Okay, well, good evening, everyone, and welcome to our first budget work session of 2026.

Tonight's topic is the proposed CIP and revenues.

With that, I'm going to go ahead and turn it over to Director Route.

That's correct.

Good evening.

Tonight's work session is on the capital improvement program.

Revenues, we'll give a brief overview, and then we have a few fee adjustments.

Um we want to discuss and also options for tax rates.

Um we have a presentation on how it's hoarded and economic development and um a legislative update from the General Assembly session.

Um we'll wrap up with the budget calendar.

So we'll start with uh Arthur Wicks and the CIP.

All right, good evening.

Uh so we're gonna go through the proposed fiscal 2027 through 2036 uh capital improvement program tonight.

Just wanted to note there's a few slides in here.

Uh Jim already presented on them last night.

We're just including them here.

I'm gonna breeze through them pretty quickly, but because it's a CIP work session, be good to have that all together here.

Okay, so uh as Jim mentioned last night, our 10-year proposed plan is 2.01 billion dollars with a year one capital budget of 238.7 million dollars.

Um for the overall 10-year plan, this is down about 3% from the previous approved capital plan.

Um, that's largely a function of fiscal 26's capital budget was a pretty big appropriation year, it's about 205 million dollars.

The year 10 we've added to the plan is less than that, it's about 165 million.

So, really most of that decrease is just the fact that what we added to the end was less than what we took off the the front of the capital plan.

Uh this is our proposed CIP by uses.

Um, really the only note I want to make here um that I don't think the manager touched on last night was within that $629 million dollar wedge for transportation, about 30% of that uh nearly 200 million dollars is our uh well amount of capital subsidy.

So the money we pay into our regional transit network.

One second here.

We can go backwards.

There we go.

Um, so the guidance that the city manager gave to departments and the schools back in the fall, and that was reaffirmed as part of your uh the budget guidance, really called for uh a CIP that continued to execute the plan we had approved.

Uh, and really not looking at a lot of changes, and if you did make changes, uh kind of staying within your levels.

So, really, I just want to touch very briefly on three kind of exceptions or highlights and explain what's going on there.

Um, because really beyond that, the CIP, there is not much in the way of material change from what we had approved in our plan last year.

Um so the first of those items is affordable housing.

Um, and really uh the difference here is is a more matter of how funds are being characterized in the final appropriation.

So uh in previous years, there was the one percent meals tax dedication, which uh went from the general fund to the housing fund to the capital fund and was projected out 10 years.

Then there was the dedicated penny.

Uh portions of it were used to pay debt service and housing position costs and the operating budget, and the rest went to the housing fund and stayed there.

And really now we're just moving that over to the capital fund.

It makes managing how we lever how we use these funds and leverage funds uh in a more consistent way.

It also lets us project out that what that dedication is gonna generate over 10 years.

So if you look at the affordable housing section of the CIP, you'll see that the real estate real estate tax dedication is about 4.1 million going into the capital funds, and fiscal 27 is projected out uh over the 10 years.

Between that, the meals tax dedication and the $1 million of cash capital we dedicate annually as part of the Amazon HQ2 agreement.

Uh, that's a total of $126 million dedicated to affordable housing projects in the CIP.

Mr.

Wicks, I just want to make sure I'm tracking correctly though.

So the real estate I get is now going straight to the CIP, but the meals tax will still follow the same path of housing than CIP.

So two steps.

Yeah.

Okay.

Yeah.

And really effectively both are doing that because both of them are technically general fund revenues that are dedicated.

So they are received as general fund revenues, go to the housing fund, go to the capital fund.

Um, it just is allowing us to kind of manage those in funds in a more consolidated way for projects.

Okay.

Thanks, Mayor Bagley.

Yeah.

Um doesn't a portion of one of them though go to operating.

That's right.

So what you're seeing, so that's a great, great point.

So general fund housing fund a bit drops off the pay for the positions, and there's a little bit of remaining debt service on some borrowing we did in back in 2017.

That's staying to pay that.

The remainder is what's going to the capital fund.

So you're seeing the true direct project part of the real estate tax now in the capital funds.

So it's 4.1 this year.

It's going to go up next year, partially as a function of assume, you know, just forecasted assessment growth, but also that debt service is going down.

That now gets to go directly to projects.

All right.

The next item on this list, I'm just gonna touch on this briefly because I think we're gonna cover in depth at the March 16th work session.

But uh we're proposing a uh essentially a purchase of sanitary sewer capacity from Fairfax County to alleviate some of our forecasted sanitary sewer needs over the coming years.

Um but that was a change in the CIP from the approved.

So uh in fiscal 27, that's about 22.2 million.

That combined with some reprioritized prior year balances in the sanitary capital program totals 43 million for that purchase.

And again, I believe you just received the memo uh overviewing that, and we'll talk about that in more depth on the 16th.

And then finally, uh the last sort of material change was the sanitary sewer pit and gibbon combined sewer capacity project uh initially had uh 24 million dollars, um, I believe in fiscal 27 or 28.

Um that's been removed.

Uh my understanding is there's not a really feasible capital infrastructure solution in that area.

So staff is looking at ways to use prior year balances in that project to do sort of a property by property level floodproofing strategy.

Um, and certainly we can there are questions about that, we can talk about that or cover that at the March 16th work session.

Okay.

Um the next slides will look a little familiar.

We go over this every every CIP.

Um, you know, we've talked at the last several times we've met about the CIP about our concerns around our debt capacity.

That's really an unchanged situation from when we met in the fall or the previous CIP.

Um, we are continuing to see us get near our debt limit as we start to implement some of these bigger projects that we've approved and pay down other projects that we had previously approved.

So right now, kind of the pinch point to pay attention to is fiscal 31, where the remaining debt capacity gets to about 15 million.

Um, that's within 0.02 percentage points of our debt limit.

So that's that's pretty tight from our from our viewpoint.

It's something we're monitoring.

Um, obviously, we are trying to be very disciplined about the CIP and the funding levels, looking at cash flows, these are all things that play into managing this.

We're aware of it, but uh it's just something we want to make sure we're socializing every year when we talk about the CIP.

Um when we say general funds support the CIP, we're talking about how the general fund operating budget through direct cash capital and principal and interest payments to service borrowing, um, how that's impacting operating budget decisions.

So uh for the proposed fiscal 27 um CIP and general fund operating budget, that totals to about 141 uh million dollars between debt service and cash capital.

That black line shows uh how it's projected to grow over the next 10 years.

You'll notice there's some pretty big jumps between 27 and 28 and 28 and 29.

We'll talk a little bit about the 27 to 28 jump in a minute.

Um, that is largely driven by underway projects.

These aren't decisions to be made, these are projects where there are shovels in the ground or fences around City Hall, and we need to borrow and raise proceeds to pay our bills on those projects.

Excuse me.

Uh so this is a slide uh, I believe council asked for in the fall, and I remember councilman green asking about it at the retreat, about trying to better understand kind of what's the that long tail long-term impact of some of our decisions.

So the I believe it's 14 projects you see listed here are things uh that we are uh debt debt issuances we are currently paying off in fiscal 27 uh or going to be paying off in fiscal 27.

Um what those proceeds were used for are these projects and how much longer we're gonna be paying them off.

So you can see at the top there, landmark mall redevelopment, the last of those bonds pay off around 2055.

Um, the down to the lowest for an NT Day will still be paying off into the 2040s.

Um this is not a comprehensive list of projects.

There are other things on here that we're paying off, Wamada, street uh street repaving.

These are just some big higher profile projects.

If you were to look at that list of projects, and you've heard me say before that we typically borrow over a 20 year payoff over a 20-year period and say, well, surely there are things, other big projects in this list.

So we did a lot of that between 2015 and 2020.

It resulted in lower debt service cost, more options on the operating budget, and in a lot of cases, a faster uh rate of repayment of the bonds, which if you remember, one of your financial policies is around how fast we pay off debt.

So this is one of the things that helps that's why we're nearly at 70% for that ratio.

Um, but that's a long way of saying there are other projects we are still paying off.

So just a few to keep in mind, the police headquarters, we are still paying it off.

Patrick Henry Elementary School, Jefferson Houston Elementary School, Fire Station 210 out on Eisenhower, and Fire Station 203.

These are all things we are paying for in the operating budget today.

Part of the decisions, you know, that the manager's talking about balancing.

That it's a long tail.

So think back, it's 2026.

Anything we did after 2020 and six, um, you know, we're there's still an impact on the budget.

Okay.

Uh this slide was in in the in the presentation last night, just a reminder, the uh proposed 10-year plan includes 190, almost 194 million for the proposed uh for the school's capital program.

It's roughly equivalent to their non-capacity program, plus one small capacity project in 27.

It's the the funding to uh renovate their uh the chance for change space, if I'm getting that correct.

Um, but beyond that, the what's been placed in that reservation of uh capital capacity is equivalent to their out year capacity program.

And this slide was also in last night's presentation.

I think Jim covered quite a bit about you know the rationale, and I think you're starting to think through how that dialogue is gonna go.

Um, but we want to make sure it's understood that in our 10-year planning, when you're looking at the debt the debt forecasting, we are factoring that 88 million in.

We want to make sure it's understood that that's not being spent elsewhere, it is being set aside for this so that we have that capacity when we make the decisions.

And then finally, uh Jim mentioned briefly.

Vice Mayor Bagley.

Um, thank you.

Um can we can that will that money earn interest while it's in a reserve account?

So it's it's kind of the flip of that really.

Um we're not so we borrow on a cash flow basis.

So it's not like the uh the funds are sitting there.

It's just that when we model out our debt, I'm assuming we're taking on X million dollars in 2030, so that I don't we don't allocate it elsewhere.

Um, but no, it's it's not sitting in an account accruing interest.

It's it's uh forecasted borrowing in the future.

So just so I can say it back to you to make sure I understood it.

So it's it's money we intend to borrow and are committed to borrow, but haven't borrowed yet.

Okay, thanks.

Councilman Green.

Thank you.

So for 2030, when do you go out to borrow money?

For 2030.

For 2030.

So uh our typical process is uh actually this is a you've throw me a softball for a good reminder of things.

So uh you'll uh adopt you'll adopt the budget at the end of April.

Um, and at your first legislative meeting in June, you'll typically see the first reading of the appropriations ordinance for the the operating budget and the capital budget.

That same docket, um, you also see another uh legislative item that it is empowering us to go out to market for bonds.

It's usually the authorization matches what you just appropriated, kind of keeps things clean.

We'll use between then and when we actually go to market, which is later in the year to decide what's the actual issue inside.

So what do we really need?

Because we don't want to borrow and just sit on the dollars.

That's that's paying debt service, we don't need to pay yet.

And there's some compliance things we have to monitor if we do something like that.

So uh that's a long way of saying you'll do that.

We will put together our ratings package.

