Board of Supervisors Budget Work Session   4/7/2025

I'm pleased to call to order this meeting of the Albemarle County Board of Supervisors on the 7th of April, 3 p.m.

in room 241 of the McIntyre Office Building.

Like to note at the table, we have Supervisor Mike Pruitt of the Scottsville District, Supervisor Bea LaPisto-Kirtley of the Rivanna District, Supervisor Jonathan McKeel of the Jack Jouett District, Supervisor Ned Gallaway of the Rio District, Supervisor Ann Mallek of the White Hall District, and myself, Jim Andrews, representing the Samuel Miller District.

The forum is present.

We're also joined, as always, by our

Officer Paul Quillen and Officer Brooke Chico, thank you for your service today and every day on behalf of colleagues.

Let me also note at the table, we have our Deputy County Executives, Ann Wall, Trevor Henry, our Chief Financial Officer, Jacob Sumner, and our Assistant Chief Financial Officer, Andy Baumann, who will be joined eventually by our Chief Operating Officer, Christy Schulman.

Where's my mobile machine?

Good afternoon to the board, and thank you to the chair for the introduction.

Today is work session number five with the fiscal year 26 proposed budget.

We have a few topics, but we're going to spend most of our time talking about affordable housing and the CIP to continue the discussion or kind of an idea that began at the last budget work session on March 19th.

Just a few slides to recap.

It's been a couple weeks since we've been together.

We have completed all the activities in March through the work sessions and the town halls.

After today's work session, there are two town halls later this week at Western Albemarle High School and North Fork Research Park, followed by the seventh and final town hall next week at Journey Middle School.

This month will conclude with the public hearings on the tax rates and the budgets, and then the budget process will be wrapped up on May 7th.

So this is the last work session that is scheduled at this time for today, though certainly not the last opportunity for the board to engage with the budget.

There are three topics for today, the first of which is really spending some time with affordable housing and the CIP.

This is the first time there is ongoing funding dedicated to affordable housing or into the Affordable Housing Investment Fund.

This would be the board's desire to look at what if something were to be done different in terms of the CIP, what could that look like.

Mr. Sumner is going to lead that part of the presentation.

After that, I will come back and do a brief presentation to continue previous human services funding process discussion based on coming from a board member to just bring that back in case the board would like to consider any adjustments.

And then finally, it's just a time for the board if there's anything else they would like to identify knowing that this is the last work session.

The board, of course, they amend the budget all the way up to April 7th and then beyond that during the year.

If staff helps the board get ready to finalize the tax rates in the budget on May 7th, this is the only thing we can do for that.

That would be part of that.

I will share all the Q&As.

There's actually one final one from prior work sessions we have to send to you all today.

All of the questions have been responded on the website, but certainly we'll add to that should any follow-ups come from today's meeting.

So one slide before I turn it over to Mr. Sumner.

This is a slide we've seen many times during the work sessions of the $0.04 real estate tax increase included in the proposed budget.

We've talked at length before about the dedication to public safety, schools, and to affordable housing.

That affordable housing amount of $0.04 is $1.2 million of ongoing funding.

And as I mentioned a minute ago, it was the first time that we had that ongoing funding into that fund.

So we're going to spend most of our time in today's presentation focusing on that point four.

But of course, the board has the flexibility to adjust anything in the budget among dedications, other changes in the budget, with the one exception that a tax rate cannot be adopted higher than what was advertised at 89.4 cents for real estate and 428 for personal property taxes.

Thank you, Mr. Bowman.

Board, always a pleasure to be in front of you and today we're going to talk a little bit more about the affordable housing investment that is in the proposed budget.

So as Mr. Bubba mentioned there is the 0.4 cent dedication for affordable housing in the budget and I also recognize that there is the additional three million dollars of one-time investment that's been included in the proposed budget as well.

But for today's purpose, I'm really going to focus on more of that dedicated revenue stream because that fits more closely with the conversation about how affordable housing could fit into the CIP or can be addressed in a way similar to how we fund the CIP.

So not ignoring or dismissing the $3 million one-time investment but really focusing more on that recurring revenue or more of that dedicated revenue stream.

So this is a slide that the board has seen before, and it may have been a little bit since we brought this back before you all, but I thought it would be good to start with some background and just reorient ourselves with

I think that affordable housing and affordable housing needs is on a continuum.

