Post #G26: Back in the Town of Vienna, our water/sewer rate versus Fairfax County

This post only really matters if you use a lot of water outdoors during the summer.  Hence, it falls under gardening on this website.

People are often surprised to find out just how much water it takes to water a garden, or that running a lawn sprinkler for an hour typically consumes 1000 gallons.

And so, there’s sometimes some hubbub when the summer-quarter water bills come out, here in the Town of Vienna.  Particularly now, as Vienna is half-way through a planned five-year, 50% increase in the water/sewer rates.  People see an unusually high bill and attribute that to the rate increase.  When that may not be the whole story. Continue reading Post #G26: Back in the Town of Vienna, our water/sewer rate versus Fairfax County

Post #G25: Meanwhile, in the Town of Vienna, the latest water/sewer rates are being felt

This is another of my contractual obligation postings, relating to government of the Town of Vienna.

Recall back in Post #448, where I described the Town’s five-year plan to raise the water and sewer rates by about 50%.  The Town didn’t really go out of its way to advertise that, or to advertise that it planned to raise those rates every year for five years running. Continue reading Post #G25: Meanwhile, in the Town of Vienna, the latest water/sewer rates are being felt

Post #751: Shooting range?

I’ve been staying away from posting about the Town of Vienna.  But I just had a conversation with my next-door neighbor about the new Town of Vienna Police Station.  It left me shaking my head, saying, oh, that can’t be right.

Or can it?

I already knew that the new police station was going to be the biggest building they could squeeze onto the lot.  That’s the hallmark of the prior administration.  I knew the Mayor-elect would vehemently defend the proposed police station, because that’s what she was elected to do — defend the decisions of the Powers that Be in Vienna.

But I did not realize that part of the new police station — built like a fortress, as post-911 standards require — and three times the size of the current police station  — has a shooting range.  (Three times the size of what it replaces, with no more residents or police here than when the old police station was built.)

As if, what, they can’t use the Fairfax County range?  As if Town of Vienna police are that likely to have to draw a weapon in Town?  As if their duplicative “meeting space” area didn’t waste enough space?  (This building sits maybe 200 yards from the Community Center, yet has its own meeting rooms presumably for holding meetings with citizens.  That, somehow, the oversized Community Center cannot accommodate?)

I get the fact that if you want to build the biggest possible fill-in-the-blank, you have to use up the space.  I just didn’t realize that one of the reasons was having a handy area for honing gun skills.

To be clear, I’m not against having the cops being trained in the use of firearms.  That’s part of the real world.  I’m not that keen on un-trained people carrying weapons.  I’m a gun owner.  And a health economist.  I’m not strictly anti-gun, though my wife is.  I think that, as a public health measure, easy access to guns is a bad idea.  But that has nothing to do with police training.

It’s just odd to see a major piece of capital infrastructure dedicated to that task.  In a building that is vastly larger and far more imposing that what it replaces.  Given that the sum total of my interaction with Town police has been being pulled over for having a marker light out on my car.

There has been a petition circulated to defer the spending on this obese police station.  I didn’t think it would get any traction with Town government, because … well, that’s the way Vienna works.  A thousand people signed up against the 440 Maple West development, and the in-crowd just shrugged that off.  But maybe I need to rethink that, given this new rumor of Vienna’s own shooting range.

There are maybe a couple of things to say about a petition to divert the spending on this building to other community-oriented purposes.

First, you can’t legally divert money from the capital budget to the operating budget in a Virginia town.  So, the fact that the prior administration “maxed out their credit card” on this police station is just, well, tough shit, from the standpoint of funding operating costs of the Town going forward.  The capital account (borrowed money) can’t be used for that.  Because, among other things, you can’t deficit-spend as a Virginia Town.

So even if you think that putting a dedicated gun range ahead of other needs is misguided, if that money is re purposed, it can only be spent on capital projects. You can’t legally use it to fund (e.g.) social services.

You might say that either our economic priorities are amiss, or our social priorities are amiss, or both.  Or maybe the Powers that Be are planning for the complete breakdown of social order.  Here in Vienna.  In which case, I’d wish they’d let me in on that, so I could get prepared.

