections the cash flow did show about 4.5 million dollars being needed and or allocated for the high school roof in fy 26 that we have now delayed at least for one year so basically that 2032 row is that additional year from pushing out that high school roof thank you thank you so i think as we go to page nine so transitioning over into as we again run these planning numbers ran these run these assumptions through you know the city's uh sort of budget through your policies we use a variety of assumptions yet deal with those assumptions is to be more on the conservative side uh we don't know nor do you what interest rates will do what inflation will do but the hope is we're

we're erring on the more conservative side given the information we have today um again top of the page the idea here is to take this in sort of annual increments so it's not 220 million all at once it's annual borrowings that would allow you to course correct allow you to build some dollars into the budget um on a on an annual basis uh the middle of the page what we've assumed is a five percent planning rate so very simple we do that a lot for capital planning you'll see it in the the general fund side as well current market rates are below that they're probably in the low fours but again we like to err on the side of conservatism as we do that planning because we don't have any control nor do you

over where interest rates are going about the third bullet point down we put a note there about the value of a penny on the real estate tax rate um that is there it's about 835 000 jc you can correct me if if uh we're wrong or in the right range there but about 835 000 um and that's there because we run these numbers we like to understand if we had no other revenue source outside of the real estate tax rate and assume that real estate tax doesn't grow at all what is the relative impact to the real estate tax rate now in reality you as a city have a number of different levers you can pull in terms of revenues we'll talk about the one percent sales tax that's been discussed um over the last several years

you don't have it right now but you might in the future um so there's a variety of different again our terminology levers that can be pulled from the revenue standpoint for purposes of this analysis we've tried to make it simple and just say if the only thing we had was the real estate tax rate and it only was at the value it is today so assume it doesn't grow at all you've been growing at a nice rapid pace assuming doesn't grow at all that's what we've assumed um in here again the idea being let's try and err on the more conservative side of the equation bottom of the page there again this is all schools we're not talking about the general city cip it's purposely just focused on schools page 10 from an interest rate perspective won't spend a lot of time on this page but basically rates

remain good in the credit markets you have very high credit ratings that get you access to those credit markets with the lowest possible market rates um again our rough estimate as i talked today probably in the low fours if we were to go sell bonds tomorrow so again we're planning five on purpose we're probably in around the low fours um in terms of the current market uh so on the next page what we've done here is just tried to summarize a lot of different ways to to kind of look at and layer these numbers together but just give you a sense of what the payments would be for each of the various schools um as it's laid out um in those prior cash flows so you see broken out there daniel's run providence fairfax high school

the roof this basically just shows on an annual basis what those payments step up to given the timing from a couple pages ago so again in 2027 which is the fiscal year coming up on that roughly 22 million dollars it's in that cip if we borrow that we have a payment that begins um in that year we'll have about a 1.8 million dollar and rounding up there about a 1.8 million payment or thereabouts the next year it starts to build to about 3.6 million the next year after that about 11.5 and then as you get to the end of the decade 2030 we really reach the peak at about 16 to 17 million dollars a year that in isolation is one thing we're to take this we're to translate that again to that real estate tax rate it's not saying it's the only revenue source you

have but it's clear you have to identify additional revenues to make payments like that we're also going to translate that to the size of the city's budget it's one thing to look at the numbers in isolation we need to understand what that looks like relative to the city and its budget but again these are pretty good order of magnitude estimates of how those payments would step up over several budget cycles we flip the page flip the page to page 12 so this is that what we call tax equivalent impact i was referencing early we're about we've taken those debt service estimates on the prior page and just said okay if the only revenue source we had to make those payments was new revenues and the real estate tax rate

what would that take in terms of equivalent pennies and you see it right there on the page and so far left hand side that is the 220 million in the aggregate in 2027 it's about two and a half pennies 28 it's an additional two 29 it's about nine and so 29 is when those payments really start to ramp up and then five and one and a half so a total over uh basically about six years of about 20 pennies and again i made that caveat i'll probably continue to make it that assumes no growth in the tax base it assumes no other revenue sources it assumes no one percent sales tax the only thing you had was that real estate tax rate that's that's what that is on the right hand side of the page we've just tried to

break it down by school if that's useful these numbers aren't surgically precise think probably move around a little bit but just gives you an order of magnitude of per project daniels runs about 7.4 providence is about 8.4 and the roof is about 4.2 in that range plus or minus so you can see that relative breakout amongst the various projects importantly as you look at 2027 that two and a half pennies as we've done this planning we've assumed that two and a half pennies occurs um that may be uh you know us putting the cart before the horse but as we think about the next series of things as we think about additional revenue sources again the idea being let's try and be more conservative as opposed to less we've kind of

baked that into the cake for the moment for the fy 2027 budget you can tell us to change that amend that but that's what we've assumed as we go to the next page so all of that again presupposing the real estate tax rates the only revenue source we had how do we stack up which i think probably most folks in this room um you know look at this see it and understand it how do we stack up relative to our neighbors and peers across the northern virginia region so you as the city right now you're at 105 and a half the top blue bar there and what we've done in the bottom section is to compare you to a variety of other northern virginia jurisdictions there's one caveat i would make to this graph um if you were to take out the bottom four local governments that's basically the counties

you've got fairfax county arlington county prince william and louden those are really probably different animals relative to the city of your size and so as you look at that peer median it's it's a dollar 16 if you factor everybody in there but if you factor out the counties understanding that maybe a little bit apples to oranges that peer group media is more like a dollar 28. um and that's again if you're a town that's factoring in the county tax rate plus a town tax rate we're trying to adjust some things for you know an apples to apples comparison but that just gives you that that relative sense of things arguably being you know the herndons the viendas the falls church especially probably more analogous to

you in the city of fairfax than like a loudon county that just is also a client of ours but very extreme with the size they have and the data center revenue which is which is you know makes them unique in the country relative to the region on the next page so on this page what we're showing is two of the city's very important policies mentioned earlier the rating issues care about policies you're following those policies the city from a debt perspective has two long-standing policies the left-hand side it's debt service to expenditures and the right-hand side is debt to assessed value the left-hand side graph is really adjusting those debt service payments we looked at a couple pages ago for the size of the

city's budget your policy is a city for a long time it hasn't been adjusted for probably 20 some years of the year and the right-hand side of the city's budget is to have a nine percent debt service to expenditures limitation you actually exceeded this as a city back when the last school referendum was done in the early to mid 2000s and i think as as jc would echo this is something we've talked about just given the size and scale of your city and the capital program adjusting to make sure that it fits the current day in terms of what you've identified on the school side and likely what you've identified on the city side as well but all that said what you see with that policy is we're right now at about six

seven percent it goes to about you know 12 plus percent uh over the course of the next five or seven years this factors in very little growth in your budget so as your budget continues to grow this ratio actually looks a little bit better so again trying there on the conservative side um if you grow at the same pace that you have historically if interest rates are better than we've assumed these ratios will look a little bit better it's not going to keep you down in the six or seven percent range but it'll be incrementally better if indeed you continue growing at the pace you have similar story on the right hand side debt to assessed value just another way of looking at that debt profile for local government you've got a three percent policy without any growth effectively we get

uh which we have two percent growth in there but um pretty modest amount of growth you get basically to right at that three percent uh policy if i can kyle just a quick comment on this specifically and as you mentioned so back in early mid 2000s 2004 2008 time frame uh when actually the city was upgraded uh to triple a status by both moody's and s p about a year apart our debt service to expenditure ratio was slightly above 14 percent so we had just done the last school bond referendum in the city's history also similar to that our debt versus assessed value was about hovering right below three and a half percent so we have broached that internal policy and we've had discussions with both rating agencies about