We typically go up in late September, early October to do the bond rating process, and then the market follow the market sale follows that.

So it all kind of wraps up typically in November.

So for fiscal 30, you're talking uh November of 29 is when that borrowing would roughly happen.

Okay.

So like I said, the manager mentioned briefly about the alternative penny proposal.

Um, if there were to be an additional cent on the tax rate, and our recommendation for that is really to apply it to capital.

Um just between 27 and 28, we are forecasting uh debt service, general fund debt service go at 15 and a half million dollars.

That is largely driven by the the cash flow need for George Mason and City Hall is driving that increase and that the issuance we'll do later this year.

Um really uh the issuance we'll do later this year, just between George Mason City Hall and our Wamada contributions, we're over 100 million dollars just for those three projects that we're gonna have to go borrow for.

So really not a lot in the way of maneuvering room there.

Um so uh with all of that in mind, uh, you know, raising the the rate by one cent would uh raise roughly 4.9 million in reoccurring funding, and because of its impact on the second tax payment of fiscal 26, it would raise 2.4 million in one-time revenue.

Um so if you took that seven and a half million, use that as cash in lieu of some of the borrowing we planned.

Um, that has a nearly 700,000 annual impact on you know, mitigating debt service payments because we did a little less borrowing.

And then for 28 and beyond, we would we would not use it as cash capital anymore, we would just use that to absorb some of the hit on this debt service.

So uh that's just something we want to put out there for for consideration because that is part of the guidance about what we would do with additional penning.

Councilman on Newbie.

Thank you, Mm-hmm.

If we were to follow the scenario, yeah.

Would the picture you showed earlier on how on when we would and when those payments would end change?

Do we end up paying the debt quicker?

So that picture would change, or we still would end up where we are.

It's not necessarily quicker, it's just a little less amount being paid.

Do you right?

So all I'm saying with the seven and seven point four million, uh, where we have assumed X million in borrowing, it's X million minus 7.4 million.

So the the rate of pay doesn't change, it's just the amount we're paying off over time.

That's that's 700,000 a year of savings.

Um and then for 28 and beyond, really, we're just taking that as part of an operating budget decision and applying it to debt service instead of cash capital.

If we're applying it to debt service, that means we are paying our debts quicker, right?

Uh so all right, let me let me try another way here.

Um roughly right now, cash capital is 30 million.

I'm saying if you did this, we would bump it up to 37 million in 27, but in 28, we'd go right back down to 30 million, which is creates five, like it actually creates five million dollars in space in the operating budget.

Uh-huh.

So now when Jim comes to you at the retreat and says we have this gap, we have to solve the debt service part of that's really only 10 million instead of 15 million.

Does that make sense?

The the costs haven't changed, it's kind of like they're making revenue available a little earlier to help with this.

Uh Morgan, Jim, if I if that's yeah, I think I art's right on.

I think we go back to you want to take it back to this slide.

Sure.

Um we would be borrowing less, $7 million less.

So the slide that would be affected would be the one you see here, yeah, where we would be borrowing slightly less than that orange line because we we use that cash to pay for a portion of a project that would have otherwise been borrowed for.

So we slightly reduced, not by much, but we slightly reduced that one.

And that amount we were gonna pay interest on, so we're saving those interests.

Exactly.

Do we have a sense of how much we're saving that interest?

That's the 700,000.

Okay.

Right.

So really like we'll have the the seven and a half million will have reduced ongoing debt service by about 700,000 a year.

Got it.

And then because that rev, you know, because we're not going to apply it to cash capital in 28.

That the reoccurring part of it is available to help mitigate the rest of the debt service increase that's remaining.

Got it.

Got it.

Thank you.

Yeah, appreciate the explanation.

Thank you.

To be clear, still a big increase in 28 to deal with.

It just might be a third less as bad.

Got it.

Okay.

Um, I know the next slide after this is revenues.

Why don't we pause here and let's take questions related to the CIP?

Since this is a new setup for us, and I know staff come um, let's just say if you're staff on this side, you can use this microphone, and if you're staff on this side, you can use this microphone.

And we we also have staff online uh to uh answer questions if they come up.

Thank you.

Um anyone who wants to kick us off.

I have one.

So I guess one question I have, and so mine are related to like specific projects.

The first one is not in here, but it's one that came up when we did our work session, and that's the 200 block of King Street.

I was wondering if we could do a deeper dive.

Um, my first question is if we have any updated figures on what it would cost for the one-time improvement to do um, I guess what are they called?

The full platforms as well as any other improvements.

Yeah.

So I I can answer pieces of that, and we've got some other staff here to help.

Um, what you saw at the the you're referring to the number that was in the CIP retreat uh in the the fall, that had a very high, you know high planning level number.

I think it was 3.2 million.

Uh I think there were some assumptions embedded in that of sort of a cost takeoff of the hundred block of King Street.

Um there are some dependencies here on whether or not it's mobilized with the 100 block, these are all things that would play into the price.

And I think I mean there's two different parts because there was one project where it was, I think around 200,000, and then there was another for the full street scoping.

If we could just break those out and help me understand the difference between the two.

Sure, good evening.

Hillary or deputy director for transportation.

So based on the cost of the hundred block to put in what we would consider temporary measures, so the platforms, um, some additional bollards and some maintenance of those materials, we were estimating about 300,000.

Okay.

And then the second project that is um the million dollar number.

Explain that to me.

What is the scope of that project and what would that be for across the two blocks?

So we're still scoping that out.

There is there are funds in the CIP currently for the 100 block, and that is basically to put back a flush street.

So there's a lot of maintenance work that needs to happen under the 100 block.

And after they dig that up, the goal was to put back a flush street.

Um, so I believe there's about uh five million of prior year funds for that block.

Um, that is very dependent on the rest of the waterfront time frame because those projects are tied together.

Um, for the 200 block, we need to look at one, do we need to do maintenance work under the street before we put it back into what would those cost estimates be?

And three, can we separate it out from the 100 block?

So would if if we can't get to the 100 block yet, could we do something with the 200 block?

We do think that it would be around three to four million.

And that's a that's potentially a low estimate.

We need to dive in deeper to have something um more solid.

I guess uh two follow-up questions.

One, so with the hundred block, we did do the temporary measures, even though we know we have to rip it up.

What um, I guess are the pros and cons to doing something similar in the 200 block, like if we were to do the 300,000 investment to have a you know, a street that looks complete, inviting and helpful for our tourism and economic uh development priorities, knowing that maybe in future years we'd have to do this larger street flushing.

I mean, the nice thing about those platforms, and that's the the major cost that we're talking about is that we can move them.

At one point we had considered, depending on the time frame of the 100 block, could we take the ones from the 100 block while that's under construction and move those up to the 200 block?

It doesn't look like that's gonna make a lot of sense right now if we want to activate the 200 block in a in a different way and make it feel similar to the 100 block.

Um, but we could certainly reuse those platforms in another area of the city.

The ballards are a little harder, they're more permanent.

Okay.

So we could do the investment, pull it up and then be able to put it back.

Okay.

And then for a project, I'm just trying to get a sense of like if we do this, how long it would be in place.

I guess if we were to look at the street, I it seems like a weird term, but the street flushing.

So if I'm saying this wrong, please let me know.

Um, but if we were to do the street flushing across, how far out is that project?

Like, are we talking we could put the infrastructure in for it would be there for three years by the time we get back to that project?

Or is it something like if we were to put this in this budget, try and aim to do this, it would be there for four or five years.

If we made the street flush, it would be there.

Not that I mean, if we put in the um if we go ahead with a temporary temporary investment, how long until we come back and do that other project?

Well, we don't have any funds for the other project right now.

So I that's a really hard thing to to answer until we have money for it to design it and construct it is going to be, I would estimate at least a year and a half to two year project, because it'd be very detailed engineering design.

Okay.

So just to add to so if you were to try to shift funding, put funding into the FY27 budget on the scale, you're probably looking at really two and a half to three years before anything else happens.

Okay.

And yes, that's for the longer scale project.

Okay, so two to three years.

And just one thing on the shorter scale, like on the ballers.

I mean, one thing that might be interesting to think about, you know, City Hall is obviously going under significant renovation.

Um, so that means we're losing a place for um many of our visitors and residents to congregate, which probably lends some credence to trying to find alternative locations in close proximity to many of our businesses that that congregation helps uh with some of the opportunities for some of the business growth.

So a two-on-block does represent an opportunity from a positive side, should you want to adjust and do something in that 200 block.

And just as I began to think this out, this project, it seems to me like the 300,000 would be like a one-time investment.

We need to plan for ongoing maintenance, but there's a one-time upfront cost.

Does that have to be funded in the CIP, or could this type of one-time funding be like a general operating cost?

I mean, I I think given what we're talking about, it can be done with one-time funding out of operating.

Okay.

And do we have a sense of the ongoing cost for maintenance currently on the 100 block?

What a budget needs to be for that.

If not, I can put a follow-up memo in that.

Yes, I think a follow-up memo would be great because there's several departments that are doing different types of maintenance and have built that into our our routine schedule.

So we'd need to get back to you on that.

Okay.

Director Route, I'd love to request a memo on that one.

Thank you.

And just to my colleagues, the reason why I'm asking about this, I thought we had a really good cut discussion about this at our work session.

I think is part of our goal of um enhancing our economic strength.

We know how valuable this part of our city is, especially to our tourism efforts.

I think there's a lot of excitement here.

And honestly, I think it's just it's not a great experience when one part of the street looks one way and the rest is not.

And so I'd be curious as how we start to bring those more align and really plan for like one continuous street moving forward.

Um, the other question I had, this one is a housing related question.

So thank you.

Um Ms.

Orr.

My question was going to be it's my understanding that previously we did a bond package for affordable housing.

I was wondering if you could tell me a little bit more about sort of the size and scale of that issuance and like what's the process that it goes that we have to go through in order to plan for if we wanted to do a bond issuance for housing of like a larger package.

Yeah.

So the issuance I was referring to earlier um was have the number, excuse me.

That was about four and a half million dollars that we did in 2017.

Um, so it was it wasn't a large scale package per se.

Um so a couple considerations on that.

Um, one, depending on the nature of the investment being considered.

Um, that that bond package and it's possible a future ones is not actually eligible for tax exempt bonds.

So we we uh had to do a taxable bond, typically has a slightly higher rate.

Um, I think the last it's been a bit since we've looked at this, but we assume are just for modeling purposes of a rate that's roughly a half to one percent higher.

So that's a consideration.

Uh the other is this is not a uh necessarily a borrowing that we would consider exempted from our ratios, right?

So while there are dedic there are dedicated funds within the general fund, they are not separate revenue sources from how we interpret our bond, our bond ratios.

So if we were to do a you know 20, 30 million dollar housing package, that impacts uh the slide, right?

It's part of that number that this this borrowing we're still paying off is factored into these numbers.

Um, so that that's the two considerations to make.