As with so much of Town of Vienna government decisions, I can’t make head or tails out of it.  But, ditto, whatever They have Decided, It Cannot Be Questioned.  Which is how I take our new Mayor’s response to having been questioned about this expense.

Second, the ship sailed years ago on this police station project.  Two years ago, and then some.  And, believe it or not, the proposed building is only modestly above industry norms of space per occupant and cost per square foot.  You can read my analysis of that in this post, dated 9/4/2018, dating back to the time when this project was still being billed as a police station renovation.

All-in-all, Vienna has modestly more officers per capita, square foot per officer, and cost per square foot than what I estimated to be the average within the industry.  Particularly the square foot per officer part.  This building looks big, and objectively, it is big.  And when you multiply those three together, you get what you get.

If you want to have a clue to the high cost, just look at the specs.  From that posting:

And if you read further, you will see that the architects are not exactly planning for a friendly small-town police department.  The specs include blast film for the windows, concrete bollards to prevent ramming the building, steeply sloped window sills to prevent bomb placement, and special construction to withstand earthquakes.  This isn’t Andy of Mayberry.

The bottom line is that this building is in large part a reflection of the post-911 paranoid world.  It’s built to withstand terrorist attack.  It’s occupants receive regular training in the use of deadly force.  It truth, it would not surprise me if they had plans in place in case of a breakdown in social order  (e.g., riots), even here in bouzhie Vienna.  Because that’s modern thinking.  Earthquakes included.

And all of that predates the pandemic, and predates Black Lives Matter.  Community policing went out the window on 9/11/2001.  Pretty much, if you want Federal funds, you have to build a fortress designed to protect its occupants from you.  And those occupants have to be trained to deal with terrorism.  Because, as always, we’re fighting the last war.  You can put a nice face on it, and pretend otherwise, and include a “community meeting room” and such.  But a fortress is a fortress.

It’s not what you’d have in an ideal world.  But it’s what we’re stuck with.  For the next 50 years, here in the Town of Vienna.

With any luck, future generations will look back on this as being the high-water mark of the us-versus-the-rioters police architecture mentality.  The embodiment of the 9-1-1 non-war that we’ve been fighting for the past 20 years.  This building is of-a-piece with routinely being subjected to whole-body X-rays if you want to fly anywhere.  Of-a-piece with a government that can legally “disappear” you at will, as part of the PATRIOT act.  (Read it if you don’t believe me).  It is of an era where nobody would even question that every sleepy little high-income suburban town would of course have its own police gun range.

So I applaud the people questioning this building.  And, ultimately, questioning what I see as the post 9-1-1 mentality.  I don’t think they’ll make a dent in Town of Vienna government.  But I applaud them nevertheless.

And if we’re not lucky, and the Town actually needs its own little fortress?  If, down the road, people actually applaud the decision to build a police station that could withstand an assault?  Well, I just don’t want to go there.  I have more important things to worry about, in the here and now, to worry about what this building bodes for the future.

Post #547: The flip side of your declining 401K

The actual 2020 figure is nominally $34.5M.  But it’s not quite as simple as that.

This is just a quick post to calculate what interest rate the Town paid on its (nominally) $34.5M bond issue sold yesterday.  The results of that bond sale are reported on the Town’s website at this link.

The Town agreed to issue bonds with a $34.5M face value, a 1.86% nominal interest rate, and a $3.1M premium.  That last bit — the premium — is the confounding factor.  That extra money is the reason that the true interest rate isn’t 1.86%.  And neither the Town nor any other social-media-type discussion that I have seen has managed to explain it correctly.

So let me explain exactly what that is. (And, separately, in a different post, I’m going to try to track the premium dollars from prior bond issues, because they effectively are not reported with the Town’s capital accounts.  I tried but failed to do that last year, with the 2018 premium.  Those dollars have to be reported somewhere, I just have to find them.) Continue reading Post #547: The flip side of your declining 401K

#532: Last night’s 2/24/2020 Town Council meeting – CORRECTED

Correction:  I looked at the wrong block(s) of Plum Street.  The one block in question does not, in fact, have a sidewalk now.

The Town has already posted its video recording of last night’s meeting.  You should access that by clicking the relevant “media” link on this page of the Town’s Granicus website.