amending that policy um if kyle could recall some of those conversations maybe expand on how that's viewed with the rating agencies i think that would be beneficial with council absolutely yeah and so um the rating agency just like anyone else in politics or business they don't like surprises and so back in that early 2000 time period the fact that you broached that policy was not a surprise there's a school bond referendum there's a lot of capital projects the planning had been done um and so they knew meaning they the rating issues that there was a plan to have a structurally balanced budget there was a plan to fully fund the debt service there was a plan to basically work your way through what were large generational capital projects 20 25 years ago and then come back down

which you did as a city and so a lot of the rating agencies view of that jc to your point is understanding what your plan is year over year is it a surprise we're going up no certainly not but what are the other things that you as a city are doing to help counteract the fact that that debt service to expenditure ratio is going to increase and that's where it gets to things like making sure we've got a really strong fund balance making sure we're doing those other things and those other quadrants we're talking about to help bolster the overall finances of the city um and that that tends to give the rating agencies a lot of comfort um this nine percent policy too is just it's very low for any any city of your size and the the scale of of capital projects nowadays um we really think that

should be higher we don't tend to see policies that low anymore um and so again a comparative for you on page 15 again taking other virginia triple a's um you see there we're about six percent um the policies meaning the the uh percentages here range anywhere from the fredericksburg falls church at ten plus percent um chesapeake's much different situation down to three and a half percent um and so anywhere in that in that range um and this is just looking at virginia the other thing the range will do though is they will look nationally and so if we go one state south into north carolina there are a fair number of um growing uh local governments with their cities or counties taking on large generational capital projects that have a ratio that's much much higher and so

again it's not out of the realm of of what the rating agencies see nationally even regionally to have something um in a ratio like this that is on the higher side if indeed there is an overall holistic plan to it um and again knowing we're a city that is working our way through generational you know once every 25 or so years capital projects i think as we flip the page you see a similar picture if you will this is that debt to assessed value ratio we're at about 1.3 percent you can see anywhere in the range of uh 2.9 3 percent as the peak false church you know maybe a direct comp meaning comparison here in northern virginia they've taken on some very large capital projects they kind of worked their way down a little bit but if you go back five

seven years they were much much higher on debt service to expenditures and debt to assessed value and this kind of absorbs some of those projects the last several years on page 17 we'll talk a little bit about this um and just it is a point of of reference i actually started my day in rocky mount virginia in franklin county it's a ways from here um we're talking about doing school projects down there and the exact same the topic on this page is this one percent sales tax exact same topic came up and so folks as far away as the roanoke region are asking the exact same question as many many local governments all across the state whether you're in southwest virginia you're in northern virginia you're in hampton roads um are thinking about and asking about

this one percent um sales tax so we're going to bring it up i know we've broached this in the past um it is not something it's not an arrow you have in your quiver a lever you can pull right now we don't pretend to know if you will be able to it's going to depend on a lot of politics but certainly we can tell you as we work across the state is there are local governments um in far south or so excuse me far southwest virginia there's rural urban um many many many local governments and many many different constituencies are very interested in this potential revenue source um nine local governments by virtue of a little bit of history they've already been able to implement it you can see who they are there the charlotte gloucester halifax henry so forth and so on everybody's

a long way from here um in northern virginia it hasn't you know made it through the governor had bipartisan support um in both houses this year obviously there's a gubernatorial election we don't pretend to be uh political experts but certainly there's a hope out there that this will be a revenue source coming forward but by no means do we have any specific knowledge of that and so that's why we set this planning up with the understanding sort of the assumption that the only revenue source we have is the real estate tax rate from a timing perspective um say on the positive side if indeed this would work its way through state government make its way to you at the local level hold a referendum that would have to be approved if things work in the way that

it has in the past what that really means is that it would be fy28 meaning not fy27 the year coming up but fy28 before we'd really see the revenues from this potential or hopeful new revenue source kick in so for an fy26 now we likely have all of fy27 which starts about a year from now and then fy28 before we'd really see those dollars kick in and so on page 18 why do we talk so much about this um it is for school construction specifically i think you probably all know that in in this room given your um various positions um it's also a material amount of dollars and so for effectively every local government that we've looked at um planning on the capital side for schools for it whether it's again urban rural suburban whatever it is it's a material amount

of dollars and so um our best estimate at the moment for the cities that could be between 12 and 14 million per year that's what that that that one percent um equates to there's some nuances about what exactly counts within that one percent but rough dollars it's about 12 or 14 million dollars a year so you take that 12 or 14 million a year and think back a couple slides ago the peak debt service on the school program was about 17 million so it almost entirely covers what we think right now would be the peak debt service on the school program and it entirely covers it or almost entirely covers it again assuming no growth in these revenues so we're trying to be as conservative as possible use current dollars and so um if you run

some modest growth out on those revenue streams it really would basically cover uh the debt service on the school program as it's been estimated right now um again importantly from a timing you're not going to see that in f526 we know that you almost certainly couldn't find a way to see that in f527 so it's really f528 before those dollars would start to uh be be helpful be useful to you in the budget but if indeed that were the case if indeed it was approved in a local referendum it would go a long way to and probably cover all of the debt service on your referendum i think that's the end of the presentation um open it up to council and school board members if they have any questions or the school board chair if she has anything that she would like to add before

the questions uh yes um i would like to get just clarify or provide clarification um so as jc and kyle both stated the design phase that we are currently in was funded primarily from the school board returning three million dollars in cip funds and then we delayed the roof which was four and a half million dollars which that helped balance the 26 budget which now that delay on the roof we all have to realize that roof has now gone up in price so i feel like i just want to say we're kicking this can down the road we kind of have to make a decision about how we're going to proceed next week you all are supposed to award the contract do we really want to spend this three million dollars of taxpayer money if we have no

intent in moving forward because if you shelve this design in a matter of years a lot of it is going to it's going to be obsolete it'll have to be redone plus the cost of it changes once the timeline we've reached the end of the timeline where they've already projected the increases now the 220 million dollar bond no longer is enough so i i would like some of the discussion to be around what we are willing to publicly commit to in terms of this bond and the renovations mr phillips did you want to speak about well i think good evening everybody i i think uh in addition to the question about the three million is just thinking about you know one of the things when we did the comprehensive facilities assessment we looked at or the company the organization that did the study

looked at the items that were going to be needed they didn't look at it just from a renovation lens they looked at what needed to be done so we talked about like um useful life of the air conditioning systems the plumbing things like that and they made predictions about what needed to be done and if you recall looking at the study i think the study was completed in 23 23 23 and so there were about seven million dollars worth of repairs that were scheduled not scheduled but predicted to be needed in 23 and 24 and so just to kind of catch up to those things is about a seven million dollar cip bill or or you know the funding would need to come from somewhere and those are the things like you know many of you have students in school right now um we're doing a lot of work with fcps to keep the

air conditioner running the hvac running and so they're very real things that impact instruction you know it's not just a theoretical like there's some pipes in the wall that might have a problem down the road we feel it already and i think we're fortunate to have good partners in fcps and good folks working on it and just those kind of things will start to come do whether we do the renovation or not you know and it's just important to remember those things it doesn't they don't it's not just the the really nice new facility that we look at and new spaces and things like that it's just the reality i think um if you look out just to fy28 in total counting that seven million is about a 20 million dollar expectation again they may not all