There's multiple needs at different levels on the affordability spectrum and so as we've talked before, there's many tools that can be used to address affordable housing on these different levels

So not that we're going to address any singular or any individual opportunity today, but just as a reminder that as we look to impact affordable housing in our community, that there are multiple tools that we'll be looking at along the way.

And hopefully today we can talk about one that potentially we can add to the toolbox.

From a historical perspective, just a reminder of where we've been on the affordable housing investment fund.

The funding sources for this fund in the past have really been one-time transfers from the general fund.

There is, you know, transfers or sourcing from our affordable housing proffers, although it's been much smaller in comparison to the one-time transfers that have come from the general fund.

As Mr. Bowman mentioned on the 26th proposed budget, there's the ongoing, and again this is the change, that's the ongoing component of the 0.4 cents dedication of the real estate tax.

Also as a reminder, some of the past uses of the affordable housing investment fund has been our investment with Virginia Supportive Housing and Premier Circle, our investment in the Southwood redevelopment phase one and phase two with Habitat, and then also in the Southwood redevelopment area, the Hickory Hope Apartments with Piedmont Housing Alliance.

And a final example of a past use is our commitment or support of AHIP, not to be confused with AHIF, which is our investment fund, but AHIP, which is as we used to support their rehabilitation and energy improvement program.

This slide the board has seen before in previous work sessions and this is just another point in time slide about the number of affordable housing units that are currently in our community as well as another metric of affordable units that are in our pipeline.

So a lot of these slides I've just presented are laying the background and kind of reorienting us

where our affordable housing needs have been, where we've been addressing them, and kind of get us up to speed before we dive into some scenarios and some different options that the board may want to consider.

So at the March 19th board meeting, staff was asked to explore whether the county could borrow for affordable housing projects really within the context of the capital improvement program.

And so as we prep for the discussion that's going to come later in my portion of the presentation, I wanted to start with just some baseline, some baseline considerations to keep in mind before we dive into really more of the details in trying to answer this question.

This really focuses around borrowing or leveraging and really leveraging ongoing revenues to help support or fund projects, whether that's capital projects or affordable housing projects,

where we currently issue bonds for projects that we're trying to construct or impact today that will then pay off that borrowing over time.

Any borrowing for capital projects, whether it's for affordable housing or general CIP, we always want to consider taking consideration of a few other aspects as well.

We want to make sure we consider our debt-related financial management policies and the Board has approved our financial management policies and there's some specific debt-related ones that are in those and I'm going to talk about those in the next slide but that is really one of the main considerations we want to keep in mind as well as our capacity within those financial policies and the flexibility that we have within that capacity.

are proposed FY26-30CIP totals of $322.7 million.

And so any addition to borrowings or any addition to projects would also want to be in context of what's already been proposed of the $322 million.

And any debt that is, or any borrowing, any bonds that would be issued to support that CIP, we need to address our capacity as well on top of those fundings.

Affordable housing projects in relation to CIP, we want to ask the same questions we ask any capital improvement project.

What are the other considerations?

Are there any operating costs?

Post implementation of a capital project is one of the questions we typically ask.

What are those ongoing operating costs?

So we'd want to ask the same question in the context of affordable housing projects.

Are there related operating costs that we'd want to consider or take into account?

Whether it's trying to have some monitoring of those projects, really looking at accountability.

Are there any clawbacks that we would want to monitor and keep an eye on?

We'd also want to take any affordable housing projects that may be included in the structure of the CIP regarding the timing.

I'll talk about this a little bit later from a legal standpoint, from a bond issuance standpoint, but if we were to include projects for football housing within the CIP, the timing of issuing the funding for this project would need to match up and align with our funding for our capital projects.

We wouldn't recommend issuing bonds specifically for affordable housing on a standalone basis.

It would be coupled with the more larger general CIP borrowings that we do on a periodic basis.

And the last consideration that I have on this slide for the board to consider is borrowing for affordable housing projects would be new for the county, but also would be new across the state for many localities, many counties in particular.

Now that's not saying that there aren't other localities that have issued bonds to help pay for affordable housing projects, but those are typically cities.

and those typically have redevelopment housing authorities and those give additional powers and different abilities that most counties by themselves do not have.

And so while we're looking at other peer localities that may have issued bonds to fund affordable housing, there's just not a lot out there that would be an apples to apples comparison for the county.

So we just have to recognize that this would be new for us but also new for other counties.

