Fairfax County: Financial Outlook and Capital Challenges in 2012
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Fairfax County: Financial Outlook and Capital Challenges in 2012

Fairfax County: Financial Outlook and Capital Challenges in 2012

Board of Supervisor's Retreat February 7, 2012

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Fairfax County: Financial Outlook and Capital Challenges in 2012 Presentation Transcript

  • 1. Fairfax County:Financial Outlook and Capital Challenges BOARD OF SUPERVISOR’S RETREAT FEBRUARY 7, 2012
  • 2. Where Have We Been: General Fund Revenue Growth Rates Annual Percent Change – FY 1992 – FY 201215.00%10.00%5.00%0.00% Real Estate Non-Real Estate-5.00% Total GF Fiscal Year *Projected 1
  • 3. Where Have We Been: General Fund Revenue Average Annual Growth Rates FY 1992 – FY 20120.080.070.06 7.2%0.05 5.8%0.04 Forecast 3%0.03 growth 1.9%0.02 0.7%0.01 0 Fiscal Year *Projected 2
  • 4. Where Have We Been: Real Estate Tax Base 1992 1993 1994 1995 1996 1997 1998Equalization (2.75)% (6.48)% (2.46)% (1.29)% 0.36% 0.57% 0.80% - Residential (1.90) (3.74) (0.52) 0.01 0.49 (0.23) (0.50) - Nonresidential (4.80) (13.22) (7.86) (5.28) (0.09) 3.27 5.05Growth 1.79 0.40 1.08 1.97 2.16 2.13 1.93TOTAL (0.96)% (6.08)% (1.38)% 0.68% 2.52% 2.70% 2.73% 1999 2000 2001 2002 2003 2004 2005Equalization 1.77% 2.96% 5.13% 9.70% 11.72% 9.94% 9.54% - Residential 0.04 0.77 5.13 11.26 16.27 14.55 11.29 - Nonresidential 7.12 9.24 5.15 5.92 0.52 (2.94) 3.74Growth 2.19 3.37 3.81 3.94 3.42 2.54 2.50TOTAL 3.96% 6.33% 8.94% 13.64% 15.14% 12.48% 12.04% 2006 2007 2008 2009 2010 2011 2012Equalization 20.80% 19.76% 2.47% (1.02)% (10.52)% (8.98)% 2.67% - Residential 23.09 20.57 (0.33) (3.38) (12.55) (5.56) 2.34 - Nonresidential 12.74 16.64 13.57 7.00 (4.51) (18.29) 3.73Growth 2.69 2.94 1.68 1.53 0.57 (0.22) 0.60TOTAL 23.49% 22.70% 4.15% 0.51% (9.95)% (9.20)% 3.27% 3
  • 5. Where Have We Been: General Fund Revenue Historical Perspective - FY 1992 to FY 1999 FY 1992 – FY 1995, 1.9% Average Annual General Fund Growth  Total Real Estate revenue decreased 0.5% per year  Residential values either declined or were essentially flat  Nonresidential values declined each year  All other revenues rose at an average annual rate of 5.1%  Personal Property Taxes rose an average of 5.2%  Sales Tax increased 6.7%, on average  BPOL rose an average of 5.6% FY 1996 – FY 1999, 5.8% Average Annual General Fund Growth  Total Real Estate revenue increased 4.7% per year  Residential values declined or were flat  Non-residential values fell in FY96 then rose 3.3% to 7.1% in FY97 – FY99  Value of new construction exceeded the increase in total equalization each year  All other revenues rose at an average annual rate of 6.9%  Personal Property Taxes rose an average of 7.8%  Sales Tax increased 6.5%, on average  BPOL rose an average of 7.3% 4
  • 6. Where Have We Been: General Fund RevenueHistorical Perspective - FY 2000 to FY 2007 Revenue grew 74%, an average annual increase of 7% Of this increase: • 69% from Real Estate tax revenues which grew at an average annual rate of 9% • 31% from all other categories which grew at an average annual rate of 5% 5
  • 7. Where Have We Been: General Fund RevenueHistorical Perspective - FY 2008 to FY 2012 Revenue grew 3.4%, an average annual increase of 0.7% Of this increase: • 132% came from Real Estate taxes which grew at an average annual rate of 1.5% • All other categories combined decreased 0.5% per on average The value of Real Estate in FY 2012 is still 11.6% below that of FY 2007 6
  • 8. Looking Ahead: Modest Revenue Growth The County economy (measured by Gross County Product) is expected to rise, on average, 3% from 2011 to 2015*  From 2000 to 2006, the County’s economy grew at an average rate of 5.8%  Including the recession (2000 to 2010) average annual growth was 4.0% Northern Virginia is expected to gain 16,000 jobs per year from 2011 to 2015**  Average Annual Change from 1990 – 2010 was 36,000 Federal Spending in the Washington Metro area is expected to remain relatively flat from 2011 to 2015**  Federal Contract spending in Fairfax County rose at an annual rate of nearly 14% from FY 2000 to FY 2010 *Moody’s Analytics **Center for Regional Analysis, GMU 7