Uh beyond that, kind of more detail, like what we would need to do for that.

I think we'd either need to follow up in a future work session or via memo on details.

That's just the two things that I want to bring up at this point.

Okay, that's helpful.

I mean, I guess I would probably request a memo on this, but maybe more so to understand not just how we get there, but if we were to think about something like that, what like size packages we could be able to consider and which years, which one of the out years would probably be most appropriate if we were to start working backwards and thinking about something like that.

Okay.

And then I have two other questions.

I think might be quick.

Um one is on the Witter Wheeler campus planning.

And this was page 9.26 under public buildings.

Um I'm just curious, given what we have going on in terms of the robust like Duke Street planning process, um, why the planning funds for this um seems to me like they were eliminated, or the outyear funding planning funds were eliminated.

I just I'm just wondering, it seems like it's a good time to make sure we're planning for this while also planning for the Duke Street plan.

So just curious about that decision.

Sure.

Uh I can speak to the historic part of that, and the colleagues can join me if they want to talk about the other parts of it.

So that that uh pro that project really, the the genesis of that started around the time of the ad hoc facilities investment task force.

Um the idea was to put aside a bunch of funding to do work in that area.

Uh, I think the reality is over time, some of the the specific Witter Wheeler campus work that was done.

Uh, we parsed off projects from there or eliminated funding to reprioritize for some of our other needs for schools and city hall over the number of years.

So, really that remaining funding is sort of dealing with some smaller level projects in that area.

That's the historic part.

The the nexus with that and Duke, you know, Duke Street.

I think I'd probably ask uh general services staff that's on the call if they they have some comments on that or or planning staff.

Um, Mayor Gaskins, Emily Baker, deputy city manager.

Um, as Mr.

Wicks said, we really did move the money out for the reasons he talked about that we weren't exactly sure what we were gonna do.

We won, and it wasn't a priority as high a priority as some of the other projects that we needed to that we needed the funding for.

I think we've also um had conversations with ACPS over the what we were going to do with the transportation facility there and how that was gonna play out in that facility.

And we wanted to work through some of that, those issues while we know ACPS was looking at sort of what options they had um in their transportation study.

And um while the Duke Street land use plan is going on, we want to see sort of how that comes out to see whether there are um whether there are investments the city needs to make and whether there are private opportunities that can help bring some some P3 opportunities to bring that in.

But we have broken out some of the projects that are proceeding.

The fuel island is going through um renovation and other things that were still moving forward there.

Maybe um, I guess maybe a different way of asking this is recognizing that some of those same conversations are coming up again with like ACPS transportation facility and the campus planning.

Do we need to be thinking about any additional amount of money at this time to help support more coordinated planning across these efforts?

I think it's a great question.

Um, you know, given some of the dynamics, I think that there could be some additional support for what I'll call more master planning.

That's you've got the Duke Street land use plan that's high level, we're gonna overview.

Um I've been talking to our planning staff about uh the next step of that would then be to do the more detailed master planning.

Um that probably could use some additional assistance.

I think the timing of that would follow in this coming fiscal year.

I think that would be helpful to be informative to the council on the decision related to the specifics of the land use pattern out there.

So, you know, if if the council were inclined, and we can certainly look at this.

I I think uh, you know, uh another additional resource allocation.

I I think the resource allocation that was done before was a little bit on the higher, it was 200, 250.

What was the number that was previously in planning in that area?

Probably around around that.

But the the what she's referring to, there was a funding reservation with several million dollars in it, but it's been doing kind of piecemeal and infrastructure work.

Yeah, yeah.

I mean, then I guess I would be curious if there, and this is probably a lot of different groups like planning and zoning um tests.

I I guess I'd be curious first and foremost, is there a need for additional support related to the master planning as the major the as the manager mentioned?

And then if so, is that a separate um like what would be the cost of doing that, or is there a way?

I'm sure we're working with consultants or other people as part of the Duke Street plan.

Is there just a way to like amend the contract to add some additional support for this?

But my biggest thing is like I just don't want to miss the moment.

I feel like in a week we're gonna have a long conversation with ACPS about the transportation facility um and other parts of their CIP.

I don't want to miss the opportunity to connect all of these plans.

Um Director Stotter.

Uh yes, thank you, Mayor.

Uh Paul Stoddard, director with planning and zoning.

Uh, as was mentioned, the Duke Street long use, uh, the Duke Street land use plan is an ongoing effort.

We're expecting that to wrap up at the end of this calendar year.

Uh I'm sorry, end of this calendar year or early next calendar year.

So that would time it well for a budget request going into the subsequent fiscal year.

Uh so I I think uh planning for the programming phases now might be a little bit premature until we've worked out that the higher level view of what we want to achieve.

Uh I think once we have that narrowed down, we could look at options for bringing in whether that's consultants or urban land institute or a group like that to help us with it.

Thank you.

I appreciate it.

It's helpful to get all the different perspectives.

Um, I think that's the only one I have on that.

And then the last question I just had was related to um playground renovations.

8.26.

Um I was just wondering if we don't end up using sort of all of the contingency funds for some of these projects.

Are we able to move them quickly to do other playground renovations or like sprucing up of some of our parks?

Like is that money, I guess, able to be flexible and moved around if these projects don't come in at that total cost.

I I know there's some RPCA staff that can speak this, but I also said that the CFMPs by design are meant to be agile in that sense.

So we do list out their projected projects or contingencies for the next year, but that is a sort of constantly re-evaluated list, you know, whether an emergency comes up or they get to a project and realize perhaps there's a little more useful life there, and it's not prudent to do that in that year.

So we we give a forecast of the work that they're they're they're looking at.

Um, but yeah, whether that that is something that happens, that they they reprioritize that funding uh as it needs arise.

Okay, thank you.

Yeah, I was just excited about yesterday's announcement of new funding to improve some of the appearance of our facilities.

I was thinking if we're doing this and these projects come in less, this seems like some quick strike funds to pair with those same facilities to also make sure they're getting paint or some additional love as well.

Other uh CIP questions.

I say Bagley.

Um, I have a question about uh it falls under, I think transportation um and transit with the King and Commonwealth White Bridge projects.

We might have need Ms.

War to come back up, but um what I was curious about is our planning are we gonna be prepared to know what the costs are to do the work underneath at the same time as we are able to do the work underneath.

Again, Hillary or deputy director of transportation.

Um great question.

Yes, I believe we are.

We are getting our 30% plans in very soon.

And so we'll have a pretty reliable cost estimate at that time.

We've been working with VPRA on timing.

Um the bridges are gonna be the last component of the construction.

So our project would come in after they are done.

Okay.

And um, I know the King Commonwealth Bridges are in here, and the projects themselves are not Alexandria projects, but I also couldn't see sort of numbers yet that we'll be contributing.

And so I just wanted to touch on it and be sure that like we're in the planning and that when it comes around for FY28 is when we'd be working under the bridges.

Does that sound right?

Yes, that's great.

Okay.

Um thank you for that.

And um, just because I think we're gonna be asking a lot of the residents in the area.

So I'm just keen to see the amenities underneath the bridge deliver as closely in time as possible to the bridges themselves.

Yeah.

Thank you.

Um the other um, another question I had was about I hate to do this, but about um the waterfront and um flood mitigation.

Um, I don't, I don't know who the so um we have a budget and we are and it talks about projects um sort of in design in FY26 in construction.

And I'm just uh I'm curious to what extent, if any recent news has any impacts on how we might um be planning and budgeting and impacting sort of year one in the CIP with regard to flood mitigation at the waterfront.

Sure.

Um I'm happy to answer that question.

So we have, as you know, we've been well underway on design.

We've actually taken the brief pause to evaluate an alternative that was brought to us by some stakeholders.

We are um received some news from the National Park Service that does impact the the um design that we've been working on.

Staff has been working on alternatives.

We've got some options that we think are worth further discussion with council that we want to be sharing with you in the coming weeks.

I think there's still uh work to be done there, and there's still the area still flooding.

The area is still there are still infrastructure improvements that are necessary.

So let us get through the next couple of months, and I think we'll have um a better understanding and we can get some clear guidance from council on what the next steps are, and there's still an opportunity for us to move forward with some work in that area.

Okay, and yeah, I think we might have the apologies.

Um so I think council was anticipating um the report coming back to us in March.

Um is has that changed?

Do we still expect an update in March?

Okay.

I mean, because I think ideally it would be nice before we close out this budget process to for it to be informed to the extent possible by both that March report that was coming forward anyway, and then this recent um development uh so that we can adapt as necessary in terms of certainly year one in the CIP.

Um, well, thank you.

I just thought it was worth touching on and to the extent maybe to staff, like to the extent there's a budget memo there to just acknowledge like the the um impacts of this development um and reference perhaps the consulting memo that's coming forward in March, just to kind of bring that update together in in inside the budget process, I think would be useful.

Yeah, I think if I could just emphasize what the vice mayor said, I think definitely making sure that we get that information during this budget process, even if we can't scope all the way out, understanding what it means for year one.

And I think if it is a if the alternatives that are now being proposed are significantly less than the previous project, I think understanding with um the budget team, like does that mean we might use some of that funding for debt pay or like what else might be the proposed options for how that money could shift in service of the CIP.

Um same goes if it's much higher, but trying trying to also figure that out as well.

Um on a on a on a theme, unfortunately.

Um I I was wondering if, and I don't know if um anyone's here from sort of the flood action team, but um there's an entire chapter obviously in our CIP on stormwater and all these capacity projects, and um there's several that sort of remain beyond the last year that are that are in here, but um a couple of spot projects, particularly.

I think the one at Ashby and Glebe and a few others.

And I'm just um I'm wondering if we could maybe get I appreciate all the different pages in here that break them each down, but I was wondering if maybe the flood action team could provide us an update on last year's overview of the ordering of these projects, the potential funding streams that we are monitoring um that might reorder these projects or reprioritize them as infrastructure is assessed and um and maybe there's nothing to change, and that's fine.

I just know that um I'd like to know that we are continually re-evaluating the ordering of those projects and the funding available for them that might precipitate a reordering if funding sources change.

Um is that clear?

Yes, and I'm um I'm happy to work with the team to put that together.

We are regularly meeting.

I have a monthly meeting with the stormwater team to talk about where we are on all of these flood action projects.

We have some very large projects that are under development and getting ready to move towards construction.

The Commonwealth Ash Peak Lee project, you mentioned the water company is out right now already, starting to do some utility relocation that's necessary for that project.

There are several smaller projects going on that are moving forward, and we are constantly reprioritizing those and looking at uh what is in the best interest and where the biggest need is and what we can afford to do, but absolutely we can put together an update for city council on where we are in a timeline.

And just admittedly, like I just started into the book last night.

So I you know, I know they're all individually here, but um, so I'm not asking for reprioritization of them, but just maybe you know, when our last assessments were done and and um any recent updates would be great to kind of see the the big picture.