So this is the financial management policies related to our debt ratios I mentioned earlier.

And this slide should look familiar.

We talked about this back when we talked about the CIP and debt.

And I think I believe our third budget work session.

But the one I want to focus on is really that debt service as a percentage of general fund revenues and not ignoring or giving much credence to the outstanding debt as a percentage of assessed value.

Those are both important but when we talked previously about the headroom between our

maximum threshold for these policies and where we anticipate our projections to be against these policies.

We highlighted back at the third work session that our tightest headroom is in really FY29.

As we built out that $322 million proposed CIP, this is where we would anticipate our ratio levels to be when we get to that point in our

Anything in addition, as mentioned earlier above that, a proposed CIP would just add some more pressure and be layered on top of the ratios and scenarios that you see in front of you.

In the past, the Board has expressed a desire to not push up to the maximum limit, to allow some flexibility and some headroom should we have some

different economic circumstances that would potentially lower that or bring that capacity number down.

So always have a little bit of headroom between where we anticipate to be and our policy maximum.

It is a good best practice to keep in mind.

We also discussed back in the third work session about our bond ratings and the importance of our triple AAA rating Attaining this achievement gives the county greater flexibility in both our operating and capital budgets by receiving the best possible interest rates when we go to issue bonds

That in turn gives us flexibility by having lower borrowing costs, lower issuing costs.

That gives us the ability to respond and have flexibility in those budgets.

It also gives us the ability, by having this triple A rating, the ability to access the market when we need it.

Back when we issued bonds in I believe 2023 we had nine firms that bid on our bonds.

That shows that there was great demand for the bonds that we're issuing and so if we need to issue bonds the demand is there and so we have the ability to issue those as opposed to to look out as it may have a lower bond rating

It's very challenging to have that many folks bidding and competing for those bonds.

And the importance of having this flexibility, particularly as we look around at the news and the economy, both in the national level and the local level, having that budgetary flexibility is really important as we look to weather some of the challenging headwinds that potentially could be out there.

We're watching the stock market on a regular basis, returns on a regular basis, the unemployment rate, all the metrics that we use as part of our financial analysis and financial forecasting.

And knowing that we have this AAA rating and the ability to adapt and be agile in our response is a pivotal tool in our financial resiliency for the county.

So this was a lot of background that I covered based on our financial policies, a little history on the housing investment funds, but I haven't really answered the question yet and that was intentional because before we go into the scenarios I wanted to set the ground work and set the stage

for where we are with our current proposed CIP, the debt capacity that we have before we dive into the specifics.

And I want to preface in the next couple slides is I want to walk the board through some recommendations from bond counsel on what we can.

and what we cannot borrow for, then I'll be going into some more scenarios specifically about the Affordable Housing Investment Fund related to the dedicated revenues.

I'm asking what percentage is unhealthy?

It seems to be in the 6% area.

We're now up to 8%.

So I'll answer that in two ways.

The first, the change that you see from 26 up to 28 and 29 is really driven by the capital improvement plan and mainly driven by

Those are some of the largest projects that we've funded and that carries a large debt burden as well and so that's what that's a driver for what's taking that line from about 6% to the 8% figure.

As far as a recommendation to give headroom, the closer we get to that 10% mark, the less flexibility we have.

And then I notice on slide 9, you say few counties have received bonds for affordable housing.

I have a question on page 6.

Premier Circle, is that for permanent supportive housing?

CIP allocations in the context of the annual budget, because that's when we also review a five-year CIP.

But my understanding is we're not.

In the context of the budget, we're bound from midstream changes, because we can't change our tax rate in the middle of a fiscal year.

We have a total planning amount for that year.

Generally, other than

making sure we're planning for the interest payments.

I will start, but I'll let Mr. Bowman add a little more detail on the planning, particularly on the debt side.

We typically issue bonds about every two years, and part of that is the quantity or the number of

the cost to go through the process to issue bonds on a more regular basis it makes a little more sense financially to bundle those you know that also as we look at building out the CIP we plan for our cash flow needs you know related to our operating but also the capital component of this

And as we work through our bond schedule, that really ties into how often we issue the debt.

And so we really want to work hard towards trying to make sure we have that on a regular cadence.

I'll add one example and maybe help the board think through this.

A few years ago, we had in the CIP an annual amount of economic development funding.

that funding was able to then be converted to the Rivanna Futures Project which again the money was there it just changed from a concept to a real project mid-year.