  • 9. Looking Ahead: Residential Real Estate Fairfax County  The number of homes sold in 2011 fell to 12,077 or 13% compared to the 13,894 sold in 2010  Average price of homes sold in 2011 rose 3.3% from $457,174 to $472,241  Weakness in the 4th quarter 2011, average home price fell 0.2% from the same period in 2010 Case-Shiller Housing Index for the Washington Metro Area indicates home prices falling slightly in 2012 and then experiencing average increases of 2.5% from 2013 through 2015* Mortgage interest rates are projected to remain under 5% through 2013 and then rise slowly to 6.4% by 2017**  This is likely to restrict home sales *Moody’s Analytics **Blue Chip Financial Forecasts 8
  • 10. Looking Ahead: Nonresidential Real Estate Office Vacancy Rates at Mid-year 2011  Direct – 12.8% down from 13.3%  Including sublet space – 14.7% down from 15.3% Total 113.4 million square feet of office space in the County  4 buildings totaling 870,000 square feet are under construction Office Leasing activity is on track to meet or exceed the average, 10.8 million sq. ft., of the last 5 years  Through the 3rd quarter of 2011, leased 9.2 million square feet Multi-family rental market is strong  Low vacancy rates, rising rents  New construction and renovations of older buildings will help to meet demand 9
  • 11. Where Does That Leave Us?• If Revenues (with no real estate tax rate adjustment) are estimated to increase ~ 3% annually• Then assume County Disbursements also increase 3% ~ $100 m annually• The challenge is that $100 m/year will not go very far to meet existing requirements and Board priorities 10
  • 12. Where Does That Leave Us? (continued)• As examples, in the following categories, annual expenditure growth for both County and Schools would cost: • 2% COLA $ 60 m • Restoration of remainder of compensation increases $ 70 m • 2% increase in FCPs enrollment $ 40 m • Fringe Benefits (health, retirement, OPEB) $ 35 m • Inflation (contracts, utilities) $ 10 m • Required Debt Service increase to support current CIP $ 7m • County Metro/Transit $ 3m • TOTAL $ 225 M 11
  • 13. What’s Left to Be Addressed: Further Progress on Board Priorities Quality Education System  Student Achievement, Capital Program Safe Streets and Neighborhoods  Public Safety Staffing, Public safety resources (infrastructure and equipment) Clean, Sustainable Environment  Environmental CIP, Stormwater Requirements Livable, Caring and Affordable Community  Housing Blueprint/Ending Homelessness, Maintaining Safety Net 12
  • 14. What’s Left to Be Addressed: Further Progress on Board Priorities Vibrant Economy  Economic Development, Revitalization Recreational/Cultural Opportunities  Athletic Fields, Sustainable Library Services Taxes that Are Affordable  Economic Diversification, Preservation of Intergovernmental Revenue Efficient Transportation Network  Transit, Roadway Network 13
  • 15. What’s Left to be Addressed: Capital Requirements Near Term Capital Requirements beyond basic CIP Includes Baseline GO Bond Program of $233 m per year and funding for 3 additional requirements Other projects outstanding include Tysons Redevelopment, Transportation and Schools Two Questions Related to Capital Program  Affordability?  Ratios? 14
  • 16. $233 m Annual Bond Sales FY 2018 to FY 2030 as included in Forecast and Ratios Human Services Public SafetyParks - NVRPA 10,000,000 10,000,000 3,000,000 4% 4% 1% Parks - FCPA 9,500,000 4% Metro 23,500,000 10% Transportation (Roads) 20,000,000 Schools 9% 155,000,000 67% Library 2,000,000 1% 15
  • 17. Capital Requirements: 3 additional requirements Mid-County Public Safety Tysons Mental HealthDescription Headquarters Road Center * Improvements (Woodburn)*Total Project $80-90 million $149 million $45 millionEstimate (prelim.) annuallyAnnual Debt Service $6 million $11 million $4.5 million(approx.)Debt Service begins FY 2016 FY 2017 FY 2019Amortization Period 30 years 30 years 20 yearsType of Bond Sale EDA Lease Revenue EDA Lease General Revenue ObligationStart of Spring / Summer Spring / TBDConstruction 2012 Summer 2013*Projects have received Board approval and are included in the Adopted CIP 16
  • 18. Other Capital on the Horizon Dulles Rail Shortfall $200m  Represents portion not covered by Phase I & Phase II Transportation Improvement Districts  Debt Service in C & I Fund Tysons Redevelopment  Funding formula under discussion by Planning Commission Transportation Plan  To be discussed 17
  • 19. Debt Service Payments / Affordability 430,000,000380,000,000 330,000,000280,000,000 2021 2020 2022 2012 2028 2017 2027 2015 2030 2016 2018 2019 2023 2025 2013 2024 2026 2029 2014 Baseline Mid-County (Woodburn) & PSHQ Tysons $45m annually 18
  • 20. Debt Services Payments / Debt Ratios Not to exceed 10% of Annual Revenues10.00%9.00%8.00%7.00%6.00%5.00%4.00% 2021 2020 2027 2022 2023 2024 2012 2028 2015 2018 2019 2025 2030 2016 2017 2026 2029 2013 2014 19