Thank you for that.

Um I asked about waterfront spot flooding came well.

Oh this perfect Mrs.

Baker's still here.

Um the this isn't a year one issue.

So, like recognizing the priority for what it is.

Um to what extent, if any, might the torpedo factory question.

Sorry, I didn't mean to bury the lead.

Um, so we are obviously the things in our CIP are very sort of basic facility, you know, condition projects as an elevator project, you know, sort of not big changes.

Um maybe this is a next year question, and I'm getting ahead of myself a little, but um to the extent that the RFP process plays out, um will we be returning to like the OMB to say, okay, here's the updated vision.

You know, we've picked an operator, they've defined a vision.

This is the revised, um, and maybe it's a maybe it's a planning question, but you know, but I just kind of was looking at it and thought, oh, come next year.

I hope we have a clearer sense of what the investments are beyond sort of like maintenance.

Yes, and that's our goal.

We are uh um as part of the RFP process.

We're hoping the respondents will be telling us what their plan is, not only for the operations and their revenue generation and what they may be able to, what they'll be providing, what resources they may need from the city on the operational side, but also on the capital side.

And we did make it the time frame of this lease flexible because we know the longer period that someone has, the more they're gonna be willing to invest capital.

And the shorter it is, the um the shorter it is, the more the city's gonna have to invest on capital.

So as we get those responses through later this spring, and we're evaluating them, that is exactly what we're gonna be doing.

And in conversations with them to say, what is it, what would we still have to bring to the table?

And that will absolutely inform the CIP for the FY28 conversation.

Just one addition to that.

It's also about negotiation.

Could very well be the depending on who the selected party is, their opportunities to do things in exchange for other things, lease cost, revenue generation in exchange for additional capital costs and accelerated time frames.

So those are the things that need to be brought to you.

Uh that would probably be a a year two through 10.

Uh, but they're great questions.

No, I appreciate that.

And part of why I asked this honestly, is just because there's we've spent a lot of time on the torpedo factory of late.

There's been a lot of coverage, and what I was trying to make clear and thank you for sort of um speaking to it is just this budget isn't reflective of the 10-year vision yet for the torpedo factory by design, because we wanna have the buy-in and partnership of the future operator to that design.

And so that's what I see here, and that's what I hope to see next year and next year's budget.

That's right.

Okay and at the same time, we have left there is a CFMP here where there are we do recognize that the building is still operating and it's an old building and there are still needs.

So we want to make sure there's sufficient funding in there.

Thank you, Madam Mayor.

And my questions are around the public pools program.

Um as we and I uh as we go into um closing old town, the old town pool, and as our other pools continue to age, um, of course, there's significant funding in there for the old town pool.

Could I get um information on the program that was put in place back, I guess 2016 uh with the pools that closed um and um I guess splash pads or um fountains were to be replaced.

I know there's one still going on at Del Ray.

Um do we have a plan as to when those are coming online, particularly with I guess Old Town Pool going down.

Um and as I look at the um the funds that are being appropriated for uh 2027 through 2029.

I I I guess I would just like to know like how do we prevent something like the old town pool from happening?

And is the money that's allocated, you know, the money that is truly need for maintenance and replacements and of that nature.

Um, just the overall plan on where we stand right now.

Sure.

Jack Brow and um deputy director with park um with recreation parks cultural activity.

So I guess the answer to the first question, the there was a decision in the early teens, 20 teens or 2010s to turn just shut down and close what we called our mini pools.

We had several of those throughout the city.

One of those that was replaced was with the Charles Houston um recreation project.

And those have now been converted to other uses.

Um the Nanny J.

Lee pool is actually being um improved right now, not as an aquatic facility, but for a new programming space outside of the Nanny G.

Lee Recreation Center.

The mini pool that was once at Calasanto, that will be the new splash pad.

And that is under construction now.

And it will be completed um this spring with the anticipation that it will open um by Memorial Day weekend um for the coming pool season.

So the only other large outdoor pool, well, we replaced the Warwick pool um around the 2018 time frame.

So that pool have, you know, was completely renovated and replaced bathhouse and the pool well itself.

And now we're up to the old town pool.

So the old town pool will be a full um replacement of the same type of pool that's there now.

We'll have a diving well with competitive and lap swimming, as well as a family component with a brand new bathhouse.

And that's under design right now.

We anticipate going under construction in um winter of 27.

And it will be closed for that season.

And we are anticipating right now with the schedule that we have that we'll be able to open it up for the 28 season.

So that we will only be closed one full season with regard to that.

I mean, the aquatics program has been a struggle um, you know, in terms of maintain, but we do feel comfortable that with these new assets and the funding that we'll have through our um CFMP and so forth, that we can maintain these programs.

I mean, the old town pool is dated.

I mean, it's roughly 70 years old.

Um, so maybe a 70-year-old structure, it's not doing too bad.

But we do know that it it's on its last blex.

I mean, we we anticipate getting through this um season, um, but that we will need to close it down for um the renovation.

Okay, that's helpful information.

Just a follow-up on um Nanny uh J Lee.

What is the programming that will be brought online?

So we're basically creating um a plaza space.

So there'll be a programming component.

Um initially we're gonna have a lawn space there, but there'll be improvements with regard to potential hard and or soft scape, but it'll be an expanded opportunity for not only the therapeutic recreation program to expand outside, but it'll be a community asset as well.

Thank you.

Um Councilman Al Newby.

I have a question on the Dash CIP.

Um a couple of months ago, a few months ago, there was an announcement, public announcement that we received the federal grant, about 10 to 12 million, something like that, if I remember correctly.

And I'm going as slow as I can to give Mr.

Baker a chance to get over here.

My question is my my understanding is, and please correct me, um, Mr.

Bake.

I know we've had conversations about this, that this money's for bus replacement, and it's not going to be electric, it's probably gonna be like clean diesel.

But is that money that was already accounted for?

Like, did we anticipate getting a grant?

Or is this money that we had budgeted for in our budget?

And now that we got our grant, this money can the money that we budgeted can be allocated something else.

Do you whatever way you want to go?

Uh uh thank you.

Good evening, Josh Baker, general manager of Dash.

Uh, thanks for that question.

Um, so yes, we were thrilled to find out that we received some federal funds under the low emission, no emission federal grant.

Um, and those were as a result of us making a pivot to in technology of the buses to from fully electric to hybrid electric.

Um don't know, can't recall the exact number of buses, like 10 or 11 buses, but nonetheless, um those funds are for state of good repair, and they help to relieve the pressures on the CIP.

And I'll let Art speak exactly to the details of how that ends up looking.

Um but that was new money.

Um, and it does go towards state of good repair, which helps us through FY26 and 27.

Yeah.

So uh your question about where it shows up.

So the uh that grant is actually being brought forward as part of the spring supplemental appropriation ordinance.

It's it from a federal perspective, it's available.

Council just needs to go through the process of accepting, you know, sort of recognizing that revenue and giving the expenditure authority.

So that's gonna actually be happening kind of before this budget so that they have access to it earlier and kind of keep up with their timelines for for buying rolling stock.

Um, your question about it freeing up funds and and right rays on the call can help with this.

Um, there's actually some notes on the Dash bus fleet replacement page in the public transit section, and then on the uh it impacts the Dash upper uh the facility repair project in public buildings, essentially um that did free up some local dollars that we had committed to meet state of good repair.

And then on the uh it impacts the dash upper uh the facility repair project in public buildings, essentially um that did free up some local dollars that we had committed to meet state of good repair.

That is now being used to match yet another grant that Dash has been awarded from the merit program.

That's going to allow us to get uh put the funding package together to make the necessary facility repairs to the the remediation to the facility and the roof deck and the water intrusion issues.

Um so essentially it it freed up money on the state of good repair side, and we've taken those local dollars so we can match another grant, which will also be in the spring supplemental appropriation ordinance um to meet another unmet need, which is the Dash facility.

And like I said, raise on the call if I if I've missed anything or Josh.

Um but it's kind of sort of happening before this budget.

We want to make sure they have the money as soon as possible so we can get these things moving.

Um, and that was sort of the best avenue we had available.

Got it.

Thank you.

Very helpful and very, very glad to hear that.

So it helped so that money helped us to meet an unmet need.

So essentially it was new money that we were.

We leveraged it twice.

That's amazing.

Thank you so much.

Appreciate it.

Thanks for the question.

Um, seeing no additional questions on CIP, let's go ahead and move us to the general fund revenue overview.

Okay, moving on to revenue.

Before I get into the section, let me just say that there are going to be some slides that um you all saw last night, same with the CIP.

Um, I think just for the sake of the audience, anyone who might watch this video online.

Um, last night, February 24th, we had uh city manager's presentation of the proposed budget.

We also had an extensive discussion about the um real estate assessments, and so anybody who's interested in those topics can go back and watch those meetings as well, because we may not talk as much about that tonight because I know we want to get to economic development and the legislative updates, but anybody who has um interest in those areas, there were some fairly extensive discussions about those last night.

Um, so uh first of all, you saw this slide from last night.

We have no proposed changes in any of the tax rates uh in the budget.

Um we do have a few fee increases that we are going to get to in a couple of slides.

You'll have opportunity to uh ask questions about um we are funding the uh elderly disabled veteran tax relief at 12 million dollars.

That's up from 10.3 million dollars in the current budget.

Um we will also have a slide in uh coming up that will talk about options for raising taxes.

So there's no tax rate increase in the proposed budget, but if that was something council wanted to consider for ad delete, we have a slide on what those options are, what they would generate in terms of revenue and what the potential impacts of those would be.

Um just the over general overview.

The uh total general fund revenue budget is 977.3 million dollars.

Um, I'm not gonna go through this line by line because we have slides for each of these individual categories.

I think the takeaway from this slide is that um, as we heard last night, real estate taxes make up almost 60% of our general fund tax base.

Uh, the increase in revenue for FY27 is about 20 million dollars, and it's almost coming entirely within the area of real estate.

Um the city manager has been giving you state of economy reports for months now where we've been telling you about the softening of some of our other local taxes.

Um, and so and there's is a lot of economic uncertainty.

I think one of the things we talked about last night is um this budget is reflective of that uncertainty, and that almost all of our revenue growth is in the real estate tax area as well as a few of the fee increases.

Um this is not a financial crisis.

Uh, we are well managed, we're in a solid position financially, um, but it does limit our ability to do some things that we would like to be able to do.

So this you saw the slide from last night.

Um, the reason for the revenue growth is that 3.4% increase in local assessments.

Sorry, there we go.

Um, and then you also saw this slide, which shows the the distribution uh between residential, including multifamily and commercial uh tax revenue.

We had a fairly extensive discussion on this topic last night.

Um we're here tonight to talk about economic development.

So this is part of the reason uh for this work session.