To cut to the chase:  There was not a peep about the (now) $10M parking garage — see just-prior post.  Or about the $1M increase in cost for a proposed Church Street garage, for that matter.  Not a peep about the revised Capital Plan for $35M in borrowings this year.  Again, see just-prior post.  Those two items took maybe ten minutes in total.  But there was more than an hour discussion of sidewalks, leading to a decision to authorize three stretches of sidewalk (on Plum, Cabin, and Holmes) using funds from the Robinson estate.

Those sidewalks were chosen by … the Trustee of the Maude Robinson estate.  At least a couple of Town Council members understood how irrational that decision process was (Majdi, Noble), though I did not see any progress in arriving at something more rational.  One, by contrast (Colbert), applauded the process as democracy in action, or something. Continue reading #532: Last night’s 2/24/2020 Town Council meeting – CORRECTED

#531: The $9M Patrick Henry parking garage?

When did this become a $9M project?  Beats me.  Last I recall, the only number mentioned was something like $4.7M.  Pretty sure that lower number was what was in the discussion of the capital budget.

I guess I haven’t been paying attention, because that’s the first I’ve seen of that $9M number.  But there it is, in black and white, in the documentation for that portion of tonight’s Town Council meeting, which you may access on this Town of Vienna web page.

Wait, doesn’t $9M for 188 spaces work out to be near $50K per parking place?  Didn’t (at least some) Town Council members balk at paying far less than that, for a parking garage on Mill Street?  Again, I must not have been paying close attention, because that’s sure how I recall it.  Isn’t that vastly more per space than the Town is going to pay at a proposed Church Street garage?  What the heck?

How many parking places does the Town need at this location?  You’d figure, you’d get a clear idea of that first, then proceed, right?  Nope.  Not clear that anybody has any estimate of that, but … but the Town will eventually do some sort of study, at some point, to guess at that.  It’s on the calendar for some time a couple of years from now.

How much time does the Town have to think this over?  One month.  According to Town staff, the agreement has to be signed no later than next month’s Town Council meeting.

Does this have anything to do with a modified Capital Improvement Plan (CIP), for the Town Council to re-approve at this meeting?  See materials on this Town of Vienna website page. Maybe, I haven’t quite had the time to look at it, except to see that, when the Town couldn’t fit the $35M borrowing into its current economic model, it … changed the economic model so that the $35M in proposed 2020 borrowing now fits.

Is the 2020 bond issue still, by far, the largest amount the Town has ever borrowed?  Yep.

Do we still burn through all the reserves in the bond fund, down to the agreed-upon $2M minimum safe level?  Yep, somehow, with the new economic assumptions, the reserves fall to exactly $2M with $35M in borrowings, which is exactly the minimum acceptable level.  (This is from materials for Tonight’s Town Council meeting).

Does that new projection include additional 2022 and later borrowings to cover the increased cost of the parking garage?  Not clear, because not shown.  Last time around, the figured the cost of the garage in as about $4.7M, but free to the Town (paid for by some other entity).  So it’s not clear that an additional $9M in liabilities has been worked into the future borrowing scenario.  Here’s how the Town’s projected borrowings stood as of the last (what I though was the final approved) version of the CIP.  (This is calculated from the prior CIP, not the new CIP to be approved at tonight’s Town Council meeting.)

Today, gold hit $1673 per troy ounce (per Kitco).  Does anybody remember or care what happened to meals tax revenues for 2009, during the last recession?  Nope.  Likely I’m the only person in Town who cares about that.  But just FYI, here’s the historical on that one:

Does it bother anyone but me that the Town is projecting no trouble paying for all this, based on nothing but ultra-strong revenue growth for immediate, mid-term, and far future?  Apparently not.

How long does the Town Council get to think about this new proposed CIP?  Per the presentation, no time at all — they have to approve it tonight.

Post #522: The 2/3/2020 Town Council meeting

The Vienna Town Council met last night to consider a few items of business.  You can find the agenda and meeting materials on this web page.

Land at 440 Beulah and 114 Locust converted to government use.  The main item on the agenda was to get the ball rolling on legally allowing a couple of parcels of land in Vienna to be used as part of the new police station project.  The properties in question are the area directly adjacent to the existing police station (114 Locust) , and a house out on Beulah Road (440 Beulah), adjacent to the “Beulah Road Mulch Yard”.  The Town bought that Beulah Road house back 2018, but refused at that time to say why it had bought it.

