AAA presents Financing Options on Chinquapin to the City Council

Dear Mayor, Vice Mayor, and Members of Council,

Per your suggestions at our recent meetings, we have met with the City Manager regarding the new pool for Chinquapin, but his position is that he has given the Council the information that you need to make a decision. Possible additional capital projects (including the pool) are listed in the supplemental CIP and possible ways to raise the funds for them are also listed. We have also listened to your concerns, your desire to see a pool if possible, and your discussions on the budget and its financing. Based upon all of the above, we propose three paths for you to take to fund a pool:

1) Authorize the borrowing of $15 million over a two year period (2018 and 2019). As with financing a home, the City’s borrowing of the $15 million has to be paid over a period of time – not all at once. Our rough calculations show that borrowing $8 million in 2018 at 2.5 % interest (the City actually borrowed at 2.1% interest this past year) repaid over a 10 year period would require a payment of about $900,000 per year. $8 million is enough to start construction for the $15 million pool; then another $7 million would need to be borrowed in 2019 to complete it. Again at a $900,000 payment per year, this would require a total of $1.8 million to be paid in the second year and beyond. This amount of $1.8 million per year would require a tax increase of about 0.5 cents over the loan’s life. This approach allows pool construction to start in 2018 and be completed in 2019.

It would leave room for you to do other supplemental projects within the maximum tax rate increase you have advertised – such as the Affordable Housing initiative or school spending. Of course, it would have to be factored in when determining the debt ratio, but that is what the City does every year.

2) Establish a 2 cent tax increase and pay for the pool in two years. This should generate enough to cover the pool funding and keeping that 2 cent increase for the balance of the 10 year CIP would provide another almost $60 million for schools, affordable housing, etc.

3) Defer appropriate capital projects already in the funded CIP for two years from the list of projects attached. Please note that the list doesn’t imply that a project is not important – just whether it needs to be done in 2018 or 2019. Also note that none of the projects affect schools, sewers, Metro or projects like the West End Transitway (that has alternative funding possibilities).

You all have unanimously told us that you appreciate the value of the proposed pool, but some said that there didn’t seem to be a way to fund it. The above provides you with a path within established City guidelines. Our recommendation would be the first one since it has the least impact on the current budget and on taxes, but any of the three will solve the problem.

Please note that we didn’t get into possible revenue sources such as personal property taxes; restaurant taxes; hotel taxes; etc. Those could mitigate some of the tax increase on real estate, but we did not have the appropriate information available to us to comment on them.

Please do the right thing so that all Alexandria kids can learn how to swim.

We would be happy to discuss these approaches if you would like.

Thanks,
Bill Rivers
Advocates for Alexandria Aquatics

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