We updated the budget to reflect that and the bonds were issued as Mr. Sumner described.

I've mentioned that as a concept for the board as the board does not have to necessarily make a decision today because if that 1.2 million was kept flexible should a project arise at some point in the future that could be converted to a capital project.

Just for the audience for posterity to insight into what I'm thinking with this question, we know

Statutorily, the TOFA, the right that mobile home lot renters have includes basically an exploding offer to purchase and realistically this happens with other affordable housing developments in practice when they're being offered up on the market normally because

is expiring.

They often get sold two, three years before that because the person who is managing an affordable complex doesn't want to deal with the redevelopment.

And we get these, and we of course always get asked by our partners in the affordable housing space, oh, can you help us put together $80 million?

Which is a Herculean ask, and we're like, well, I've got

1.2 in the housing budget.

I raise this up as this is something we encounter.

And I do wonder how agile, in a pinch, we can be with these decisions through the CIP.

Just one comment, and you can correct me if I'm wrong.

I'm trying to phrase this in a way that's not confusing.

I think about the CIP as something that we develop in a five year and then another out year or five years.

So we have a five year CIP.

But we always know in the back of our minds, or at least I've always assumed, that that CIP can be adjusted

times, but it's much easier to adjust if we're talking about on a yearly basis, not within the year.

That flexibility.

So we can change the CIP.

It's not written in stone.

Things happen.

But we normally have adjusted it on a yearly basis when we're doing this type of work right now.

I would say typically within the context of the overall budget process rather than a one-off in the middle of the year.

That's how I've always viewed it.

Thank you very much.

So on page 5, the $4.2 million was mentioned in the housing buckets.

That would be unallocated.

Once that would be appropriated by the board, then we would have a process that would need to consider what those requests would be.

So just theoretically, the most sort of conservative 10 to 1 ratio we could

get $42 million out of them on a long-term basis and have that money be able to be, except the three is at one time, it's at the last.

OK, that messes up my math.

As you can see, I'm trying to figure out a way to have something that could then be used over a long period of time at great leverage to bring other partners into the majority of the funding.

And so I have just tried to identify

I have learned some interesting things in a conversation on Monday with Michael Anderson who works with trust funds across the country and it was an eye-opening experience for me because I hadn't been in the mind that I was supposed to generate a nest egg

It's no requirement to have the county building projects and managing all that.

He said most communities mentioned there were 800 across the country very much up and running for 50 years.

So we don't have to reinvent the wheel here.

We just need to pick and choose the very best things that other people are doing.

and apparently Richmond and Alexandria and Virginia have lots and lots of experience.

So it's not a terrible issue that we have to deal with.

So that's why I was trying to make sure I knew exactly how much we were able.

And I'll walk through different scenarios and I'll

One of those we'll be looking at how much we could leverage with that 1.2.

Very good.

I will stop there.

Thank you.

I guess I just want to make sure I understand.

When we say CIP and we talk about borrowing, it's clear to me that there are a lot of things in the CIP that we actually pay as

That is correct.

Based on the eligibility for borrowing and life cycle best practices, we wouldn't want to borrow for something with a five-year life cycle knowing the bond class for 20.

And so as we sort of weigh this possibility, we also have to look at these projects and determine whether they have a useful life appropriate for borrowing.

Yes, correct.

But also the pieces that are in the current CIP, whether they're being from borrowed funds or not, I guess I've maybe identified it here well, but I'm not seeing it immediately as to whether or not this project or that project is coming from borrowed funds.

Darktail Field Repair.

I would think that's not borrowed books, for example.

I'd like just a little bit more information on that.

And those are my only questions, obviously, comments that I can make.

More clarification.

This one, I know Supervisor McKeel brought up with the CIP and doing

In the first year, the capital budget is appropriated and moving forward.

Beyond that, that is just a plan that traditionally is a starting point for the following year, but the board has the full ability to adjust those.

The board could also adjust the current budget as well, but there would be more implications of that because things are under contract.

Thank you.

I actually have one more question as well.

In fact, on slide 10, I just want to make sure, and I'm not proposing that this is going to happen.

I don't think it is, actually.

But if we had some horrible, the assessed value properties went down like 10%, the way I read this, that 10% drop in the assessed value would still only drop

the limit on the 2% by .2% and the limit on the 10% by 1% because you basically take 10% of whatever is there as the limit and that's how much headroom you have I guess.