Unsurprisingly, that proposal passed unanimously.  That was pretty much a given, as they’ll have to rezone at least the house next to the police station in order to build the new one there.

As I understand it, this was just the first step – amending the Town’s comprehensive plan to allow this.  I have the vague impression that they’ll have to come back and redo this, for the rezoning proper, in order to satisfy all the legal requirements.

Town account balances.  A second item of business was one that I think I haven’t seen before, which was a report on the Town’s financial assets — its investment balances.  Given the property values and incomes in Vienna, it should come as no surprise that the Town is in good financial health and has tens of millions (30-ish million?) of dollars invested in various interest-bearing accounts.

I still have not quite puzzled out why I haven’t seen this before, and why I’m seeing it now.  Either I wasn’t paying attention when I researched the budget last year, or this is a new report.  I can recall looking for and being unable to find information on account balances, but simple incompetence on my part could easily explain that.

Councilman Noble will not run for re-election.  The only surprise in the meeting was that Councilman Noble will not run for re-election, citing (I believe) the need to care for a relative.  I think everyone of a certain age can empathize with that.  And those not yet of that age can be glad they haven’t had to deal with it yet.

To me, the right context for this is the controversial vote to approve 444 Maple West, against considerable citizen opposition.  The vote was 5-2.

Of the five voting in favor:

  • Three have chosen not to run for re-election.
  • One was defeated in the last election.
  • One is running for mayor.

Of the two voting against:

  • Both are running for mayor.

In hindsight, that vote, plus the simple passage of time and the occurrence of life events, appears to have been as much of a watershed moment as you are likely to see in the politics of a small town.  But only in hindsight.

As an aside:  I assume the Town will have its recording of this up soon, so I do not plan to post my own recording of the meeting.  I also have to admit that I didn’t much pay attention during the discussion of the police station item, and maybe I’ll replay the tape and see if there’s anything else worth reporting about that.


Post #515: Fraud (noun): Intentional use of deceit for financial gain.

The last item on tonight’s (1/27/2020) agenda ticks all the boxes for me.  This is the item whereby the Town Council asks yet a different taxpayer-funded organization to pay for the new commuter garage in Vienna.

Wait, you didn’t know there was going to be a commuter garage in Vienna?  That’s no surprise, because there isn’t going to be one.

I mean, why on earth would anyone drive through this …

… in order to get to the middle of Vienna, park in the new commuter parking garage, then take the (once-per-half-hour) bus back down Maple Avenue, in order to get back to the Vienna Metro?

Nobody’s going to do that.  But our Town government is happy to lie about that, if that fraud means somebody else will pay for the proposed shopper/diner parking garage at the Patrick Henry Library.

On top of committing fraud against the taxpayer by lying about commuter use of this garage, this item has several other features worth noting.  All of which I’ve touched on before.  It’s more-or-less a microcosm of … well, pretty much how I view Town government.

