The Courts--What Next?

Since I last posted my concerns on moving forward with the construction of a new court facility there have been some significant changes. The Post Office site has been abandoned and we are now looking at a new site--the current District Court/Fire Station site on Princess Anne St. The cost for the court project has also dropped to the $35 million range which includes the relocation of the fire station. Unfortunately, the current economic climate has also continued to changed for the worse, with no sign of improvement in the near future. For this reason I still do not believe we are in a position to move this project forward.

I have been privileged to have been involved in moving forward some significant capital projects in the City. Two new schools, a new police station, a parking garage, and the city's first community pool. In each case the support of the community was obtained, to include a tax increase in the case of the schools. In each case these projects contributed to the city's overall quality of life, safety, and contributed to the city's economic vitality. For its cost, the new court facility does not represent a significant contribution to Fredericksburg quality of life or economic vitality.

The reason provided for moving the court project forward is that the city is obligated, under the threat of a court order, to provide for better security and to meet the space needs driven by rising case loads. I do not dispute either of these points. However, the future increase in case loads is not being generated within the city. The 2007 Moseley report states:

"the city’s population is not expected to grow significantly during the coming years, but continued rapid growth is expected in the surrounding counties. As a result, the Fixed Ratio to City Population model would not seem to be a reliable indicator of future case filings. It predicts no meaningful change in case filings for any of the courts, even though it seems certain that increasing regional population has substantially affected court case loads in the past."

The city is expected to bear the sole burden of the cost and operation of a new court facility to meet a regional need.

One aspect of the court project that has not been discussed is the increase in operational costs. In the latest presentation to Council representatives from Glave' & Holmes Assoc. acknowledged that they did not see any significant savings, but rather some increases, in operational costs. In the Moseley report the number of employees need to operate the facility over the next 20 years will rise from 78 to 118.

While I have acknowledged the city's obligation to provide adequate court facilities I would be remiss if I did not point out that the state has some obligation to the localities. But in their case these obligations, related to transportation, education, and public safety, have not been met. In fact funding in these areas have been cut. All indications are that they will continue to be cut. This failure to meet their obligations has increased the financial burden on localities and made it more difficult for them to meet their obligations. Yet Fredericksburg is expected to meet their obligations no matter the cost.

City staff deserves credit for bringing forward the current option to use the District Court/Fire Station site which meets the courts needs, provides options for expansion, and brings the cost down to around $35 million dollars to include relocating the fire station. Staff has stated that the $35 million represents the high end cost of the project. Also, because the fire station relocation will need to be completed prior to the court construction the debt can be spread out. However, our financial situation has continued to deteriorate.

In the Moseley report released in 2007, before the financial collapse, staff made in clear how much the City could afford when they made the recommendation to only build space for (2) new courts on the current Juvenile and Domestic Relations Court site--

"City staff has indicated that a cost of more than about $30 million for new court facilities is not affordable for the City at this time. As a result, any of these three options are cost prohibitive."

Since the staff has made the above recommendation the economy has collapsed and we have had to reduce the budget over the past two year, leaving positions open, and putting off needed infrastructure improvements and repairs. In the Budget Transmittal Letter submitted by staff with the FY2010 budget they made it clear that there was no sign of an end to this trend--

"In spite of the progress made in closing the gap between revenues and expenditures in the FY 2010 budget, the outlook for FY 2011 is extremely difficult. The City continues to call upon its dwindling fund balance reserves, and the City has reduced total personnel and deferred maintenance and capital outlay replacements in order to reduce overall expenditures. The City will need to invest in the deferred maintenance and capital replacements eventually, and still needs to maintain service levels in accordance with community expectations. Without significant new revenue growth, the current austerity climate for the City will continue for at least the next two or three years."

During our Council retreat this past week the staff presentation on the budget pointed to even more significant challenges in the coming years--

• We are already using $1,296.290 of General Fund Balance to balance the current budget.

• Additional state cuts to localities are probably forthcoming during the current fiscal year and it is a certainty that local funding from the state will be reduced again for the FY2011 budget.

• Because the state has reneged on the agreement to help fund the Cowan Blvd extension we are looking to use local revenue in FY2011 in the amount of around $137,000.00 to cover the debt service. For the next few years that amount will rise to $437,000.00 a year.

• It is expected that the City will face an rate increase in Virginia Retirement System from 3 to 5 percent resulting in an increased cost of between $600,000.00 to $1,000,000.00 a year. The School system will also see an increase. A 1 percent increase to the schools totals $190,000.00.

• The City is expected to also see an increase in the cost of insurance. The amount will not be determined until after the bid process is completed.

As for new revenue sources we are looking at the new Free Lance Star printing plant, and the commercial component of Eagle Village Phase I. Also our Local Composite Index (LCI) has dropped a bit from .7943 to .7763 meaning a larger percentage of state school funding. However, the amount of funding provided by the state has decreased and will likely continue to do so. Similar cuts from the state, cost increases, noted above, will probably more than offset any gains from new commercial development.

It should also be pointed out that economists are telling us to expect a further declines in commercial property values which will place added stress on our commercial tax base. A reminder that we reassess property every two years. The Kalahari project is on hold due to the a tightening credit market which is also affecting area businesses.

I will acknowledge that there will be savings in construction costs if we proceed now. However, continuing to put off needed capital infrastructure improvements also comes with increased costs. Adding 6 to 10 cents on the real estate tax rate just to cover court debt service does not give us a lot of room to find resources to meet our infrastructure or service needs. Under the current fiscal constraints building the courthouse will affect funding to other city services, including schools, and other capital projects.

We are facing the worst economic climate in generations and no one is predicting when it will turn around. Some have said the economy is beginning to turn but unemployment and housing foreclosures continues to rise and business continue to close. It is this uncertainty in the economy that also justifies the need to wait on the court project until we get a better handle on where the economy is going. The return to the city with this project does not warrant the gamble.

We do need to build new court facilities. However, under the current economic condition the city faces, and the fact that this project does not contribute to the city's overall quality of life or economic vitality, it needs to wait. Our focus right now needs to be on maintaining city services.

Should we move forward with the court project and, if so, why?