come due at that time but that's the prediction so just keeping those things in mind also when you're thinking about like making our decision about when when to move forward and how to move forward do any other board members have any uh comments or questions i mean i would just like to echo what we're saying i would like to spend the three million on the design knowing that we're going to be able to move forward after and not waste taxpayer money um thank you thank you oh all right i will open it up to our council members if we've got questions or comments from the council members on this council member peterson and then council member mcquilla well thanks lots of great information here if we go and this is a question that may go to our chief

financial officer here but um maybe putting things into a big picture perspective here we have a schedule translation if you will of what the expenditures under the school bond would be to sales excuse me real estate tax uh here in the city and that that is just for the school bond over that same period of time i think we have at least under current plan or assumption um a series of major capital improvement projects as well do we know and this gets to the issue of cumulative tax burden do we know uh based on present circumstance what those levels are cumulatively for that series of major capital improvement projects how much they add we do council member peterson uh so we have an estimate and

that's a working estimate because not all those projects have been fully appropriated so we do have a five-year cip plan uh that was approved only one year appropriated and then you look out four years some of the bigger bigger projects that are sort of coming online are being proposed are the property yard fire station three willard showward and then also potentially in addition to the police headquarters garage in combination that's about another 150 million dollars about so i would easily say that potentially about half of what's being proposed here for the 220 million so half of that would easily be another potential 10 cents just on the real estate tax rate but big difference is those projects

were not voted on by the residents and council has not fully adopted or appropriated those entire amounts yet they can be changed if council so chooses uh this could be changed as well on the schools but that would be a decision the council would have to make so i guess to answer your questions i would say at least 10 cents for the proposed cip schedule for the next five years or so and the duration of that would be five years the duration for what sir the increased uh of 10 cents increased rate of 10 cents so it would probably be beyond 10 years uh very similar to what's being proposed here is if we were to increase the rate by the 20 or so since that was listed here that would be needed for

a a defined time frame yeah the the term of the bond it may be another way to think about that council members is that 10 pennies could be done over a series of five years and so i think when you think about that over that time period same concept whereby if you assume the only revenue source you have is that real estate tax rate um it's on you wouldn't need all 10 pennies at once or the equivalent thereof it could be done incrementally and there may be other revenue sources growth in the budget so forth and so on that could help but i think i would agree entirely with with jc in terms of the the you know ballpark estimate on the 10 pennies so just to be clear it would be on an annual basis what i'm looking

for is how much per year for how many years assuming you intelligently spread this what does that look like if you take the entire stack of major cip projects i think communitively it would be about 10 cents over the course of five years or so not 10 cents every year for five years but 10 cents equivalent over the course of five years okay so probably on average about you know two cents a year it might be a little bit more it might be a little bit less depending on the the pace of those projects okay thank you councilmember mcquillen i don't have any questions i just wanted to say thank you for that presentation and as somebody who was on school ward and worked hard during the campaign to advocate for this bond referendum having 70 percent of our public vote in favor of this means that i

will be supporting it and i want to continue pushing forward with making sure that we don't have any more delays on funding this it's been clear what the public wants us to do in terms of our students and our most vulnerable demographic here in the city so that's where i stand and i would like to hear from the rest of council what your thoughts are thank you councilmember hall and then councilmember amos excuse me thank you for the presentation for the information and for the good questions and additional comments um i i think this lens tonight is looking at this almost in its own bubble and i appreciate the questions that are being asked and the other information that's being shared because the school bond the 70 percent

passage rate that's its own bubble but all of these other areas are additional bubbles that really just fall under this big umbrella of what we as a city or we as taxpayers can actually take on and what we can afford um i will start by saying i'm all in for schools i think it's one of the most important assets that we have here in the city i think our children are our future literally thank you whitney houston um but i i do just think that this is something that nearly 70 percent of our residents said they wanted and i would actually be very curious to see if we put some of these other projects on a ballot what their approval rating would be because i think that we have if you look at the cip i think there's been a number of projects that

have been added on in recent years that it seems like we don't know where the money is going to be coming from but we just put them on this five-year plan and hope that somehow they're going to happen and as far as i'm concerned the other projects that have been mentioned the property yard i understand there are concerns there there are restrictions there are problems the fire station the willard sherwood center the police garage to me personally those things are not as important as supporting our schools and making sure that we get this renovation right and also by making sure that our ridiculously old leaking roof at the high school is actually fixed hopefully once and for all for at least the

next 20 or 30 years um i would like to just ask mr martinez for some clarification from you you had said the 10 cents um for the next five years my understanding about the willard sherwood specifically was that on its own that building was about eight to nine cents once we are moving forward or if we move forward with that so i'm just curious how that factors into the other 10 cents that you were mentioning so council members just an estimate trying to go off of memory so i'm actually looking at the actual amount right now uh from a previous discussion that we had with council in late january of this year the amount is actually 172 that was what the estimate was and i don't know if during that presentation 172

million if that amount was based on the cip that was adopted which it shouldn't be because budget had been adopted by then so i think some changes had been made based off of that we would be looking more like at 15 16 cents i was thinking it was about 150 maybe a little less but we're at 172 so that would be about 15 cents so about half of that seven cents or so potentially would be from willard sherwood as a standalone project the property yard is another 60 some odd million dollars along with the fire station so they start adding up relatively quick they do add up very quickly in a very short period of time thank you for their revised uh information on those um i strongly feel that this one percent needs to happen whether it happens with the next governor the

governor after that i have no idea but we and i know we are but we need to be advocating much more strongly we need to get our legislators involved and we need to maybe be the only place in northern virginia that gets to do this because we have to fight hard for this our students deserve it our families deserve it and our residents deserve it and we cannot continue to put burdens like the school bond in conjunction with all these other projects without considering the long-term impacts so i'm all in for the schools my support for other projects is certainly questionable thank you council member amos uh thank you great presentation just a quick note for everyone as well i do want to know that fairfax county did a public a bond referendum last year for public safety services and it passed with

roughly the same rate of schools at 70 percent so i'm sure if that were on the referendum that would be a good benchmark to assess that from people care about public safety and and schools relatively equally there could be some disproportion but regardless i did want to flag that statistic in addition to that and this may be a separate conversation or a later follow-up but for opportunities to institute some ppea agreements and to work on for example fire station three have we made any progress in that regard is uh it's something that i think would help offset some of the costs that we have coming down the pipeline sure great question council member and we have not made any substantial progress

with that we have engaged with others on trying to solicit or ask for them to solicit to us as a traditional ppa that has not happened we could put out a solicitation if need be but we have not gotten that direction or have not gotten to that milestone yet i guess as a quick follow-up what would it take to get is that just a decision by council or what would that be to to more formally move through that process yes council member if you wish to do that we could certainly council wants to um actively pursue it we could certainly do that um that's there's basically two ways we can take get in something that's unsolicited or we can actually go basically like an rfp process if you will if you recall we had uh an informational we did request for information um and uh to see sort of what the

appetite would be in the in that community we had one um provider um express interest and provide just general information that was that was not an actual solicitation did not actually have any numbers attached to it but what they said was that um the likely private component would be um residential multi-family residential or hospitality is what they was what they saw doesn't mean that others might not see something different but the the way that we would make the way that that's going to work best is again is that partnership so part of the issue for council is what kinds of things are you open to those types of of um partnerships as far as what what what the market's going to bear in terms of what you