  • Keep Town Council/Public in the dark.  There’s no copy of the staff presentation in the Town Council meeting materials.  This is now standard operating procedure by the Department of Planning and Zoning, and serves to keep both Town Council and (particularly) the public in the dark as long as possible.  Consistent with SOP, if anyone on own Council dares to slap their wrist over this (yet again), DPZ will offer to send them a copy after-the fact.  And the public?  Anything sent out with the meeting packet itself has to be public information, by law.  But if they don’t send it out?  Well, you peasants can FOIA it if you want to have a copy of it.  You can see my writeup of this tactic, as the new norm, in the middle of Post #480, which discusses FOIA issues in general.
  • Ask for a rubber-stamp approval.  Heck, they didn’t even bother to provide a copy of the two items that the Town is backing with this resolution.  I.e., the story here seems to be “just say yes, you don’t need to bother your little heads about the details of what you’re endorsing”.  If that’s not the definition of rubber-stamping something, I don’t know what is.  (And note that the story about the garage continues to change, see below).
  • We’re already overspent the capital budget.  The Town is already so over-spent on its capital budget that it needs this free shopper-diner garage, or it’ll have to scramble to find the money.  So Town Council has no choice but to endorse the fraud.  (See, e.g., Post #504, Post #488, Post #485.)
  • The story keeps changing.  The number of “commuter” parking places in this proposal is less than the number in the prior funding proposal the Town Council approved for the NVTA.  (Versus this new funding proposal, to the NVTC — see last item).  Arguably, that’s because the last proposal, for money from a different local government agency, was totally absurd.  So our story about these fictional commuter parking places continues to morph, even as we apply to additional entities to pay for them.  (See, e.g., Post #447, Post #446).
  • The only option on the table is just plain ugly, but nobody will object.  The only viable parking garage plans result in a new library that squats under a parking garage.  See illustration, and see, e.g., Post #367, Post #369, Post #371, Post #372.
  • Ready-fire-aim.  The Town will, eventually, get some consultant in to tell it how many parking places it actually needs.  But only after it has already funded both a Church Street “commuter” garage and this Patrick Henry “commuter” garage.  Call me cynical, but I bet the consultant ends up telling the Town that it somehow, though sheer guesswork, funded exactly the right number of spaces, whatever that number turns out to be.  (See, e.g., this post or Post #481 for discussion of other ready-fire-aim studies, or Post #510 for the parking study, or this post from a year ago about the economic development plan that will justify MAC zoning after-the-fact.  The point is, ready-fire-aim is the Town’s normal mode of operation in this arena.)
  • Ludicrous cost. The current lie (to NVTC, as opposed to the previous lie, to NTVA) is now stated as a request for $5.5M to buy 84 “commuter” parking places, or $65,000 per putative commuter parking place.  That’s exceptionally expensive, and doesn’t even factor in a reasonable utilization rate (i.e., doesn’t even account for the fact that commuters aren’t going to park there).  See e.g. Post #447 for how the “commuter” garage cost-benefit analysis ought to be done.
  • We have two local government agencies handing out cash?  Where do I stand in line?  Yes, the first application was to the NVTA.  That’s the organization we suckered into paying for half the Mill Street Garage 59% of the Church Street Garage, or whatever-the-heck portion of whatever-the-heck actually gets built, if anything.  (See Post #491 for explanation.)  I mean, it’s the taxpayers’ money, so it’s not like anybody needs to care about it, or anything.  So, whatever. Noted above, we’ve already put in an application to NVTA, promising that all the parking places in this new garage will be for commuters (Post #446).  But this new application, for funding the same garage, is to NVTC, and I don’t think we’re promising every space is a commuter space.  (But how can I tell, since there’s no copy of the actual proposal posted.)  In any case, we haven’t scammed them yet.  In short:  Two different taxpayer-financed tax spigots, two different applications.  The names are so alike that staff stumbled over the acronyms at the last Town Council session on this.

Except for that last point, I’ve documented all of this before, so I don’t see the need to write this up again.  Read the prior posts if you want the details.

Post #504: Revisiting old business #1, the mystery of the additional $7,000,000 2020 loan

I don’t quite have the heart to write a post summing up where we stand on MAC zoning.  Which is how I should start the new year.

So, in the meantime, I’m revisiting a few old issues, mostly those that I find puzzling or annoying.  Today’s issue is both.  Today’s post is about the Town’s forthcoming $28M — or-is-it-$35M? –2020 bond issue.

Mostly, I’m revisiting this because, upon reflection, what the Town said about the $35M borrowing authorization simply reeks of baloney.*  They said that the last $7M of borrowings was added with no purpose in mind, and it would be used to add to the reserves in the capital fund.

* I realize baloney does not reek, but my wife made me change this from the original wording.

The sole point of this post is to point that out, as clearly as possible, that this is nonsense.  And then to take a pure guess as to what’s actually going on.  The Powers That Be in Vienna will or will not inform the peasantry of the true reason for the additional loan (i.e., the spending of the peasantry’s tax dollars), at some point, as they deign.  Or not.  All I can do is point out that what they said in that meeting about the additional $7M in borrowings isn’t plausible. Continue reading Post #504: Revisiting old business #1, the mystery of the additional $7,000,000 2020 loan

Post #485: The (up to) $35 million dollar bond issue

I did a brief description of this in Post #482.  Tonight (12/9/2019) there will be a public hearing on this proposed bond issue, as part of the Town Council meeting.  So in this post, I’m doing my homework to get up to speed on it.