And then you also saw this from last night, which shows the average assessed values for a calendar year 2026 and uh the impact on the average tax bill.

Um as a result of the increase of assessments.

And then in terms of the individual categories of revenue, um vehicle the personal property tax, another one of our larger uh largest sources of revenue beyond real estate.

Um vehicle personal property is the largest portion of that.

You may recall for a couple of years we had some uh fairly extreme increases in uh real in the value of vehicles resulting from supply chain issues that seems to have leveled itself out.

So we're actually re-estimating a little bit less than we had budgeted for FY26 and then showing a normal amount of growth uh for FY27.

Second director out by three bagley.

Just to that point, has has the region essentially has everybody gone back to 100% assessments.

I I can tell from the screen that Kevin's coming up behind me, but I think that is we are back to 100%, and I believe that's the case of the others.

Kevin Greenleaf Department of Finance.

Uh uh Morgan's absolutely right.

All jurisdictions have ended their um assessment ratio discounts.

And have when's the last time we reset the value under which there is no assessment?

Uh it was uh a couple of years ago.

Um I want to say two maybe three years ago, where council basically limited the tax on any vehicle, so personal use vehicle assessed five thousand dollars or less that took about 30, 32,000 cars off the tax roll.

Okay.

And are we in line regionally in that regard?

I'd say we're ahead of the pack in that regard, yeah.

Still, despite having done that a few years ago.

Okay.

Um, I appreciate that.

I don't know if it's worth you know revisiting that, if car values have changed substantially or if there would be um a substantial, I don't think it's something I've heard you know much about.

Um maybe um I'll think about whether there's a question there, but I I was curious if it was time to maybe revisit, you know, where we drew that line and what it would mean in terms of lost revenue.

I I can tell you that it's not a uh issue that comes up in our office.

Um I appreciate that.

Thank you.

Okay, for our other local taxes, um you tell from the table, sales, utilities, um uh considered relatively flat um for uh FY26 and FY27.

Um B poll uh business licenses, that's I think the the big variable in in this budget is we don't get the uh gross receipts.

It's based on the calendar year of gross receipts, and we won't receive those until March.

And so we really don't have anything to base uh or don't have much to base an estimate on for FY26.

Um, I think we're fairly cautious on this estimate uh given the federal cutbacks that we've experienced and the some of the shutdowns.

So we're kind of waiting to see what kind of impact that was have on businesses for last calendar year um and have factored in that uh that into our uh assumptions here.

And then as you've heard from the monthly state of the economy, um, this the where we're seeing the I think the most softening in the revenues is with the transient lodging and the meals taxes.

Um so we've actually um adjusted those downward a little bit for FY26 relative to what we budgeted, and then showing um very modest growth for FY27.

Um Director Rout, we have a question from Councilman Olive.

I have a question on B poll.

Um we we did receive a concern from a resident um about the rate there and how it exponentially goes up if a business makes over I think 100,000.

And um I'd like to know where are we in compared to the surrounding jurisdictions?

And if we have uh I I may have gotten my numbers wrong, I don't know, but uh correct me if I'm wrong.

But also, do we have any well where do we let's let's take a subject up?

Where are we in compared to the compar uh compared to the surrounding jurisdictions on people in terms of our rates?

So Morgan, are you able to jump ahead to the tax rate options page?

No, no, no, no, that's that's fine.

He'll come back.

Okay, he'll come back.

Oops.

Um and a couple of things.

Um the taxpayers issue on this one um surrounded the professional category.

That is our highest rate.

If you can go one more, uh, Morgan to the people.

So there you go.

That that shows our competitive rates to other jurisdictions for the these categories I picked out are 74% of our people revenue.

Um they're the biggest ones.

They're also ones we have any flexibility to some extent on the rates.

Uh her category was the professional 58 cents.

And you can see it is the highest uh of our competitor jurisdictions there, closest is Falls Church.

Um we're at the state cap.

The state maximum rates were set back in around the 1970s after a Weldon Cooper study of trying to do a comparative analysis, looking at profitability and whatnot.

Um if if the the problem here is if you went, if you took all of those other jurisdictions and just took the average rate, that'd be an average of 38 cents compared to our 58 cents.

If we were to lower our professional category to 38 cents, we'd lose about 2.6 million dollars.

Professionals are second largest category in business license taxes, about 17% of our of our tax base.

Um it is a um data point in competitiveness and in determining whether you want to move in or out of a jurisdiction.

I would not say my experience is it's not the determining factor.

It's one of many factors they consider when you decide to locate in the locality.

You consider many other many factors, beeple just being one of them.

Um it is a policy decision for council.

Now we'll say um her issue also was a request to basically right now.

You pay a flat tax on if your gross seats are 100,000 or less.

You only pay a fat flat tax of 50.

After you cross cross the threshold of 100,000, then you pay the rate bait tax rate-based tax and you pay it on the full gross receipts.

Her argument was, well, I'd like to deduct the first hundred thousand.

I'll pay $50 on that and only pay a rate on the remaining gross seats.

That's not allowed under Virginia law.

No locality has the authority to do that.

Council does have the authority to exempt the first hundred thousand for everybody or for a given category, or the first two hundred thousand.

It's a there's a state cap up to two hundred thousand.

That obviously would have a financial consequence if you do or do that.

And the question would become what's your economic return on investment for doing that?

Well, you know, or you may be rewarding the people in that category.

You may or may not move the needle in terms of business um uh portfolio size.

Thank you so much for that detailed explanation.

Uh to your point, it's it's one data point.

Um, the you know, the the rate and when it comes to competitiveness.

I I would be curious, and we may or may not have this this data, but I would be curious.

You you said we we would lose a little over two million dollars if we would reduce our tax rate.

The average of the other localities.

Right.

But I would be curious if we have data to tell us if we are, and I know you know you touched on it a little bit.

If we are losing on people coming to Alexandria because of that, I know it's one point, but do we have a sense of are we actually losing on money because there are people who don't want to come to Alexandria because this this tax is is higher?

Again, it's not a question for today, but I think it's just something to to think about.

Uh Stephanie Lanner may be better able to answer that.

I would tell you my experience that has not been the case.

Um I I can tell you back in the early 90s, I was involved in another jurisdiction in a massive change in rates, and it really had a negligible impact on our business portfolio one way or the other.

I mean that's not say it was a bad thing, but it it did move the needle, I'd say in terms of portfolio size.

Got it.

Thank you.

That's all for now.

Thank you.

Now I'm curious if I can stomp Kevin.

I'm curious.

Do you do you know you knew that I don't know if you just were prepared because Abdell had asked about it, but the financial services alternatively, those are all over the place regionally from tax rate perspective.

Do you have any insight and what does the man about why we landed at 35 cents?

Because alternatively, we are leaving $2 million on the table at that rate, arguably.

You know, I to your point to you know, to Councilman Alnubi, we we are, you know, collecting an extra two million because we're at the top of the rate.

And when I looked at the comparators, they're all over the place.

So I'm just kind of curious what your take is on that.

Well, you did stunt me in terms of the genesis.

I don't know why we landed at 35 cents.

Um your point is absolutely well taken.

We are leaving money on the table there.

Um those money lenders can be they're not banks.

Banks don't pay um business license, but they're financing companies, they're um uh money lenders that are not banks.

Um it's it's a it's a valid point.

And unfortunately, I don't know why we are where we are um on that one.

Yeah, it's interesting just to see the the disparity.

The average is about 33 cents for the other localities.

It is all over the place, but it averages out of 33 cents.

Okay, thank you, sir.

Yeah, fairly okay.

Um let's go back to slide 21.

Okay.

I think this is where you are.

Yes.

This is this was the next slide.

So um you may recall from last night the city manager talked in his presentation about uh number of positions that the state reimburses reimbursed the city for um the cost of those positions.

Um coincidentally, coincidentally is about 41 million dollars, which has nothing to do with that number on the table, but um it's about 41 million dollars, and I think we get 11 about 11 million dollars in reimbursement revenue from the state, um, and then city subsidized the remaining 30 million dollars.

This is where that 11 million dollars is, and we do have assumed uh just probably between two and three percent growth just as normal uh growth rate.

Um and then some of the other categories of the non-tax revenue.

I think the big highlights here is where you'll see the um the only place that you're gonna see any significant change would be in fines and forfeitures and charges and services where we're budgeting those fee increases that we're going to talk about, I think on the next slide.

Then also the use of money and property.

Um, most of that is um interest earnings on cash the city is holding.

And so that amount is declining as the federal interest rate is being reduced.

And then so we move into the fee adjustments.

Um we sent you all a more detailed summary of each of the fee increases that we've included the proposed budget.

You see here the the departments that um have submitted uh fee increases that we've included in the budget.

Um the largest one, of course, the um parking meter rates uh increase there, and then also um the addition of Sunday hours and the increase of the parking citation fines.

Um I think we'll probably just pause here and see if you have any specific questions that you want to ask about any of these, and we can take those now, or we can discuss them in each of the each of these departments will be before you in another work session.

So we have opportunity to talk about them then too.

Do folks have doesn't I think we'll wait then.

It doesn't seem like folks have specific questions at this time.

And then we also mentioned that there is uh increase in the stormwater utility fee, and that is part of a multi-year plan that has been in place for a number of years now.

And then coming back to the tax rate options that we talked about briefly earlier.

So this shows you essentially where we are on our current tax rates relative to the state cap.

Um, what amount of revenue might be generated uh if we were to increase um any of these rates and what the potential impact would be on the taxpayers and then also how they those rates compare to other jurisdictions.

Um I want to say a couple things here.

First of all, on the real estate and personal property, we will be bringing forward the ordinance.

We'll be introducing the ordinance on those taxes on March the 10th.

And that is the time at which you all need to set the maximum tax rate that we advertise for the real estate taxes.

So just want to um remind you of that here, and I'll also include that in my weekly updates to you.

Uh the other thing that I would mention is if you were to consider any of these other tax rate increases, uh, they would likely require almost certainly require an ordinance.

And so even though the ad delete deadline is April 9th, and we talked about that last night.

In order to dock it and properly notice any uh tax rate changes, we would need to know about that sooner, um, February 6th.

And so we could get that document.

I mean April 6th, not February 6th is behind us.

We lost track of where we are right now.

Um April 6th, thank you, Amanda, uh, is when we would need to know if you if you were considering doing one of these options.

So it doesn't mean all your ad deletes would be due on April 6th.

We would just need to know that that's something that you're planning to bring forward.

And so this is for real estate, personal property, um, sales tax were at the cap, um, meals and transit uh lodging are options that we could increase.

And then on the next slide was the B-poll, which we just discussed.

And so give you the opportunity to ask any other questions about revenue.

And if not, then we'll move into the economic development section.

Are there any additional questions about revenue?

I felt like sorry, that's sorry, mom voice.

I'm sorry.

Yeah, I was uh real move right along to do investment.

Oh, my mic.