I'm trying to assure myself that

Certainly the advantage of time would be on the board side because that's not an issue in 2 fiscal year 29 and every year the board would have an option whether it be through

decisions on the expenditure side with projects, decision on the revenue sides, whatever that may look like.

There would be times when work through that would look like.

That's one of the advantages of not planning it at 10% so you don't inadvertently find yourself above those policies.

I would say in those projections, again, work with our financial advisors, it's a fairly slow and steady growth rate in that red line.

Alright, so this next section of the presentation we're going to talk about as we move towards scenarios and really illustrate some of the things that the county can and cannot do with affordable housing.

related to borrowing for affordable housing, we initially started with Bond Council.

Bond Council advises us on issuing bonds to help us in the bond issuance process and we also work closely with our financial advisors.

So the past couple weeks we've been working with a pair of them and we wanted to say,

at the core are initially what can we borrow for related to affordable housing and so we did receive some pretty good clear guidance from bond counsel and the financial advisors that there are some very eligible expenses that are pretty clear in code that

we can borrow for, and there are some things that are not.

So just as a reminder of how we issue debt, and the way that we issue bonds, issue debt, issue bonds, is we issue bonds through the Economic Development Authority, through the powers that are articulated in state code with EDA.

So in that context, the board or the bond council looked at what are the powers of the EDA within state code and what are the powers for localities within state code.

And so these recommendations or these eligible expenses that are listed on the screen, check the box on both sides.

So these are eligible expenses that could be

borrowed for and with bonds that were issued through the EDA.

So that was kind of a dual check, dual lens that we looked at.

So the first one is making grants and really making grants to facilitate the construction of affordable housing.

There is the ability within state code that allows both the county and EDA to issue debt or to issue bonds to help fund a grant pool.

Now it doesn't give guidance on how much or what specific eligibility is, but there is the ability for both the board and the EDA to issue those bonds to make grants.

The second component is really focused more around what we typically see with our capital improvement projects.

These are infrastructure or what we call public facilities.

So for our normal CIP, public facilities would be things like the courthouse, school buildings, things like that.

Those are considered public facilities.

So if the board wanted to borrow funds to help invest infrastructure related to development for affordable housing projects, as long as in the end what we expend those funds on is related back to a public facility,

That would be an eligible expense for borrowing.

An example would be if we wanted to borrow or if we wanted to help build out water and sewer infrastructure.

Because water and sewer infrastructure in the end gets turned over to the service authority, which is a public facility, that would be an eligible expense.

It would be the same thing for roads.

So our roads in the end get turned over to VDOT.

That is considered a public facility as well.

And so when we issue our tax exempt bonds, those would still qualify to receive the tax exemption but also would be eligible for both EDA and the board.

Land is another eligible expense, so if the board wanted to borrow funds and use those funds to buy land, that is absolutely within the ability of the board and the EDA to issue bonds to procure land.

And it would be up to the board to

How would they want to deploy the use of that land?

Whether it was a donation, whether it was a conveyance to the EDA that could then be leased for a long-term lease for full housing.

There's different structures and constructs that can be drafted on how that land could be used for full housing, but the actual purchase of land would be okay within the context of the state code.

Bond counsel however was pretty clear that there is an ineligible expense.

They said it is not appropriate for us to borrow funds or for the EDA to borrow funds to fund a revolving loan fund.

So you know to have a revolving loan fund you want some type of scene to

before you start making loans out of that, they were pretty clear in my conversation with them that that would not be an appropriate use within the confines of the state code to issue bonds through the EDA for that purpose.

So now that we set the stage with what is eligible and was not eligible,

Let's go a little bit further into the baselines we are building up into scenarios.

So again, borrowing or leveraging is really, borrowing is leveraging those ongoing revenues because we want to match up and ensure that we have an ongoing funding source for the debt service payments that come from Michigan bonds.

So the 0.4 set dedication yields about, in that context, yields about a $1.2 million annual revenue stream.

So that's one of the base elements of the scenarios is that $1.2 million annual revenue stream.

The next component is when you issue the bonds, that creates a one-time pool of funding.

So you have the ability to use a larger pool of funding that you've leveraged from that ongoing revenue.

But at the same time, we are then obligated to pay that debt service over a much longer period of time.