The key questions are a) what are they going to spend that money on, and b) how are they going to pay it back.  The short answer to a) is, a lot of sewer and water pipes, and a police station.  The answer to b) is, I’m not sure.  So the point of this posting is to nail all that down.

To cut to the chase:  Can they really pay that back?  I think the answer is a qualified yes.  Yes, you can do a big bond issue like this, once in a long while.  If you stretch out the payments to 20 years, and spend a chunk of your existing reserves, and assume that some large capital projects will be free (meaning, paid by others, such as the Patrick Henry library garage), then yeah, it looks like the Town can borrow this much money at a time, and make the payments.  As near as I can tell.  And they appear to be doing it honestly — by using the meals tax, and spending accumulated reserves, and not by transferring money out of the increased sewer and water revenue stream.  Again, as far as I can tell.

The Town certainly can’t borrow like this on a regular basis.  So a bond funding of this size is unlikely to be repeated (and indeed, not scheduled to be repeated) in the next couple of decades or so.

The bottom line is that this proposed 2020 bond funding appears to strain but not break the Town of Vienna capital budget.  As long as they promise not to do it again for a good long time.

Separately, the Town’s total bond fundings are higher after 2020 than before.  But a good chunk of that appears to be due to higher spending on sewer and water infrastructure.  And that spending should be more than adequately covered by the increase in the Town’s water bills (Post #448).

So between the higher water bills paying for the increased investment in the sewer/water infrastructure, and the Town’s throttling back any non-water/sewer borrowing after this 2020 bond issue, it all appears to work out.

The basics of the Town bond issues.

First, you can find a copy of the Town budget at this link (.pdf).  I’m not going to go over the budget, except to say that the capital budget and the prior bond issues and such are listed at the end of the document.

Briefly:  The Town of Vienna borrows money (issues bonds) every two years, mostly to pay for large capital expenditures.  Historically, those amounts were on order of $5M to $7M, as you can see from the graph above.  So, historically, the Town would borrow that much, every couple of years, to pay for big capital expenditures.  And then pay that back over time.

An example of such an expenditure would be building the addition to the Community Center, or building the new police station.  The town also uses money from these bond sales to cover planned sanitary sewer and water pipe replacements and similar infrastructure costs.

You might ask why I didn’t include streets, curbs, sidewalks, storm drain and such, in the list above.  The answer is that that town uses some bond money to pay for those, but largely it gets state funds and other sources to pay for those.  So while the Town spends a lot of money building and rebuilding all that road and drainage infrastructure, by and large it doesn’t borrow a lot of money to do that.  Instead, most it gets the money from other sources such as state grants, and uses bond funding to only a minor extent.

Typically, the Town pays back that borrowed money (the bond), with interest, over a fifteen-year period.  The Town dedicates the revenues from the town meals tax and lodging (hotel) tax to paying back those bonds.  (The tax rate for both is currently 3%).  In addition, it transfers money out of sewer and water revenues (i.e., payments from your water bills) to cover the costs of borrowing for sewer and water projects.

FWIW, the town has a top bond rating (low risk of default), and pays reasonably low interest rates, on order of 2% to 2.5%, for the most recent issues.  (Sometimes the actual interest rate is difficult to calculate, due to a “premium” amount being offered on top of the bond amount, but that’s an extras-for-experts that I will skip for now.)

Page 358 of the FY 2019-2020 budget (reproduced below) provides a concise summary of the Town’s current obligations to repay its existing bonds.  Below, the columns are the individual bond issues and some totals, and the dollar amounts are the “debt service” amounts (i.e., payments the Town is making to pay back those bonds).

So, e.g., looking below, the schedule of the Town’s repayments for the bonds issued in 2006 started in 2007, and they will be fully-paid-off in 2021.  Similarly, the 2010 bonds will be fully paid off in 2026.  (There was no 2008 bond issue.)

The last three columns below show the total of repayments due, for all bonds, and then, where that money is coming from.  For 2019, the Town owed $3.3 million in “debt service” payments, of which $0.6M was transferred out of sewer and water revenues, and $2.7M was covered by meals tax and lodging tax.