Good card.

Good evening.

Um after purpose, I can be out of back.

There we go.

Um, good evening, Stephanie Landrum, Alexandria Economic Development Partnership, and uh Marian Marquez is with me as well.

And I see Todd O'Leary is joining us with Visit Alexandria.

Um, to transition from the last conversation to this one, I'll just mention I was back um in my archives.

The city actually had a business tax reform uh task force in FY 2015, and they issued a pretty comprehensive report, and that might be something that we uh go back and pull up and look at.

One of the recommendations in Alex Forward, which was adopted by this council in January, is to take a look at our overall taxes and competitiveness.

Um I think the work that was done back in 2015 might be a good playbook for us to build off of relatively quickly.

And a lot of the information that was just shared in those last slides already has compiled what our neighbors um are charging and perhaps where there's some areas for adjustment.

So that was off script.

Um we will move into new investments in economic development.

Um, but as I just mentioned, uh City Council in January adopted the Alex Forward Strategic Framework for Economic Development.

And um it followed a year and a half's worth of discussions, conversations, recommendations, and work by our collective staffs, but also an outside expert firm.

Uh as you might remember, there were three catalytic uh goals, or I'm sorry, there were three goals identified in the plan, and there were a number of catalytic initiatives that were recommended.

And so the city manager is recommending $750,000 of investment to begin to implement those um catalyst initiatives.

I also want to state, I guess at this point, um, there are over a hundred recommendations in the plan.

And so uh I don't think anyone expected the manager to recommend that we would pay for and implement all 100 plus in this next year.

Um and so what we're going to talk about are ones that we think have immediate potential for immediate impact, but also that are able to be implemented with existing staff resources.

What you'll see is is being recommended are all new programs.

And so one of the things that we needed to look at was capacity and capabilities of staff in our various departments.

So just wanted you all to keep that in mind as we go through the recommendations.

The initiatives, as I said, are focused on the three goal areas, basically place-based investments, business development, meaning attraction and retention, and then really thinking about our entrepreneurs and small businesses.

And so we're going to go into these in detail.

But the first one is focusing on the experience economy, which was a key recommendation under place-based investments, and also making sure that we support and streamline our placemaking efforts in our existing neighborhoods.

Um business neighborhoods.

Um, and then under business development, we are going to be talking about a proposal to invest in high growth smaller businesses.

We have a very clear playbook and tools for working with big projects.

Um we've talked about them in the past, but when we do things like attract a large employer or somebody who's willing to build and invest in real estate, we have tools.

We're missing some tools when we think about um potentially fast growing or high growing small businesses.

And so we're we're suggesting that we put in place a new pilot program there.

And then the last is thinking through how to encourage more entrepreneurship uh with some of our partners with Virginia Tech and in uh building off of the recently announced national landing or I'm sorry, national innovation corridor.

National IQ.

Um so we'll get into these now in detail.

Uh so the first new program that we're proposing is to provide lease incentives for arts entertainment and innovation uses throughout the city.

And this is building a this would create a grant program that would allow us to essentially help pay for tenant improvements in leased space throughout the city.

So we're building on our experience in Old Town North, where we have uh had to do this to help arts uses.

We're talking though about doing this in privately owned spaces to help entertainment and and innovative uses in every neighborhood of Alexandria.

And so think about this as a jump start to a business who oftentimes would have to come up with a significant amount of money to pay for tenant improvements if they were going to lease a space, and this would help us potentially program new ground floor space at the West End development, uh, new ground floor space in mixed use buildings along Eisenhower Avenue, new ground floor space in some of the buildings that we're seeing in Potomac Yard.

Um this pulls on the recommendation that was very clear that came from Alex Forward that entertainment uses were something that our city was looking for.

And so this could be everything from and these are all made up.

I'm not disclosing anybody that we're talking to.

Um, you know, indoor mini golf.

I I know councils talked about bowling and um and roller skating and uh all sorts of um activities like that, but think through um, you know, crafting sorts of businesses, things that people would go to uh to to pass time to entertain themselves, to entertain children.

Um, but these are for-profit businesses uh most likely moving into least office or I'm sorry, least retail space in ground floor.

Um the I should have also said this at the very beginning.

These are concepts that were identified in the Alex Forward plan.

We're bringing them forward for council's consideration.

If they were to move forward, they will require very detailed um implementation plans uh about who would be eligible, how we would implement it, et cetera.

And so right now we're really talking with you all about the concept.

Um just a quick follow-up on the concept.

Do you guys have a target number of businesses you'd want to be able to serve with um the 250,000?

We um we don't have one off the top of our heads, but we could do some math based on uh tenant improvement costs.

Okay, yeah, I think I think it would be helpful and maybe I'll press a budget memo just to understand like just 250,000 get us two tenants.

Sure.

Um, or does it get us like five or six?

Sure.

And we're we're thinking about this as we would uh there's not an instance where we would fully pay for somebody's improvements, that this would be a subsidy um to potentially help make them more market with other retail uses, um, which frankly incentivize the user, but also incentivizes the landlord.

Uh so this the second program is I'll let the city manager talk about this one.

Yeah, so this is um where we have, I think we have a gap.

Um we are obviously doing quite a bit of um work in the old town area with City Hall, uh, the relocation of City Hall, the renovation, um potentially one on 100, 200 blocks, some flood mitigation, a lot of different construction activities that is changing the temporarily changing some of the dynamics, uh parking, uh detouring, uh staging of equipment, um, inconvenience related to events that happen on a regular basis.

Um, and I think there's a gap in how we communicate and and push that information out to our business community, particularly in the old town area.

And so a portion of this money would be used for that purpose to be able to uh add the communication necessary to to explain and talk about things uh much more in advance than we're able to do at this point.

Um, the other aspect of that funding is um the the council had put 25,000 aside for four old town events, the warehouse, the sidewalk, uh, et cetera.

And we learned through that effort that you know, frankly, it's it'd be easier if the city were able to uh pay for that and cover that under our staffing resources, perhaps with some contract uh working with those those businesses.

Um, because I think the model is a great, it's just who who delivers uh that work.

So that so there's 25,000 in that.

And the remainder would really be to uh to be utilize beyond the old town area in the west end, the east end, all parts of our city where we want to promote uh maybe activities that um like WIBA might be doing that that could promote some of the small business activities in in and around uh the community.

And I think this dovetails pretty well with uh perhaps trying to learn learn where we might have some small businesses that are in the process of you know, trying to expand, they've got a great product, they're trying to move forward in the market, they're struggling a little bit to get to that next level.

Um so this could be combined with uh that that other program.

And that's really what we saw uh with with this one.

Uh Councilman Green.

Thank you, Madam Mayor.

Umager, uh, does that include because it talks about City Hall, um Market Square, um the King Street black closures, but does it also include Upper King Street?

The the businesses in Upper King Street, we would include that.

Yeah, I'm lumping it all together.

Yeah, but what I would ask um for council while we're referencing old town, some of those dollars would be utilized in other parts, not just old town, but that was sort of to frame the conversation because that was more of the acute area where we're doing so much work.

So really, really from uh the metro all the way down to the waterfront.

Um that has a significant impact as we do construction, including the work that's being done at the Metro.

Okay, uh the next initiative is the continuation of a pilot that uh AEDP has been running called Alex Open Rewards.

Uh, this is a affinity program for independent retailers throughout the city.

We included in this uh note here some of the existing numbers.

We currently have 2,000 users and 731 participating businesses.

This is at provided at no cost to the business and was intended to help independents get repeat customers.

And what it does is allows a shopper who is registered as part of open rewards to get credit for money that they spend in an Alexandria business by then being able to spend that that credit at another Alexandria business.

And so I think we're all familiar with how these programs work with large national chains and how it drives repeat business.

Uh, we believe that the participation rates have been high enough to continue the program beyond pilot.

And so this proposal would allow us to continue it into fiscal 27.

So moving into goal two, which is targeted business development or business attraction and retention.

The manager mentioned uh yesterday's presentation that we carry about a million dollars each year for the last few years to allow us to be competitive and attracting larger businesses.

And the example he used was uh successful at retention and growth of systems planning and analysis this year.

Uh, that was a company that was creating almost a thousand jobs.

We realize though that there are a number of businesses that have the potential to create meaningful job growth, but perhaps only in the 2030 uh person range or significant investments and capital investment or uh lease uh extensions where we don't have any programs to offer them.

And many of the state incentives they won't qualify for.

But these businesses and their uh their growing here in Alexandria is extremely important to us.

And so we are proposing to create a fund of 200,000 where we would be able to uh provide a grant to a business, just like we do for these larger businesses who make commitments about job creation and or capital expenditure.

And so we've given some examples here of things that the grant could cover, but the idea that we could help them pay for co-working space, um purchase of equipment, uh licensing, things like that.

And um, again, this is a concept.

thousand dollars where we would be able to uh provide a grant to a business just like we do for these larger businesses who make commitments about job creation and or capital expenditure and so we've given some examples here of things that the grant could cover but the idea that we could help them pay for co-working space um purchase of equipment uh licensing things like that and um again this is a concept and so if this were to move forward there would be some really clear parameters that we would put in place so that one businesses knew who was eligible and who um would be considered but two there's a really clear ROI much like we do when we do any of these other larger incentives um you know when we bring any sort of incentive or grant to you we're pretty clear about why it makes sense for the city to invest and I and I would use that term invest in a business because they then are creating value for the city whether it's through taxes like we've just talked about or employment opportunities for Alexandrians.

Vice Mayor Bagley Thank you one of the um this probably isn't an exhaustive list of eligible uses but one thing that I was curious could it be used for is like a transit benefit like if a small business wanted to offer a transit benefit to their employees sure and if I just missed it in the list but it it feels like that's a win-win for the city in terms of having people come to work sure you know using BRE or using Metro that sort of thing.

Absolutely um I think that that absolutely would um would be something that we would see as a qualified expense that a business would take on that adds value um and that they might find uh helpful in attracting workforce thank you that reminds me this could also be some of the tying to our workforce training I know we're we're working with a fairly large initiative on that um that could also tie into that some many of these things that we're talking about now if you if you can almost see a situation where you know a really quality small business that is got some some opportunities and got some great opportunities to grow um could tie into an incentive a little bit of help on the lease uh working with us on uh you know growing their business uh to provide additional employment opportunities so some of these they could could work together and I think that's that's sort of how I think Alex Forward was was put forth is that it's probably not one one small thing that's going to do it it may be a series of things as well as obligations on the part of those small businesses to provide certain community benefits to our community as an exchange.

So the ROI is financial but it's also community ROI.

Okay.

Um the last program that we are proposing in this first um version or tranche for Alex Forward is focused around innovation and entrepreneurship in national innovation quarter or national IQ.

So part of what Councilman Chapman actually reported out yesterday at at the council meeting was that uh recently Alexandria and Arlington have partnered together to declare that national landing is an innovation district and we have worked with some consultants to help us identify opportunities to attract businesses around growing sectors.