And our typical repayment period is 20 years.

So it's a one-time pool of funding, really more at the beginning of the borrowing, that is then obligates us to that annual debt service over 20 years.

And in this scenario, as we're building the elements of the scenarios, each $1 million in bond proceeds yields about $84,500 in annual debt service payments.

So that's based on the rates that we're currently seeing.

So those are the elements that are going to go into the scenarios.

So we have three scenarios that we're going to walk through today.

The first one is, option A is

What's currently proposed?

It's the proposed CIP with no affordable housing projects in it right now.

It's not leveraging any of that $1.2 million of ongoing revenue that's in the proposed budget.

Option B would be, what if we leveraged half of that dedicated revenue?

And the last option we'll talk about today is, what if we leverage it all?

And it's really good to answer Supervisor Mallek's question is, how much could we borrow and create in a pool by leveraging that full 1.2 million?

So that would be the third scenario that we talk about.

So for each of the scenarios, we've laid them out in this format.

And just to orient the board and the public to how these slides are crafted.

At the top where we have revenues, this really represents that ongoing revenue stream.

So this is the 1.2, which represents that 0.4 cents dedication of the real estate rate.

And then for scenario purposes, we've assumed 4.9% annual growth, which

So over the over the five-year time frame in which you know we typically talk about the CIP in five-year increments that's that's why we also have five years presented on these scenarios we would expect the 0.4 cent dedication to generate about 6.8 million over those five years

On the expense side, you'll see we have zeros.

There's nothing in this base scenario related to affordable housing capital projects or the debt service.

So again, this base scenario is what if we did not dedicate any of the ongoing revenue towards the debt service and that would be from leveraging the pool.

So this would allow for, again, that same amount, $6.8 million of

programmatic expenses related to affordable housing.

So again, this is really baseline.

This is very much what has been proposed in the current budget, particularly for the FY26 column.

Anything beyond FY30, the borrower would have full flexibility as well.

And that's going forward because there will be in the next scenarios, next slides, there's less flexibility when we go to leverage and have debt service in the out years.

So let's transition to option B. What if we dedicated half of that $1.2 million of ongoing revenue?

$618,000 would be the debt service.

So about half of that is about $600,000.

About $600,000 in debt service gives us the ability to borrow about $7.3 million.

So what you see in blue up in the revenue is that would be the pool or the funding source of the affordable housing projects that we could leverage with half of the dedicated revenue.

So again, for our purposes here today, and again these are just scenarios, if we were to issue the debt, or issue the bonds in this first year, we could have $7.3 million available for projects.

Now on the expense side, you'll see the $7.3 million also highlighted in blue.

That would really be the funding source for the housing projects.

What's down in gray is the ongoing debt service.

So out of 1.2 million, the first 600,000, 618,000 would go towards paying off that debt service to pay back that 7.3 million.

And even though you see it on years 27 through 30, this would continue all the way out from 31 to year 46 because this would be a 20-year debt issuance.

The ongoing expenses are really programmatic expenses would have decreased because we need to carve out some of that for the debt service.

It would really have around that $600,000 growing to about $880,000 of additional programmatic or annual

opportunities for affordable housing on top of the $7.3 million that's available for the capital projects or the affordable housing related projects.

So again, half of the dedication of the $1.2 million in scenario B would yield about $7.3 million in project funds for affordable housing.

The trade-off would then be about $618,000 in annual debt service for the next 20 years.

That would be utilizing a portion of that dedicated revenue.

The last option, last scenario that we have prepared for the board today is, what if we leverage that full $1.2 million?

So the calculation of what would $1.2 million of debt service relate to from a borrowing perspective, we could borrow about $14.6 million.

That would be for one-time purposes that could be used for affordable housing projects for those eligible expenses that I mentioned earlier.

However, what you would see, especially if you compare it to the scenario B or scenario A, the ongoing eligible expenses or more programmatic expenses would be greatly reduced.

There would be less flexibility and growth in dollars that would be dedicated towards the programmatic side.

Mainly because all of that dedicated revenue would be used for debt service.

Really what you're seeing in those outer years is really just the growth because the first things we'd want to pay is our debt service related to these projects.

So those three scenarios are really the one end of the spectrum with no leveraging of the ongoing funding to the other end of the spectrum of leveraging all of the dedicated revenue and then one right in the middle was split the

So as we looked at the financial policies earlier, when we were talking about headroom, continuing with our scenarios and our assumptions, we were curious how would each of these options, these scenarios, impact the financial ratios?