Source:  Town of Vienna FY 19-20 budget, page 358.

N.B., Don’t make anything out of the declining payment totals toward the bottom of the chart.  Those are an artifact of methods.  You’d see those if and only if Vienna never issued another bond.  In the real world, as time moved forward toward those years, you’d see the earlier bond issues drop off the table (as the 2006 issue will in 2022), and columns of additional payments, for new issues, added to the right of the 2018 column.

So that’s a quick summary of where things stand today, prior to the proposed 2020 bond issue.

For completeness, I need to mention three other things.

How much bond debt is outstanding currently.  For this, I have to turn to the Comprehensive Annual Financial Report (2018 edition).  There (page 5) it states that the Town owed about $27M in outstanding bonds and notes.  There’s some uncertainty there, as other town documents put the current figure closer to $24M-ish?  Possibly that’ due to the year, possibly that’s due to some difference in definitions used.

Pension liabilities.  But those bonds are not the only long-term liability on the books.  From that same source, the Town has a long-term obligation in the form of future pension payments that it must make.  The current estimate of that appears to be about $16M.

Cash balances.  The only other thing to note is that, at least by eye, the Town has lots of cash reserves.  Again, from that same source, assuming I’m reading it correctly, the Town has about $28M in cash reserves.

I’ll go out on a limb here, but if we ignore pension debt, and ignore non-liquid assets like land and buildings, I think the Town is in roughly a break-even position right now.  It has about $27M of outstanding debt, and it holds about $28M in cash reserves.

The 2020 bond issue and capital improvement plan.

The Town Council passed the final 2020-2036 capital improvement plan at the 10/21/2019 Town Council meeting.  A link to the relevant materials is given here.

What will they spend it on?  The Town’s capital spending plan lists about $28M worth of capital spending that requires bond funding (borrowing) in 2020.  That list was posted with the 12/9/2019 Town Council meeting materials, and can be found at this link (.pdf).  Let me paste in a copy that in below, but briefly:

  • $15M for a new police station
  • $8M for sewer and water projects (of which $2.5M is a transfer to Fairfax County that the Town of Vienna is obligated to make).
  • $1.6M to buy into a Church Street parking garage (with the assumption that the Northern Virginia Transportation Authority will pay for the bulk of costs on that project.)
  • $1M or so in paving and other street projects.

Those items account for more than $25M, and the remainder of the proposed $28M is a collection of miscellaneous items.

project listing 2020

So answer the question about how the Town will spend the money is straightfoward:  Police building, water and sewer projects, part of a parking garage, and some road work.  And then a collection of small items.

Some of those expenses are going to take place over several years.  So it’s not like they’re going to spend the $28M in 2020.  They’re going to borrow it in 2020, and spend it over the next few years doing those tasks.

In addition, Town staff would like to borrow roughly another $7 million to cover contingencies.  Or, at least, that was true the last time I looked up the information on this issue.  For example, if the Town of Vienna has the opportunity to buy a piece of land, it would like to have the funds available.

If you want more detail on those individual tasks, I think you can find that in Town discussions of its Capital Improvement Plan.    A link to the relevant materials is given here.  For example, from that, you can see that the sewer and water expenditures consist of 30 to 40 small, separate projects.  A water line here, a sewer line there.  Nothing big.  Looks very much like business as usual.

How will they pay it back?  Here’s where it gets a little interesting, because off the crack of the bat, the Town looks like they are pushing the envelope a bit. 

First, assuming I have this right, they are planning to stretch out those easy monthly payments.  For every other bond issue, the Town had a 15-year payback period.  But for this one, it’s a 20-year payback period.  Presumably they wouldn’t have done that if they hadn’t needed to, in order to get the payments to match available revenues.

Second, they have assumed that a couple of large projects are free or mostly free.  They assume that the Northern Virginia Transportation Authority will pay for our shopping/dining parking at the Patrick Henry garage.  And they assume NVTA will pay for two-thirds of our shopping/dining parking garage on Church Street.  NVTA has no business paying for either of those, but plausibly they will be sloppy enough to pay for them anyway (Post #447).