can put with that and so i know for other projects just residential specifically um and i know it's project specific but council members have expressed questions and comments about additional residential development um and so that's one of the things that we probably or you all should probably have perhaps a larger conversation on but in general if we want to if council wants us to put something together um to to solicit we can certainly do that it would just take council action to tell us to do that uh thank you for the clarification that's something i certainly support and i've supported ever pretty much ever since i've been here uh but i mean the request for information i remember when that

occurred that was roughly february march time frame and i know we didn't get a lot of bids but i do acknowledge also that some of my developer friends following that did express that they weren't even aware that we had a bid out uh or not a bid but an rfi out so i think there is some at least some interest and i think that would be an option worth exploring because it can significantly help us on costs councilmember harty chandler i do want to thank you for the presentation um i do not have children in the school district but let me tell you as a resident this is an important investment for all of us so whether you're directly connected with schools or not i think this is something that we can't continue to kick forward this is something

that certainly continues to contribute to the quality of life that we have in our city so i want to explicitly express my support for this referendum which i also supported as we were campaigning and we should not continue to move this down the line recognizing in your words we have generational impacts when we make those decisions and there are costs certainly that are financial but there are other costs to these delays so number one full commitment number two i think it's really important that we keep in mind or i'll say my commitment is to our residents across the lifespan kids will graduate from these schools and become adults and become older adults in our community so that's not to the

exclusion of other projects that safeguard their safety and well-being what you said kyle in your presentation is about the levers and so i think one of the things i would ask moving forward and i think this links to council member amos's comment is that we explore opportunities to pull all the levers that we possibly can but again reiterating that we have a commitment across the lifespan i support this i support looking at the projects and that are in our cip because of the impacts on the rest of our citizens rest of our residents but also maximizing ways in which we can pull every possible lever that we can and thank you council member mcquillen and then council member bates i just wanted to say that i

second council member amos's request for um us moving forward with a ppe for the other cip projects or upcoming projects that we have that that might be appropriate for um as well as um following uh uh sorry seconding um council member hardy chandler's statement regarding um you know different levels levers and different things that we can look towards to um pull from other revenues since that's something that uh is stated here and identifying additional reoccurring revenues or experience experience revenue growth so um i second that thank you council member bates i also agree with council member mcquillen and seconding council member amos and hardy chandler's thoughts uh and i may not have kids in the city schools myself either but just five years ago i was a kid in the city schools and uh

the physical state um and aesthetic and uh um condition of the schools can have quite a profound impact on uh the ability of students to uh come to school happy and ready to learn if school's getting run down things aren't working right um that really can just kind of change the atmosphere and change the uh the mood in the school and you know increase uh introduce additional stressors um and uh so it's very important that we make sure that uh the students have quality facilities to go learn in other questions comments council member peterson i think this will be a question also uh for our cfo under for a one percent sales tax here in the city of fairfax do we have um a sense of the household level impact that a one cent sales tax has here an average would be fine but i know

there's a differential here council member i don't think we have it broken out by impact to household i think on the slide that's currently up is just sort of the total revenue that the city would potentially generate uh currently it's about 13.5 million dollars um i think it's hard potentially hard to try to break that out by household depending on how much a household goes out and spends um it would vary between households needless to say but we can try to do that for you i think it would be helpful um first i i think in my view i share the views of others and the public here that schools are um clearly essential infrastructure and need the support but we are in a a bit of a balancing act then about how we do that in the face of other things that are being proposed

as well there are many other capital improvement projects which come at a cost in terms of an elevated real estate tax but even if the school sales tax passes we still have a financial impact on households and you have cumulative tax burden going on here between real estate taxes and sales tax the sales tax is an interesting one because that disproportionately hurts lower income people and so we need to maybe be aware of that as we go forward so i i agree with earlier comments here that i think we're going to need to be quite sensitive uh to these other potential expenditures and um how they could or should how they can and should be managed um and whether they should proceed if schools are going to be the first priority that doesn't automatically mean everything else that's in the cip list is

also going to be a priority we may be making some trade-offs here some sacrifices in order to put schools first and i think that is possible given um the sensitivity that exists in the city over taxes of any any kind of land but i do think um the the essential infrastructure of schools is quite critical the the other thing i would just say is i also welcome more information on ppes that's a bit of a two-edged sword and so it would be helpful to know both sides of that equation the experience has been uh yes and no uh cuts and then gains i mean it kind of depends on circumstance design a whole series of things and so i would support if we're interested in that doing our homework homework and having eyes

wide open so we're fully informed councilmember hardy chandler um just one final thing as we weigh the cost of things i think we also have to weigh the cost of not doing them which also has repercussions so i'll just add my two cents worth in or maybe my one cent worth uh in this case the one cent sales tax has been supported by our northern virginia delegation for two years and delegations around the state in both parties um i assume that that support is not going to be any different in this next legislative session what made the difference is there was a governor who would not sign it it was not the people in the senate and in the house who did not want it they wanted it it passed with strong support so the key here is there has to be a

different governor in order to make this one cent sales tax go the second thing is that it can the earliest that it can be implemented if it's on a referendum and if it passes it's it's the fy28 budget well that budget will be decided by the people sitting on this dais who will take office in 486 days so prior to that this dais will decide the next budget and we will decide what our obligations are to this referendum but it will be a different dioe maybe some of the same people maybe not who will look at the 28 budget and if there is a one percent it changes everything dramatically so talking about making cuts to things like the willard sherwood center which is a long-term collaboration with the county in which we have already invested a tremendous amount of money

when we don't know whether or not we're going to get the one percent but to torpedo a long-term project in which we have not just an investment but a commitment in order to make a commitment to the schools when we do not know whether a lot of money will be coming to us in 28 that solves a lot of this problem to me is not good governance we do have obligations in our cip that we have made and it is a way there is a way to do two things at once and it's just important to have the willard sherwood center for other residents of this city for instance the seniors who want the senior center there as it is to make sure we have a commitment to the schools so i would ask everyone to keep in mind this dais will decide the next budget in 2027

but there's every possibility that a new governor and we will know that in about a hundred days will make the difference and then we will know the money is coming if this community supports a one cent sale tax at the same rate at which they supported the school bond referendum at 70 percent and the other thing i would say about that one percent sales tax it's not just residents who pay it the students are paying it visitors are paying it tourists are paying it everybody who comes into the city and buys something is paying it it is not something that is on the burden simply of the residents who live in the city it spreads it out so i would just ask us all to to look at the short term do we want to make this three million dollar commitment because we are willing to make the

follow-up commitment in a reasonable amount of time which is the purview of this dais for the 27 budget budget or not because the 28 budget is going to be different and again once we know who is governor we might have a better idea about how to project more reasonably and that is like less than 100 days away so i just think all of these things are you talk about pulling levers or using levers these are all the things we have to consider they don't exist by themselves in a vacuum all of these things are interrelated so i think the question i think there's no one here who doesn't support the schools i don't think there's any all of us supported the bond referendum all of us want us to see the renovations

the repairs happen but there's some unknown things out there and some information we will have sooner than other information that we will have but when we sit here starting to talk about how we are going to rob peter to pay paul then that's a whole different ball game so i would i would like for us to address what i believe the question on the table is tonight are we going to spend three million dollars because in the next budget there is going to be follow-up money in some amount to move forward with the design i think i believe that is the question on the table chair that is the question on the table um and let me say that nobody on the school board is trying to sacrifice one age group for another we're simply

we're not saying that the senior center or anything is less important they're just two very different needs you're talking about kids who have to go to school in buildings with trash cans down the hallway catching water for three or four sometimes five months of the year talking about hvac that is constantly broken uh how many plumbing issues have we had water heaters that have leaked exploded and leaked into our libraries i mean this is different these repairs will have to be done one way or another so the cost is not going to go away it's just where you're going to see it so i just want to make that clear and in terms of the the private public partnerships i do think the city should start to