We have identified defense tech as as um and government technology and a number of other industries as being targeted areas for growth based on our anchors in national landing but also in in what sort of industries are growing and one of the things that has become very clear is that there is a need for what we would consider to be non-traditional commercial space and it doesn't currently exist in Alexandria or Arlington and it doesn't mean that the real estate itself doesn't exist it means that no one is operating what we would consider sort of innovative space for RD and umoffice uses.

And so we are proposing that we would use some funding to launch an innovation lab in partnership with Virginia Tech and um under the brand of the national IQ to attract these sorts of corporations who are looking to do RD and want to be proximate to the resources that we have here.

This could come in the form of us renting a warehouse this could come in the form of us using some retail space that exists and reprogramming it could come in the form of a temporary structure that we put adjacent uh to national IQ these are all things that we would explore.

We also are have identified a potential grant partner or in and are in the process of pursuing that grant and so we uh thought that this was a recommendation that comes from Alex Forward that has some really potential um like immediate impact so it's I just had a quick clarifying question so this 2000 dollars is to explore the potential of doing that it's not necessarily for like the space itself.

No, it's for the space itself.

Okay.

I guess I'm curious and this may be something that we have to think about as they're built out because my understanding this 7500 is one time.

But it's my understanding this 750,000 is one time.

Yes.

Okay.

I guess how are we?

Maybe this question for the manager, but how are we thinking about the sustainability of some of these efforts?

Because I'm gonna believe that we get in and we're successful, but I don't want to have rent for one year for the next year.

That's that's a great question.

So to use a term we heard today, I we kind of saw some of these as experiential with a thought process rather than like a traditional pilot, let's try them.

Are they actually growing the opportunities?

Um we would end up coming back to the council, uh, frankly, if we found that we had a sustainable model here that some of this was working really well, for instance, on the lab, where we would then come back and say, okay, this is so successful and it's doing what we needed to do.

We need to put more money into it.

Um I didn't really want to do that now, frankly, because some of these things may not work so well.

Some of them may work really well.

Um I think that's sort of how we saw the one-time funding versus the sustained funding.

But the other thing I would say is if we are in the budget year and we find something very successful, we can we can tap into that million-dollar um economic development fund is already set aside or is planned to be set aside to to sustain that for instead of one year, maybe it's a five-year growing leash because we're so certain that that small business or that uh new concept that um that entertainment opportunity is so strong that we need to do that.

And it's also important to try to make that deal work.

Uh so that would be sort of how I think we would we would see it uh and recognize that you know, a lot of this is gonna have to be adaptable.

We may find an opportunity that we have not thought of.

Um, at least I hope that would be the case, and that where that's where we would need to pivot as to what what would that deal really look like?

Because it may be that especially for some of the companies that they're more interested in maybe not so much upfront money, but some tax certainty or some things like that.

So there's tools we can put in place that we're not even really describing in this um that are perhaps can provide that some of that sustainability or a bridge to where we have sustainable funding.

That's helpful.

I guess um what I would like to know, maybe in like future conversations as you're building that's out, is just I think it's great that we're testing things out and we're trying that's what we should be doing.

We should not put plans that just sit on a shelf, but kind of recognizing by the time funds would be allocated, and then by the time we potentially got into a space, we're already, I don't know how many months into the creation of the next budget process.

And so what are those quick indicators that we start getting back to the council?

What are those proof points that start to come so we can begin to be nimble in the next budget?

Um the other question I have.

So I'm mindful this effort is in Potomac Yard.

One of the other efforts was in Old Town.

Um, there isn't anything that is a specific West End initiative.

There are some that I think could be stretched in like the arts lead spaces, but I guess I'm curious, were there any um specific ALX forward recommendations that are West End specific that were in the catalyst bucket that could potentially be funded in this budget?

I don't I don't think there were any that were specific West End.

There were certainly a number that were site agnostic or were available to the entire city.

And actually I'm forwarding to this slide um to remind myself.

There are 130 recommendations.

And so our team actually this week um is is beginning the implementation in earnest with all of our partners.

And so we will be working to bring council a progress report in the fourth quarter of this uh fiscal year, so relatively soon, sooner than we think, um, to that will show you progress on all 130.

Um, you know, there might be no progress on some, but you will start to see all of the recommendations and how we are working on them and or where we need more resources.

And so through that process, we will take your comment and see if there is anything that was specific, but nothing I don't think I don't think anything was specifically just for the West End.

A lot of the recommendations were written in such a way that to extend good things that are happening in Potomac Yard and Old Town to the West End.

Um, and so we can go back and kind of look through it from that angle.

I mean, I think one thing that isn't here, like Stephanie said is um trying to activate graphical retail um the West End and other spaces outside.

But but um let us go back and take another pass at that.

Yeah, I guess I would I guess I'll frame it as maybe a specific budget memo.

Um and I guess what I'm looking for is a huge piece of this plan was on placemaking.

And I want to make sure that we're intentionally focused on all places throughout our city.

And so if there are any initiatives that um I guess don't just hint at the West End, but are specifically maybe would be more helpful there, more aligned with I'm thinking the ALX West planned or all of these other plans that we've had about the West End, I would love to see what those costs and if those could be in the budget.

And then I guess the other way I would frame it is if we move forward with these, maybe one of the evaluation points we should have is kind of a map on where we're seeing these business investments go.

And if we're seeing them only going to part of our city, then that might mean we need to adjust or do things differently with these plans to continue.

And then the last question I just had for all of these, it feels like the most important thing is going to be helping people know about them and get it out.

I'm just curious, do the budgets factor in like marketing cost or like promotion cost.

So what I what I tried to say at the beginning, and um thank you for asking this question is we are relying on existing levels of resource staff resources when it comes to program management, program design, implementation, marketing, performance agreements, all of the things that might come with all of this.

And so we are cognizant that um that this is a tight budget, and so there is no additional staffing.

What that means is that there might be some priority shifting.

I'll just speak on behalf of AEDP.

Um, if if a handful of these things ended up in um in our responsibility, which they likely would, um, we might have to re reassign some of our some of our marketing resources as an example, right?

For a couple of months as we launch a program um to make sure that we're doing an appropriate amount of communications.

Um, but we did not, I mean, just bluntly did not have the ability to to bring forward, I think, new staffing, uh, given the state of the budget.

Thank you.

Thanks, Mayor Bagley.

Just to return to the last point the mayor was making about um sort of in incorporating the West End.

I mean, something I love to second, and as even like the ALX open rewards program, like there's no reason why that couldn't equally be successful, you know, in the West End and the shops we have out there.

So maybe part of this, yes, I would love to hear the answer about other areas that could be targeted, but I think part of what I was also hearing and would like to have y'all sort of reflect back in your progress report is certainly with the open rewards and also with the investment fund.

Where are those rewards landing?

And do we do micro campaigns or targeted campaigns to make sure that um you know they're being equally taken advantage of.

Thank you, Vice Mayor Bagley.

On the open rewards, it is citywide.

What we have experienced is that there's lower adoption rates on the West End.

And we have been talking as a team about whether we can do specific campaigns and boost the percentage reward to incentivize more foot traffic and more patronage in communities that haven't adopted it as quickly.

So um, and we do have we can provide as a follow-up um some data on usage across the city and how many retail establishments are have have opted in and spend.

Um, but what what we've seen looking at that data is that we do think we would need a boost to start to see the same traction on the West.

So is there an opportunity?

I see Mr.

O'Leary sitting here.

Like, you know, this is clearly a focus of visit Alexandria is to sort of highlight there's more to Alexandria than old town.

And so I'm wondering if there's some economies of scale here or some efficiencies between linking this program to some of your targeted marketing to some of the other neighborhoods outside of Old Town.

Appreciate the question.

And there is a level of that being done already with the work that we work that we do in tandem with AEDP.

But there's certainly opportunities to put more juice behind that too.

Now I hear you on the staffing.

I think um we'll see how the results go and and what that can inform along the way.

Thank you.

Uh I I think I pretty much covered this, but in summary, um, just as a reminder, Alex Forward when adopted was acknowledged that this was a multi-year uh implementation plan.

And so these programs were really identified as what we think have potential to have return and are achievable and implementable given our current um set of parameters.

Um so we will be back to you all that these aside, as I said, in the fourth quarter with an update on how we're making progress through all of the recommendations.

And we will also spend some more time over the coming weeks, really shaping out these five programs based on your feedback and questions tonight.

Oh, I um I just want to circle back to where um Ms.

Landrum started in case um the reference to the 2015 tax study.

If that can still be tracked down, like if it still exists on the server somewhere, I would love to see it.

And then I don't know if it's as simple as asking for a budget memo to update it.

I don't know how complex that analysis was, but maybe the budget memo is what would it cost to update it and revise it?

Um that I definitely wanted to follow up on that offer there.

And I just wanted to lift up, I know um, I think this is the last slide on this section, but we have Mr.

Leary.

And I think there, I was just looking at the summary chart.

Um, when we were talking about marketing, it's it's different, but there is a one-time um $200,000 ad for small business marketing specifically.

So maybe that is an opportunity to highlight some of the businesses that we're telling stories about, or also ones where you can get your rewards at and so forth.

Um, any additional questions on revenue.

Okay, then we'll move to the next section.

Thank you.

Thank you all.

I will uh take this opportunity to check and see if we have uh Dr.

Ginsburg with us on Zoom.

I'm here.

I'm coming on video.

Okay.

Thank you.

Uh Council had asked us to include as part of the uh work session agenda, just an update on what's going on in Richmond, particularly as it pertains to bills affecting um uh local funding issues.

So at this point, I'll turn it over to Wendy.

Hey everyone, uh, mayor, members of city council, Wendy Ginsburg, I'm the legislative director.

Uh this evening I've been asked to provide a snapshot of two things as we enter the final two and a half weeks of the 2026 General Assembly session.

The potential legislative cost drivers for the city of Alexandria and the potential legislative sources of statewide and local revenue that could affect local fiscal capacity capacity.

Um I want to start to saying that Sunday was budget Sunday, which provided the first comprehensive look at what may ultimately be funded over the biennium by the state.

Uh fiscal implications extend beyond the budget bills themselves, however.

Several policy proposals under active consideration also carry cost implications and revenue opportunities, and all of this remains subject to change as negotiations continue.

And I want to start uh here from going through our city budget amendments.

And if you'll recall, we had uh three budget amendment asks that uh were included in uh the budget bills at the outset.

We had one on Freedom House accessibility at the Freedom House Museum.

The city requested $2 million for Freedom House Museum.

The funding would allow the Office of Historic Alexandria to construct an elevator providing access to the basement where enslavement were once held prior to being trafficked to the Deep South.

The funding would also partially support work needed to align the floor levels of the original historic structure with the newer edition.

