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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
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
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
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
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
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
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
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
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
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
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
$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
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
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