look into that i would caution you about a lot of development because i don't want to hear that the tuition bill is too high when we have kids that come out of those developments um and you know so and we don't want to build a third elementary school so you know those are a ppp is a great way to finance things i just would caution hope that we look at the right projects in terms of that um but i just want to make it perfectly clear that the school board is not saying that all these other projects are not needed projects it's what i think the council has to decide you have to figure out what's most important what has the greatest need what affects this community the most and i would say schools

councilmember hull thank you chair pitches um i also think that it's about identifying needs versus wants and i think we all have different needs versus wants when it comes down to what our priorities are on council and i think that when you are serving with you know five other people and the mayor up here you do deal with a lot of different priorities and i am i'm happy that we had this meeting so that we could what sounds like all put forth schools as a priority regardless of the other projects that are in discussion or not they are not on the table at this time um the other thing that i will just wrap up with and say is that our schools don't just serve our students they serve our families they serve our

community they serve our um tiny little tykes that are coming for other things we serve our businesses people hold meetings there there are church groups that come there are basketball games there this is not just about students it's not just about the roughly 2 800 3 000 students that we have in the city real estate values we have businesses that come in during the holiday market sales the craft sales i mean the schools are an integral part of our community i agree and so i think the question this has been a good work session i hope everyone's gotten their questions asked and put forward their thoughts here but the question is is three million dollars going to be spent because in next year's budget there is going to be a follow-up on the money we're expending by

awarding that contract mr foster any thoughts um mayor thank you yes so what's going to be as uh the chair pitch as alluded to you will have an item on your september 9th agenda which is to award a contract for to start the design and uh and the contract is actually um more than three million but three million is all we have to spend so part of it the way so the way it's being will be handled is um that you're committing to funding that you know we already have the three million but you're we're committing to this contract to then continue to fund um that we would then fund the remainder of it in future years so um that's when you would actually i guess technically be making your decision this is just a work session you're not

making that decision even but i think what the chair and the school board members are looking for is basically what they said is that are are are we willing or is council willing to make that commitment um so that is on your agenda for next week so you will actually be voting next week on this item unless you push it to a future date we're not suggesting that they're ready to go you've heard the needs um and and what what is out there um so again we we've set this sort of schedule just like what kyle and that you know davenport's laid out it's based on us continuing on this schedule that we already have in place so the decision point for you is next week um and and then you know we will can continue to move with

with the school board we'll continue move forward the only other thing not to change the subject but just very briefly i heard three council members express specific support for pursuing ppea or p3 options so um if there is no objection what we will do is we will we will i say pursue that we will have to come back to you at a future meeting but we will put together um materials and so forth so where we could actually put out a formal request for some of these other projects so if if there's not objection then we will start working on that uh council member peterson well i guess this may be a clarification or request or both but it would seem to me that as we explore the possibility and potential of the mechanism we need

to learn more about its functionality and the implications of design decisions on that i think we need to do a little bit of homework before we dive into actually proposing specific rfi type information here i'm not comfortable at this stage that i know enough about what these uh options and implications are to be ready to support an rfi so i would think we would take this a step at a time and do that first as a part of whatever we do here are there any other objections council member amos just to be quick we can also do both simultaneously we can learn more about how ppeas function but we can also start setting up the process for bids because ultimately we won't engage in a project until we agree as a council that it's worth moving forward anyway so it's one of those we can do both

simultaneously council member hall i am on board with both at the same time the thing that i do want to point out though is that when we had the ppea conversation specifically associated with the fire station one of the things that if i recall they heavily focused on was adding additional residential and my understanding is that that is a frequent or common denominator when it comes to ppeas or pbe is whatever you want to call them and i'm not opposed to that but i do just think that we need to again look holistically at the other proposals that are coming our way at the other areas of retail that are being diminished and turned into residential and to the school's credit trying to understand how many

more students will be coming in and what that additional tuition cost is going to be and how all these numbers work together so my answer is yes i'm on board for the conversation but i do just want to point out those potential conflict points that need to be i think very much addressed in the information that we're receiving thank you any other objections it looks like we have a majority that want to pursue two things at once okay thank you we'll we will start working on that okay thank you and without anything else i will thank jc and kyle and our school board members for joining us tonight for this very robust and productive discussion thank you so much thank you so as people are moving about mr harden how are you doing well thank you and how is your new

role going just while we're is everything so so far so good excellent always good to hear it good yes very two hats you do you do many things well well we we we are ably uh backed in community development planning jason sutton is serving as as acting he's here this evening so we are trying to cover all all bases well i i think you are doing doing a good job at it from what i can see from where i'm sitting right thank you so miss clark are we ready to move forward with the presentation on development proffers overview that are school specific yes and school specific correct all right fascinating topic and what a wonderful follow-on to the discussion that we just had we are certainly pleased to be here with

with you this evening uh particularly in light of the session with with the school board as as part of our topic this evening we'll touch on the work that they are doing as well i will start off the presentation covering development proffers generally and eric foreman who's with with me this evening um will speak to progress specifically for schools so on this slide um an overview of tonight's presentation the city's ability to accept proffers is based upon enabling authority and so we'll touch on the state code and changes in the state code that prompted all localities a few years ago to adjust how proffers are handled we'll go through how proffers are now accepted and how that's changed then as noted we'll we'll talk about proffers for schools and we'll wrap up with some things to

consider and possible next steps that we would like your feedback on so council certainly familiar but by way of background proffers are reasonable provisions volunteered by an applicant who would be a landowner or developer as part of a re-zoning proffers are not required they can relate to public facilities such as parks schools public safety buildings or transportation infrastructure and so on this slide please here proffers can be conditions that limit the use of the property monetary contributions toward capital improvements may also be proffered proffers are typically listed in a separate document as part of an application package that's referenced and approved with the rezoning ordinance next slide please here are a few notes on how proffers are applied

again they are part of rezonings special use permits special exceptions may have conditions but those are not proffers legally planned districts have master development plans those are rezonings but they're a little bit different as commitments in quotes commitments are made as part of the plan and narrative that's presented by the applicant so rezoning to one of the city's general zoning districts you see these cr rm so forth may include proffers proffers must provide a direct benefit to new residential development that's being considered and we'll talk more on an upcoming slide but the notion of direct benefit kind of extends beyond uh... what in previous times was deemed a national uh a rational nexus between

uh... development and its impacts monetary contributions that are applied to projects through the localities capital improvement program must begin within 12 years of acceptance of the proffers uh... and monetary contributions cannot be applied to operating costs or normal repairs they must expand capacity so when did proffers change 2016 uh... and the amendments in 2016 were really a game changer in terms of development the development process and and how proffers are considered the amendments applied to all residential rezonings and residential portions of mixed use rezonings proffers were categorized into on-site and off-site with some slight differences in the rules for each these amendments supplemented

any law that they were consistent with but superseded any laws that they were inconsistent inconsistent with um... with respect to that notwithstanding phrase that you see there on the slide so the legal uh... considerations with proffers really tightened up as part of those 2016 changes for example in a dispute the applicant now only needed to demonstrate a preponderance of evidence that the controlling basis for denial was failure to submit an unreasonable proffer while the locality is now held to a higher standard of having to demonstrate clear and convincing evidence that it was not courts could now rule that the rezoning be approved by the locality without the proffer deemed unreasonable and without any

