The Revenues & Expenditures Committee reviewed the proposed bonds over the past several weeks and is pleased to submit its report and recommendations for consideration of the ACCF membership.

For this review, R&E members considered the Manager's proposed FY 2007-2012 Capital Improvement Program (CIP), the County Board's CIP adoption dated July 11, 2006, and the previous bond issues of 2002 and 2004. Members of the committee also attended meetings at which DPRCR staff attended and discussed the proposed 2006 Parks & Recreation bond referendum. Ms. Linda LeDuc, President of the Columbia Heights West Civic Association also attended this meeting and discussed her association's desire for a new community center at Arlington Mill.

Members of the R&E committee also met with staff from the Department of Management and Finance. General issues regarding bond composition, projects financed and the timing and sufficiency of projects submitted for funding were discussed. Details of the proposed Parks Bond referendum were also discussed.

Before discussing the particulars of our findings, the R&E Committee would like to note:

• Bond referenda considered by voters authorize a certain amount of funding for groupings of projects, not necessarily specific projects. The packaging of the bonds is at the discretion of the Manager. Some of the projects identified for funding may not be funded at all, or only partially funded. Funds may be shifted between or among any of the projects identified in a particular grouping. Incomplete or unfinished projects may be submitted for approval in future bonds, as is the case for this year.
• This year, there are an unusual number of projects making their appearance for voter approval for the second or third time in bond referenda. Various reasons are offered for this including construction cost escalation. However, as the Manager advised the County Board, this 'inflation' has amounted to only 5% a year over the past five years, not significantly above increases in the cost of living. Perhaps more and better attention to project definition and project management before and after bond approvals would improve this situation.
• Arlington's debt levels are constrained by certain guidelines (e.g., ratio to per capita income, ratio to value of assessments, etc.) approved by the County Board and watched carefully by Standard and Poors' and other bond rating agencies. While these are useful guidelines in order for the County to maintain its AAA bond rating (and hence obtain lower interest costs), they really do not go to the issue of affordability for the average citizen. As the Manager has noted, there are costs associated with bond issues, both in terms of debt service and costs to operate and maintain new facilities. For example, budgeted and projected debt service costs for FY 2007 and FY 2008 are $73.2 million and $78.1 million, respectively. Translated to a tax rate equivalency, this amounts to 14 cents for 2007 and 15 cents for 2008. Needless to say, these amounts are not going down any time soon.

The R&E Committee makes the following recommendations for this year's bonds:

1) That the proposed bond for Parks & Recreation in the amount of $35,500,000 NOT be approved in this referendum, by a vote of 7-1.

2) That the proposed bond for Metro and Transportation of $31,500,000 be approved, by a vote of 8-0.

3) That the proposed bond for Utilities of $79,000,000 be approved, by a vote of 8-0.

4) That the proposed bond for Community Projects and Infrastructure be approved, by a vote of 4-3, with one abstention.

Parks and Recreation bond:

Arlington Mill comprises 73.2% of the proposed Parks bond referendum. There was near unanimous concern that the cost and feasibility of the proposed 'public private partnership' for Arlington Mill was so tenuous that a cost could not be reasonably established at this time. Construction of a new community center, if it is to proceed, should be deferred until the County had a much better idea of the costs and the feasibility of the proposed 'public-private' partnership.

Questions were also raised as to why a new facility was required. The present facility occupies 23,989 square feet on a location of 1.9 acres. DPRCR programs occupy 25% of the space, and APS programs occupy the remaining 75%. Arlington County spent $2,350,000 to acquire Arlington Mill and has spent another $1,700,000 to renovate the facility. Additional operating funds have been spent for improvements. The APS has agreed to move its programs from Arlington Mill, which would allow DPRCR to utilize an additional 18,000 sq ft of space for its programs.

The County recently completed a major 18-month renovation at Barcroft. This 65.5-acre community park is approximately .11 miles from Arlington Mill.

The Fiscal Affairs Advisory Commission, which is appointed by the County Board, unanimously agreed in its report of May 18, 2006, that the uncertainties regarding the proposed Arlington Mill project argued for deferring its consideration in the 2006 bond referenda.

That said, the committee is sympathetic to the concerns and wishes of the local community, which has been promised a new facility for a number of years.

The County has also added $400,000 each for finishing the Arlington Art Center, and for completing the parking lot at the Lee Center. These are worthy 'projects' that were included in previous bond referenda, but were not completed. These projects should be, and should have been completed. That said, the amounts are so minimal that they can easily be accommodated from the FY06 closeout, or from PAYGO.

$8,000,000 for open space land acquisition is also included in this bond. Given the County's obligations associated with North Tract, and absent any obvious or urgent need, the committee felt that this might be a good opportunity for DPRCR to take its 'foot off the accelerator', and concentrate on managing and maintaining its existing properties.

Metro and Transportation Projects

The committee recognizes that Arlington County is obligated under regional agreements to provide financing for its share of Metro construction costs. County residents account for substantial use of the Metro, and the County is a major employment (and increasingly an entertainment) destination. Nevertheless, some concern was expressed as to whether Arlington County was deriving its 'fair share' of Metro benefits, in relation to its financial contributions.

The 'Transportation Match' enables the County to tap matching funds from Federal and State sources. Given transportation needs in the County, this should be a good use of bond funds.

Reportedly, the project associated with the Ballston West entrance may be put on hold. If that is the case, the funds proposed for this project could be used for one of the three other categories in this bond grouping. The $1,200,000 for WALKArlington was not originally recommended by the Manager, but was restored by the County Board to maintain its pedestrian initiatives. Logically, this amount could (and perhaps should have been) funded from PAYGO or the operating budget.

Community Infrastructure

The committee noted that three of the five projects in this grouping comprising approximately 57.4% of the requested amounts were submitted to voters in previous bond issues. They are being re-submitted either because of outright cost overruns (not all due to construction inflation!), or because the County chose to use funds in previous bonds for other projects in the approved bond grouping.

Approval of this bond is being narrowly recommended by the committee.

Utilities

This bond represents a rehabilitation of the County's Water Pollution Control plant needed to comply with State and/or Federal regulatory requirements. An upgrade of the water treatment facilities at the Washington Aqueduct (which provides Arlington's water) is also provided for in this bond. Debt service costs associated with this bond will appear in the future water and sewer bill of residents.

Respectfully submitted:

ACCF Revenues & Expenditures Committee

Jerry Auten
Burt Bostwick
Frank Emerson
Wayne Kubicki
Roye Lowry
Roger Meyer
Roger Morton
Tim Wise

This page was last revised on: October 9, 2006.