Anyway, either those projects are wired, and somehow the Town knows it will get the money, or the Town is taking a significant risk there.  Plausibly, that’s why Town staff would like to borrow an additional $7 for reserves, but I have no way to know that.

Third, the Town plans to use short-term bond anticipation note of $4.8 million to tide it over until the actual bond sale planned for September 2020.  So there’s short-term stopgap funding of about $5M built into this.  I don’t know enough about typical practices in the Town of Vienna to know how often they do that, but I have the feeling this isn’t normal practice.  Looking in more detail, tbe bulk of that is for a $2.5M payment to Fairfax County, presumably our share of payment for capital costs of the entire sewer and water system.

Fourth, assuming I’m reading the charts right, the Town plans to eat through about $5M in existing reserves, in the first decade of this bond issue (2020 – 2029).  Well, that’s what reserves are for.  But it does show that funds available for debt service are not adequate to cover the debt service for this issue and the prior outstanding issues, for the first few years.  The graph below is from the CIP, and the green line is labeled “balance”, so I assume that’s the balance in the Town’s capital fund.

So that’s a bit unusual, but not necessarily a red flag.  The point of having reserves is to use them from time to time.  This appears to be a time.

That said, when I look at the proposed sources of funds, I can’t quite get my mind around how this will all work out.  The issue is having the meals (and lodging) tax revenues cover the debt service that is unrelated to water and sewer.  The last time I looked at this, the Town had very nearly maxed out the meals and lodging taxes.  That is, my recollection is that debt service, right now, consumes most of the meals and lodging taxes.  This 2020 debt issue will roughly double the Town’s outstanding debt.  And then, in the years thereafter, they will be replacing old bond issues of around $6M each, with new bond issues of around $12M each.

Part of the answer is that the large 2020 bond will be a 20-year bond.  So the increase in annual payments will be smaller, dollar-for-dollar, than if this had been a 15-year bond.  In fact, a little back-of-the-envelope with Excel says that they might have risked running the reserves down to zero if they’d had to use a 15-year bond.  So spreading the payments out appears to have been a necessary part of this package.

Part of the answer is that the Town will incur little debt, other than for sewer and water projects, from 2022 forward until well into the future.  So, in effect, the Town is overspending its debt service capacity (out of meals tax funds) for this big 2020 bond issue.  And then it’s paying for next-to-nothing out of that category for the next decade and a half, to balance that out.  Like so, taken from page 8 of the most recent CIP.

And so, I think there’s no magic here.  The Town is going to spend beyond its means for the 2020 bond issue.  But not recklessly so.  Best guess, looks like meals and lodging taxes are going to fall maybe $1M short of the required amount to service all the outstanding bonds, in 2021.  But as the Town then throttles back its borrowing (other than for sewer and water projects), as long as the economy remains stable, that should eventually right itself. Just as the Town’s projections show.

Total bond funding appear to be systematically higher in that years after 2020 than in the years before, but a good chunk of that is due to a pickup in funding for sewer/water projects, consistent with our higher sewer/water bills.  The 2018 CIP had just $2M in Vienna-based sewer-water projects (that is, excluding a $2.5M payment to Fairfax County).  The 2020 CIP has about $5.5M of such projects, and that amount continues to grow modestly moving forward.

(As an aside, that said, I could not tell from the numbers whether or not the Town was counting on sewer/water rate increases, for the next three years, that are planned but have not yet been enacted into law.)

In short, best I can tell, yes this is a significant strain on the capital budget.  But it’s not reckless.  By stretching the payments — and promising not to do something like this again, any time soon — it looks fiscally sound to me.

Final note:  The police station cost looks reasonable to me.

The police station build is the most expensive item in the capital budget.  Some people have questioned that size of that expense.  But I looked at it a year ago and determined that it met industry norms.  The cost of it appears completely in line with other new police stations.

The trick here is that, to meet current standards, you have to build a police station like a fortress — fireproof, riot-proof, earthquake-proof, bomb-proof, you name it.  So anything built to the modern standard is going to cost a chunk of change.

A lot of the numbers in that post are out of date, but you can read my somewhat outdated analysis by clicking this link.  Ignore the part about the 4% meals tax – the Town nixed that at some later time.  And at the time, this was still being referred to as a renovation.  I would hope that by now, this is being called a new building, not a renovation.