additional public notice uh... if this if the locality is on the wrong side so to speak of that decision and localities may also have to pay attorneys fees and court costs so so a lot of changes there um... so how did the proffers change as part of those 2016 amendments the definition of unreasonable proffer was added to the state code although some of the key components um... of the of an unreasonable proffer were not defined a proffer that is unreasonable is unreasonable if it does not address impacts that are specifically attributable to the new development one can certainly surmise what specifically attributable may be but it isn't defined in the code and so it does leave some to some debate

uh... new development must also receive a direct and material benefit from an off-site proffer again in this case direct and material benefit is not defined but the code notes that the impact created by the new development must be in excess of the public facility capacity this language has led to a more quantitative process but it's one without parameters on what truly qualifies the legislation also put proffers into four categories of public facilities transportation schools public safety and parks cash contributions are also considered off-site proffers so all the same considerations and regulations apply to those uh... the amendment also clarified that it's unreasonable if there is existing capacity

in the public facility so in light of these changes the city changed how proffers are accepted in a few ways uh... one the city amended the zoning ordinance following along with those 2016 amendments now the zoning ordinance for example says that discussions regarding proffers may not be held as part of preliminary discussions on an application one-on-one meetings with applicants were discouraged the city formalized the development review process um... and the pre-application process we are trying to be very thoughtful always in how we communicate and proffers are scrutinized very closely a key distinction that we would like to highlight is that not all areas are created equal residential rezoning within the bounds of a small area plan are exempt from the 2016

regulations provided those areas meet certain requirements such as transit access and minimum density levels which the city's activity centers do this exemption provides greater latitude for negotiations between the localities and applicants and as council is aware the city's activity centers and small area plans envision residential and mixed use development in those areas so they actually fold together very nicely so that's a bit of an overview on proffers generally i will now turn to eric to step through specifically on schools okay well thank you very much the overview on proffers generally proffers can fund improvements that directly benefit a new development but there's caveats and there's a lot of caveats

there was a lot of text on those slides school proffers are another example of it we figured we'd take advantage of this joint work session talk specifically about school proffers but much of the same applies that that there are caveats there are conditions there are things that the this proffer money can fund now many localities apply proffers to education expenses and the reason is clear school costs are one of the larger development related costs that jurisdictions tend to see school proffers are fairly common in virginia but they're also a bit complex as you might expect so we figured it might make sense to just look at some of the main issues that are involved specifically with school proffers

the most important thing to keep in mind about school proffers is what the proffer money can be used for so people often point to the annual cost of educating the student whatever it is twenty thousand twenty five thousand dollars a year but proffer money from rezonings can't be applied to that can't be applied to those annual or recurring kind of costs so instead and you see the state code down here state code stipulates that any proper money for schools must be dedicated to construction or must be dedicated to renovation projects that enhance school capacity so basically saying that this this money has to be used for new facilities that would be required because of additional enrollment pressures

from that particular new development from the development that's profering this money a few slides ago mr harden mentioned the profers need to address impacts that are specifically attributable to that new development so doing so in the context of educational profers this means figuring out how those impacts can be calculated on a per housing unit basis So that way there could be some kind of a rational connection between those impacts and between what's being proffered. That's really true for any kind of cash proffer, but certainly true for education proffers. So for school proffers, what that means is coming up with an equation, coming up with a formula for per housing unit costs. And that kind of formula would have two parts.

One would look at how many students may be generated by that new development, by the development that's proffering money. The other part that you see on the right here is to take that number of students and figure out how much new space would be required to accommodate them. And once you have that space number, to figure out what the cost of providing that space would be. So we'll take a look at each of these two elements in the next two slides. Student generation. So that's what's up first here. Student generation is probably the more straightforward of these. And part of that reason is because city staff and city of Fairfax schools calculate student generation ratios every year. So we do that based on actual enrollment numbers.

So this chart down here, this is one of the main outputs from this year's presentation that was delivered to the school board on enrollment. So to boil down a whole lot of information and a whole lot of work, this blue chart here, this shows the extent of student generation that we would likely expect from new development in these kind of housing unit categories. So student generation, it's typically expressed as a ratio. So what that means, if you take a look at this chart here, it says here that the student generation ratio, let's say for townhouses, student generation ratio is 0.215. And you can look at that as thinking that each newly built townhouse could be expected to generate 0.215 of a student, a little bit easier to explain in a larger context.

So for every 100 new townhouses, the city could expect 21.5. So let's say in the low 20s as far as student generation. So these are the main housing unit types that we see. So for apartments, like it says here, for every 100 new apartment units, we would expect 11 or 12 students, again, based on the current ratios that we're – or current enrollment that we're seeing now. One of the benefits for us being a small jurisdiction is that we can examine development and examine impacts at this kind of level, which is really a gift to be able to do. So we use these analyses. We use this in staff's fiscal impact analysis for new development. And also in the case of proffers, this could also be used to estimate student generation for proffer formulas.

So right there, that's one half of the formula, one half of the equation that we would use. So that's one component. The other component, the other half of the proffer formula is calculating the cost of facility improvements that would be needed to accommodate those new students. And that means figuring out an amount of space needed for new students. So that would likely be a square footage per student. And once that's figured out, to calculate the cost of actually constructing that space. So there's a number of ways to go about doing this. None of it is fairly straightforward, but we are fortunate here because Fairfax County Public Schools uses a proffer formula. That proffer formula is updated periodically.

We won't go into the details of that methodology. It is available online. It's public information. But basically, FCPS takes the square footage and takes the construction costs per square foot for all three levels of schools. So for an elementary school, for middle school, for a high school, factors in an average number of students per school, and factors in a level of service adjustment that accounts for the physical lifespan of the facilities. And doing all of that arrives at a recommended proffer contribution. So like it says down here in the red text, the FCPS current recommended proffer contribution is $14,956 per expected student. So that's not per housing unit. That's per expected student.

This is the number, if you take a deep dive into Fairfax County rezonings, this is the number that is most frequently used as a proffer contribution from developers. And this is where it comes from. It comes from this formula. So this is significant for us in the city of Fairfax because our city schools and FCPS, they use shared instructional resources. The schools are built to the same standards. We're in the same region as far as construction costs. And really, if the city of Fairfax were to develop a proffer methodology, it would be reasonable to use the FCPS recommended proffer per student as a contribution and to merge that with our own student generation estimates or those yield ratios that we looked at before.

So there obviously would be a lot more discussion on this if the city were to elect to pursue this, were to want to go down this path further. This is just one thought for how to approach the question of figuring out reasonable contribution amounts. But it is a likely scenario to keep in mind. So taking this one step further, just to put this whole concept into a bit of context, I think it would help to look at some sample developments. This chart here shows three sample developments. These are the types of developments that we tend to see here in Fairfax City. So using a scenario where our student generation ratios, again, are merged with that FCPS per student methodology, we can kind of come up with an idea of how much of a contribution we might see for an averaged kind of project.

So let's say we have a 400-unit multifamily complex. So we would likely expect maybe 32 or so students from that kind of complex. Given that $14,900 or so per student proper condition, we would be looking, again, at a 400-unit multifamily complex. We'd be looking at a recommended contribution of $478,000. Now, to borrow a phrase from Kyle from Davenport, who just went before, this is not surgically precise. I mean, this is just a ballpark estimate just to give some kind of an idea because it's tough stuff to figure out. Same thing with the rest of these. We have a 50-unit townhouse development down here in the middle row. So this is something equivalent to, let's say, Sutton Heights, which is 50 units.