The Senate included a budget amendment for one million in matching funds for the Freedom House Museum.

The House was silent, and funding decisions will be determined in conference.

Um the second budget amendment was a work group on locally subsidized state employees.

The city requested the establishment of a work group to examine fiscal impacts associated with locally subsidized state supported employees, which we've talked about a couple of times tonight.

That includes employees in the sheriff's office, the Commonwealth's attorney, the circuit court, and state health department.

This year uh support for these state employees required 41 million dollars from the city's budget.

Neither chamber included the budget amendment for the requested work group.

Although the Senate bill contains language that will require the Department of Planning and Budget to collect full-time salary data and employee counts of the state supported local employees this year.

This data collection might be a starting point for future uh policy making opportunities for the city and for the state.

Um the third budget amendment was the urban area security initiative, also called UASI.

The city requested 12.2 million per year for the biennium to replace federal funding that was removed from UASI, which supports regional national security efforts.

The House included $3.2 million per year for each year for FY27 and FY28.

The Senate did not include a budget amendment even at the outset.

So we weren't surprised that it wasn't in uh in the documents on budget Sunday.

And I'm gonna move to the next slide.

Um I want to move on to major potential cost drivers, and this is all contingent upon enactment.

I just want to restate that.

Um the first one I want to talk about is WAMATA.

Um, in FY2027 or FY2027, Wamada will have a 153 million dollar funding gap.

Despite efforts to pass a legislative proposal, this General Assembly that would generate long-term sustainable funding for WOMADA and transit across the Commonwealth, none of them made it past crossover.

Absent sufficient state support to close the 153 million dollar funding gap for ROMATA operations in fiscal year 2027.

Alexandria would need to absorb approximately 21 million dollars annually, equal to roughly half of Dash's total annual operating cost.

The House bill, the House budget bill includes $153 million in one-time general fund support for WAMATA for the biennium.

I understand that that's just one year, but sometimes we take it one year at a time.

The Senate proposal is different.

It proposes accelerating the expiration of data center sales tax and use exemption and moving it from expiration in 2035 and moving it up to January 1st, 2027.

And then they would use that new tax revenue to help fund some of the change uh some of the General Assembly's anticipated uh anticipated 205.7 million for WAMATA's capital fund over the biennium.

And I say capital fund because I will note that the Senate budget did not include a lot of funding for Wamada's operating costs.

It's actually very little, meaning the city would still have about a $21 million operating gap in 2027.

The Senate amendments also move 156 million over the biennium from the higher Northern Virginia Regional Transportation Sales Tax Base to WAMATA's capital fund directly.

And without this provision, the funding would have gone to the National the Northern Virginia Transportation Commission.

The Senate bill would also raise the regional hotel tax in Northern Virginia by one percentage point, which is expected to generate $34.3 million over the biennium for WOMA.

I'm going to stop with Mamada and move on to the schools, which we learned also this week, that's one third of our city budget.

Schools represent a significant part of our budget.

And as our city manager told us last evening at uh yesterday's meeting, uh state funding totals less than 6% of the total school budget.

For FY 2026, Alexandria's state school appropriation was $77.2 million.

The estimated FY 2027 distribution is $83.2 million.

Under the House proposal, additional funding provided to the City of Alexandria includes $508,000 for the state share of an optional $1,500 bonus for qualifying teachers in FY2026.

If schools chose to choose to pay this bonus, they unlock an ad access to additional flexible one-time funding for FY2027.

Alexandria's estimated share of that funding would be approximately $2.8 million and could be used for anything tied to the school division's needs.

In addition, if the city pays the 26 bonus, it would receive approximately $668,000 for the state's share of a 2% pay increase each year for FY 2027 and FY2028.

It's important to note that Alexandria typically funds approximately 80% of school pay-related increases.

So this funding only pays for a portion of these bonuses and raises.

The city is also slated to receive about $270,000 increase in a special education add-on in FY2027 under the House bill.

And the House bill also provides $250,000 for the joint subcommittee on elementary and secondary education to resume its work examining the 2023 JLARC recommendations that could change the existing school funding formula, which is a legislative priority.

The House proposal also allows for flexibility for localities to phase in the bonus that I talked about earlier into 2027 as well as flexibility, allowing an average annual pay increase below 2% with prorated state funding.

Now on the Senate side, when it comes to schools, they propose a 3% salary increase each fiscal year for funded instructional and support positions, providing $193.3 million from the general fund to go statewide.

Increasing at risk at funding, they would add $118.7 million statewide.

The Senate budget provides some money for special education, which has historically not been funded.

We are looking for more details about what that funding looks like.

The Senate also includes a $1.3 million investment to renew the joint subcommittee on elementary and secondary education, the same as the House, which again would continue its work examining the JLARC studies and bring forward workable solutions for a potential new funding formula.

Finally, the Senate bill provides adjustments to per pupil per pupil infrastructure funding, including a $60 million increase statewide.

I'm going to take a pause for a second and move on to collective bargaining.

In the current provisions of both the House and Senate bills, a mediator could impose a binding agreement regardless of local budget constraints.

Final fiscal authority would shift from elected officials to a third party.

The legislation currently contains no safeguard tied to a locality's revenue capacity.

As imposed, uh the award could create structural costs requiring service reductions or revenue adjustments.

And staff have been working with the patrons to provide the city's unique perspective on these bills since we have collectively bargained and understand the importance of local budget constraints.

There's also in the bills a 2% state, both of the state uh the Senate and the House propose a 2% annual salary increase for locally supported state employees.

Uh the city, as we talked about, the city already pays close to 41 million dollars to uh subsidize these positions, and that would also potentially add an increase.

Um these are a lot of the potential costs.

I'm gonna move on to the the next slide where we talk about potential revenues.

Um as I noted area when I talk about Wamada, there's a Senate proposal to accelerate the expiration uh expiration of the data center sales tax and use exemption again from 2035 to 2027.

Um that's only in the Senate bill that that is proposed, but that would generate a nearly a billion extra dollars for the state over the biennium.

We're unclear whether that will actually come to fruition, however.

Um the second uh substantial revenue builder would be that there are vehicles in both the House and the Senate that would authorize localities to impose a sales and use tax of up to 1% dedicated solely to the construction uh school construction if they're approved by a local ordinance and voter referendum.

I will say the House it's a bill, and it does not currently have a provision that allows for debt service.

The Senate, it's budget language, and it does allow for budget uh but for debt service.

Actually, it's the other way the house allows for debt service, the Senate does not allow for debt service.

So there's differences between the two.

Several localities already have this authority.

Um in Alexandria, it could lead up to 40.5 million per year for the city for school construction needs.

Now there are three other pending legislative policies that I'll roll through pretty quickly that could uh could generate revenue for both the state and local.

The first is uh a statewide legalization of cannabis taxes that could generate it, it could generate between 1 million and 3.8 million in FY27 and between 1.9 million and 6.6 million in FY28.

Um these that's in the House bill, which allows for a 1% or a 3.5% sales tax if this bill is enacted.

The Senate bill would allow a 3% uh would require actually a 3% local tax option for the sale of cannabis.

Um, it would also generate funding around 2.3 and 5.6 million uh statewide.

That wouldn't be for the city.

None of those numbers are for the city, they're statewide.

So they're not super significant revenues, but they are revenues that would be available for localities.

Um the another bill that's up is uh a bill that would tax firearm and ammunition.

It's only a state tax.

It would be an impose 11% sales tax on firearms and ammunition manufacturers for sale and distribution.

That could raise 76 point or set 63.7 million in FY28 because it doesn't go into effect until later.

There's no local taxes associated with that bill.

But then there's the skill gains bill.

Um skill games are currently illegal in the commonwealth.

The city opposes legalization, but there are two bills that would recreate regulatory schemes that tax skill games at 30% on profits from the machines in the house and 25% in the Senate.

Uh the revenue that is generated, 15% of which would go back to localities that allow for these skill games.

Currently, there are referendums required.

Um there are referendums required for uh for localities to uh approve or opt in or opt out.

So the House version requires an opt-in referendum, the Senate currently an opt-out referendum.

Um there, I'm just gonna stop and say we have a few more dates.

Uh uh February 26th, tomorrow, each chamber has to act on their budget proposal.

In March 4th, each chamber has to act on the other budget proposal.

Also on March 4th, we'll finally know who the budget conferees are, and then by March 9th, all committee action and legislation must be complete.

And then on March 14th, the session adjourns sign eye.

Uh, but it's not over until April 22nd when the General Assembly reconvenes to consider the governor's action on bill and budget items.

And in the Virginia, the governor has the ability to line item uh any changes in bills.

And I'm gonna take a pause there and see what questions you guys have.

I'm happy to answer any questions from the council.

Okay, are there questions?

Um, Councilman O'Nuby.

Thank you, Mother May.

Uh thank you, Dr.

Ginsberg.

Uh can we go back to the slide that uh shows the 40 million um if the yes for the school you said 1% sales tax?

So how does that equate to 40 million?

Is 1% sales tax 40 million dollars?

I uh 40.5 million per year for the city and school construction needs is what um our budget office had anticipated could come from a 1% sales tax.

That's correct.

Okay, got it.

Um that's it.

Thank you.

Councilman Green.

Director Kinsmark, can you go back to the slide um with the schools?

Um I tried to catch it um, but I couldn't.

Um the add-ons, which are very important um to our schools here in Alexandria, the at-risk add-on and the special special education add on.

Could you go through those numbers again?

Sure.

It's much more granular in the house.

The granular numbers haven't actually been published yet for the Senate bill.

Um let me make sure I'm sure I'm reading this the right thing for you.

Um let's see.

So for the house, like I said, there's the the pay bonus.

Uh there's also the 2% pay increase each year.

Uh, and then there is a $270,000 increase in special education add-on for FY27 in the House.

Um, and then in the Senate, there is a proposal for uh an uh $118.7 million statewide at risk add-on.

Thank you.

Okay, are there other questions?

Okay.

Um thank you, Dr.

Ginsberg.

We appreciate the update.

And I know we have uh the return of our legislative meeting this Friday for I think updates on what happens to the rest of the week.

So thank you for all the great work down there.

All right, I think we are at our last two slides.

Uh we are.

So we are at the budget calendar.

Um tomorrow night we will be doing the public presentation of the budget at Charles Houston Recreation Center at 7 p.m.

And then next week um will be the joint uh work session with the schools on their operating and capital budgets that will be at the school's headquarter.

And then the following week, as I mentioned before, um we'll we'll have the Monday uh ninth.

We'll have the public hearing, and then that Tuesday, the 10th, will be when uh we'll introduce the tax rate ordinance and need to set the maximum tax rate, and then we'll follow that with the first of the departmental work sessions um on Wednesday, and that will be the public safety, safe, secure, and just area.

Okay.

Well, thank you.

Um, I think this was a great first work session and exactly two hours.