You could see this kind of thing on three to four acres of development. We would be looking at about 11 expected students from that kind of development. And under this scenario, could see a recommended proffer contribution of about $164,000 from that kind of townhouse development. Again, just a ballpark estimate just to give some kind of framework about what we would be looking at under this scenario. So the last few slides, and certainly Mr. Harden's talk, showed that there is a lot to consider here, a lot to consider for the city council, a lot to consider for school board in the case of school proffers. And really, the most important thing to consider, and especially with school proffers, is just getting the idea that school proffers, it doesn't mean that a locality or a school system gets free money.

There's conditions attached. And again, should the council, should the school board elect to explore this topic of school proffers, those conditions would lead to these items to consider. The main one being right here at the top is whether school proffers would be beneficial to the city and to our schools. And like I said, I mean, this isn't just free money, so this is not a simple question to answer. As a subset to that question, we've got the second one here, whether proffers appear to be a reasonable approach to offset some of these development-related costs that we incur from new development, from new residential development. So again, just keep in mind that the proffers don't apply to annual costs, but they're limited to capacity-specific enhancements that result from new development pressures.

This third point here is very important, considering that we have a relatively small school system with four schools, and that's whether the city schools would have enough capacity-enhancing projects to justify school proffers. The items that were discussed as far as the bond referendum are maintenance-type of projects, mostly. And so maintenance kind of projects, a new roof and whatnot, could not be considered a capacity-enhancing project. So this really is a big question, because if there's a chance that we may not have capacity-enhancing projects over a 12-year period, then the money collected from proffers just could not be used. So it is most certainly an important question. And then finally, down here at the bottom, if the answers to all of these three questions, I guess, end up being affirmative, the city would need to decide, well, one of the last points that Mr. Harden talked about, whether to accept school proffers from all residential rezonings or to limit it to activity centers.

He had mentioned that not all areas are considered equal, and in proffer legislation, that's absolutely true. There's fewer state requirements in some developments than others. So a lot to think about. We obviously won't answer all of these questions tonight, but these are the big issues that we would need to consider if we explore the idea of school proffers, if we explore this idea further. So on the topic of exploring the idea of proffers in general, so not just limited to school proffers, on the topic of exploring it a little bit further, this is a good time to briefly mention a study that's now getting underway in the city. The city has engaged a firm that specializes in fiscal and economic analysis, and they will be examining level of service standards, so level of service not just for schools, but citywide.

And what that means, what the project looks to do, looks to examine and quantify standards for city services, so standards for parks, transportation, public safety, and so on. And the reason for doing that is to figure out potential impacts to city services that might be resulting from new development. And that, in turn, would enable the city to create standards for potential recommended proffers, so in order to potentially offset those impacts. So this is not limited to schools. Again, it's citywide. This is just getting started. This is just getting started. We'll keep council informed about this project as we move along. Just wanted to mention it now because it is something that could be relevant to the proffer discussion.

So what could potentially be next here? You know, basically what's next is to consider whether establishing proffer policies would be beneficial to the city. There's obviously a lot to that conversation, so this would likely fall into two parts. One part would be working with city schools to potentially develop a proffer policy for school facilities. And then for other aspects of city government, so that would really be for using, to use the results of that level of service study to work with our city departments to create those same kind of proffer policies for things, again, like transportation for public safety for parks and so on. So if it's possible to give an overview of proffers in 25 minutes or whatever that was, that's it.

That's proffers in general, some school-specific information. So we'd be glad to answer any questions that you all might have now. Thank you for the presentation. Do we have questions for Mr. Foreman and Mr. Harden? Council Member McGuill. I know it's early in the process, but do we have any staff recommendations for proceeding with the process or any concerns from staff regarding the discussion of this topic? No, we don't. We're, you know, a topic that we've certainly been happy to speak to. Regarding school proffers specifically, if the council desired to move that forward in advance of the study that Mr. Foreman mentioned, staff would likely follow that Fairfax County methodology. That, as was noted, that would likely make the most sense for us.

If at the end of that study period there was additional information or things that would inform that in a way that might suggest modification, that's something that we would bring back to the council at that point to talk about potential changes. But we could pursue, you know, either option. Other questions? Council Member Hall. Thank you very much. This is always an interesting conversation, I think, and I learn a little bit more each time we have it. When is the last time that that $14,956 amount was updated within the county? Do you know? 2022. 2022. So they do not update it annually. I'm not positive if they're on a fixed process, a fixed calendar. It tends to be, from what I recall, every six years, five years or so.

Five or six years. Okay. Unfortunately, data from 2022 seems outdated at this point, knowing how much costs have gone up. But I understand they can't do it every year. I am happy that we, you, go through this level of detail every year. But for the school board, for city council, I think it's really important and really helpful. If we were to consider a cost per student model, I recognize that we have the ratios that we use to determine what we think are going to be our student yields. Is there a true up amount or a date and time at which the actual number of students that live in a townhouse community are counted to go back and say to the developer, hey, we thought it was going to be 22, but it's really 42.

Is there any sort of window for that? Can't be renegotiated after the fact. So once the, and that's the reason for these estimates is it has to be an amount that's proffered at the time of rezoning, and then it is what it is if the student generation is more or if the student generation is less, that's what it is. Yeah, and that's what I figured your answer was going to be. I just wanted to ask the question. I'm also wondering if proffers were collected during like a bond referendum debt window, could any of those dollars be used towards the debt repayment, since specifically with the elementary schools we would be adding on two additional classrooms at each location? That would be a question for the school board and school superintendent to get into the details of what those renovations are

and whether they would align with state code. So I don't feel comfortable saying yes or no with that. And I should add the city attorney and the school attorney as well, and they would all have to weigh in on that one. Okay, but in theory, if we are adding capacity in the form of four different classrooms at two different schools, I think that's on its own. The answer would then be yes, we are adding capacity. I think my question is knowing that we're doing that and that let's say this was implemented next year, which I realize is not going to happen, but we know that we're going to be renovating the schools. Could those funds then be collected and proffered in the interim, knowing that we're doing that capacity within the next 12 years?

Yes. All other things aside, as long as the construction begins within 12 years, the monies can be applied. Proffer money can be applied to any capital project that it's designated for, yes. Okay. Then I think my kind of takeaway on here is that with all of the redevelopment that's being considered, this is not an unreasonable conversation to have. But I do think that it's slightly twofold in that, yes, we might need to renovate the middle school and the high school in years to come. Will we need to add capacity? We don't know the answer to that yet. So I think having a two different proffered approach where one you could do the school approach, one you could consider other, if that's a possibility, I think that would be a good way to proceed.

Thanks. Thank you. Other comments? Council Member Peterson and then Council Member Bates. Just one quick clarification. I also caught the cost of student number here just under 15, and I think the FY26 budgets in both the city and the county have that just a little bit above and a little bit below 20,000. What's the difference in those two numbers? Is it just timing that the 15,000 is from 2022 and hasn't been updated? Is that what's going on, or is there something else? Well, that and that 14,956 number relates as much to construction costs as it does anything else. So the number that we tend to see in the budget is more for a tuition type of per student charge. This is a completely different formula, and it's based on square footage per student,

and it's based on construction costs. So it's actually surprising that it's as close to 20,000 as it is, but it's measuring something completely different. Okay. That's helpful. And then any idea what percent historically and currently of new development has had school proffers? Could you repeat that question? When units are built, do they always have a school proffer or no? Or generally, what do we expect in terms of how many of them will have a school proffer? School proffers have, to this point, have only been volunteered. Right. By certain developments, seeing as the city hasn't had a policy previously. And moreover, the city, you know, as was discussed earlier this evening, you know, in 20-plus years now has not had any capacity expanding projects in the school system.

Okay. It's helpful, but I'm curious if we have any sort of a baseline understanding of present circumstance and how that might change with policy in the future, do we have any sense of what impact a new policy might have on the prevalence of proffers? If the city adopts a policy, so similar, for example, to Fairfax County, then we would see these kind of proffers in, I don't want to say all rezonings, because that really would be up to council, but in most of the more numerous rezonings on a housing unit basis. Just to add a little more context, over the last 20-ish years that I've been here working on land use applications, it's really dependent on who is the school board chair at that point in time,

what the current fall enrollment looks like in terms of capacity, particularly what the county's enrollment is, the number of county students that are in our schools at any given time, because we may have capacity if the student enrollment from the county is not up on any given year. When I say it's up to each school board superintendent, those discussions take place within the context of each application. Some have had a very conservative approach and have not asked for contributions because there are no earmarked CIP projects for capacity expansions. Others have noted that we will likely, within 12 years, be expanding capacity and have asked for a contribution. But it's not clear to certainly staff or to the development community

what that expectation is because nothing has been formulated. Okay. So it sounds like it's a little bit unclear, prospectively, what the impact of a new policy would have, but it would certainly shift things. We just don't know whether that's a dramatic shift or a marginal shift. Is that fair? Okay. Thank you. Council Member Bates. Can you go back to slide 10 for a sec? I just want to point out the first couple there. City staff calculate student generation ratios annually and reviewed by the school board each year. And you mentioned that these are the same numbers that are considered as part of the fiscal analyses. Is that correct? Correct. Would you mind elaborating a bit on the process in relation to the involvement

of city staff and school board in terms of arriving at those numbers? Sure. We work cooperatively with our city schools and with Fairfax County public schools to get enrollment figures every year. So every year we can take a look at our development. So let's take a look at our development. So let's take a look at, for example, at Scout in the Circle. So we can see how many students are enrolled at that one development every year. We can do that for all of the developments in the city. And that helps build the list of comparables to figure out potential student generation from new development. For new development, we look at relatively new comparables. looking at new townhouses, for example. We would look at newly built townhouse developments as a comparable instead of looking at, for example,

of Comstock or the assembly, because we think that those present much differently as far as the student generation than newer development. Yeah, thank you. And I just want to add that, um, it seems to me that this is another way to make sure that, uh, developers are covering their fair share in terms of, uh, contributions infrastructure. And so I certainly want to make sure that we're, uh, considering every possible route to ensuring that developers are working with the community to make sure that they are, um, supporting the residents that they're going to be moving into the city. Thank you. Councilmember Hardy Chandler. Thank you for this information. It really highlights the complexity of, um, these decisions.

I'm curious about the level of service standards because I really appreciate data-driven, uh, decisions. It says it will be conducted in 25, 26. Do we have a sense of when we would have the results of the project? Right now the consultant is looking for late spring to complete it. Uh, I'd, I'd say late spring, early summer. Uh, you know, I, I think this might be mayor, mayor June, uh, for completion. For completion of the project with the results and recommendations at the time. Correct. Okay. Thank you. Councilmember Amos. Uh, I, I echo what council member Bates said. My question would be, and this isn't a tonight question, but I would be curious on the effects that this could potentially have on development or growth rates.

So if there's a comparison between jurisdictions that have implemented this policy versus those that haven't to see if there were, if this is something that could potentially be a cause and effect issue. Uh, when, when you talk about the development, uh, or, or the effect on growth rates, you're talking about proffers in general. So not just school proffers, but, but overall proffer policies and recommendations. Uh, that and just for example, like, does it affect the number of proposals? Do you see less developers willing to engage with a community that has this in place versus those that don't? I'd be curious on what those numbers look like. That, that's a great question for the consultants who work on this because they work on it nationally.

So I, I will pass that question on, onto them so they can address it. Councilmember McQuillen. Councilmember McQuillen. So what happens in the event that we don't build anything in those 12 years? We have the plans to do it, but something happens. What happens with the funds or what happens? It, it's scary stuff. The money has to be given back. That's it? Yeah. No. It, it goes to the state. It goes to the state. Okay. Yes. But yes, we, the locality cannot hang on to that in perpetuity. But there's no penalties. There's no additional fees if we were to. Okay. That's what I, thank you. Right. So I just want to echo what has already been said here. I mean, the proffers are very narrow as far as building capacity and data makes all the

difference because we make assumptions here or our assumption here is that if you build new housing and new developments that there will be children there. Well, once upon a time in the city of Fairfax, there were five elementary schools. Now there are two elementary schools. So the birth rate has been dropping in this country for over a decade. And a lot of our school age children are now being sent on airplanes every day deported from this country with their families, which also has an unintended consequence on school enrollment. And you think going into the future, what our enrollment will actually look like if the birth rate is down and school age children are leaving the country in large numbers.

So my only thing about looking at the data is that we do need to consider that just simply building housing is not necessarily going to produce the projected number of students. I'm for proffers, but they're so narrowly to capacity that if we don't use it, and this is Councilmember McQuillan's question, if we ask for proffers, and it turns out we don't need to add more capacity to these schools because the enrollment is not what we thought it was going to be. It didn't go up. It went down. Then we're just in a situation, again, we give the money to the state, but I just think we shouldn't make assumptions that building housing produces school children because I think there's factors at play.

And measuring the data in the next two years will tell us whether or not our projections about school enrollment are on track or they're off track. So I mean, I support having a policy. I do. In case we need to build capacity. But I do think the data is going to tell the story about how many students we can reasonably project regardless of new housing in the city. Other questions or comments? Oh, yeah. Councilmember Hall. Mr. Foreman, the ratios that you do that you provide every year over the past five or ten years, have they consistently gone up, down, all over the place as far as what actual student yields are? For new development, they've gone slightly up. So new development being multifamily and being townhouses, which are the bulk of new development

that we've seen. For existing development, so for established types of housing units, established single family housing developments and whatnot, those numbers have gone down. Are they offsetting each other in...? By and large. Okay. You know, it's tough to say because the 2020 enrollment drop, we still haven't recovered from that. We have about 3,000 students in the school system now. I think in... and this is students from Fairfax City. I think in 2019 we had 3,100 or so. Okay. Thank you. So it has balanced out. So we had that enrollment dip after 2020 that messes up projections quite a bit. Right. The students that live, let's say, in a new townhouse community, if they don't go to our city public schools, we're not considering them in our ratios.

Is that correct? No, we are for... Because the ratios are really based on fiscal considerations. But I guess what I'm asking is if you're getting data from Fairfax County and from the city with the enrollment, are you also calling the private schools in the area to know how many city kids are going to their schools? No, we do not know private school enrollment. I wish we did. We do not. So that number of 33,000 or so students, those are city resident students. That's counted whether or not they attend city schools. So about 7% do not attend city schools. We also have an inflow of students from elsewhere in Fairfax County. Yeah. Okay. No, I mean, it's a good point. I mean, we don't know what we don't know.

Right. And we don't know where we're going to be in five years or 10 years as far as students or housing or anything goes. Right. So thank you. I was just curious about the trend. Yep. All right. Thank you both very much. This has been informative. Again, a very productive conversation on the dais. We are now going to go into a closed meeting to discuss personnel matters. And the closed meeting will move to room 339, the city manager's conference room. Thank you. Thank you. Thank you.