And so if we looked at the debt service as percentage of revenues, option A, that is what you saw earlier in the slides as far as the financial policy.

That would be projected to be just over 8% in FY29.

Option B would increase that a little bit more, and then option C would increase it a little bit more.

Now it doesn't get over the 8.5%, but it does eat into that capacity, consume some of that capacity by layering on additional debt.

This could, as with all debt issuances, using that capacity, we would want to consider other capital projects, any other capital projects that may be either in the pipeline or in relation to debt funding.

And then as we mentioned earlier, and we kind of talked about this as well, what if there was an economic slowdown that would impact more of that top line or that threshold?

So relating back to the R2R financial ratios, this is the impact of those three options.

And lastly, because I know there should be questions, I wanted to bring back this all into more of a summary slide.

The board wanted to borrow four affordable housings similar to like we borrow for capital projects.

The board could.

There are some caveats of things that you can and you can't borrow for and we talked about those earlier.

Mainly, you know, the ineligibility of borrowing to set up or establish a revolving loan fund.

But you could borrow funds if you wanted to fund affordable housing projects that were either grants, anything related to infrastructure or public facilities, or if you wanted to purchase land related to affordable housing.

but at the same time it also as we as we do with our capital projects taking the other considerations related to our financial management policies our debt ratios capacity and the ability to have flexibility in the future as we have more pressure in those ratios

and also to recognize that this creates, when you borrow or issue bonds, that creates a one-time pool of funding for projects and the trade-off for that is annual debt service payments typically over a 20-year time horizon.

And the last thing that we mentioned earlier and we're bringing up again here in the summary slide is we want to time the bond issuance.

If the board wanted to do any borrowing related to affordable housing, we would recommend coupling those with our other CIP

and that's really around bundling those together and doing the same issuances at the same time as you could do the CIP as you would do for affordable housing.

So there's a timing element in that as well.

from year 46, that's a 20-year debt.

So the amount we're paying on the bond debt, that would go for 20 years or just up to 20, 30 years?

The other one I think option B wouldn't be as much correct.

On slide 12, on grants

Are you referring to the Affordable Rental Housing Incentive Program?

So the funding for that incentive program is a rebate of the real estate taxes so that the bond for that would not or the revenues to fund the rental investment program would not

It could be, yes, related to the grants.

In our conversations with bond counsel, so if the board wanted to have a larger pool of funds, if they want to increase that investment, affordable housing investment fund, and use it in a similar way they have in the past, that would be an eligible expense.

What's the comparable in the CIP to this type of amount?

Some other category, total amount of dollars.

If we're looking at this as a snapshot and trying to turn 1.2 into something greater, which it does, but then we're looking at the 20-year cost which seems a little not palatable.

So what's the comparable in our CIP that we've done for years that's not a $100 million or a $50 million project?

Like an example $15 million project?

I'm assuming it would change given the year because rates are different, et cetera, et cetera.

But for the most part, we've financed this amount before for other things.

Yeah, I mean, certainly when we think of projects like the courts or the recent schools, I mean, those are 40 plus million dollar projects.

To do that or to do an additional $15 million of debt, I mean, that is something that is very common.

For this particular type of expense would be new, but that doesn't mean we can't do it.

I just want to put it into a perspective that it's not like we haven't done this before.

Right, right.

So when you look at the crossover, it's the way to turn the one

I think we've done a couple of things.

We've also made contributions and we've also made grants.

And then if the, have you run, you probably haven't done this scenario, but right now you're assuming

You know, nothing, dedicating half, or dedicating all, and then nothing will be out here.

We haven't introduced that type of variable.

You know, we wanted to really start with the base of what we have now.

The year one is 1.2 and maybe the year two is 2.4.

The dedication changes or the revenue jumps beyond your growth for the assessments.

I guess I'd have to ask both.

I wasn't thinking one of them.

Conceptually, if we go back to the comparison of even the debt chart slide.

I'm sorry, the headroom slide.

Yeah, the very end.

Yeah, so if we were to add another $1.2 million in debt service, we could imagine that we'd probably be close to the 8.5% of the headroom there.

But if a portion of that were to be used for some cash, some debt service, it would probably end up a little bit in between those two.

So if you had $1.2 million in debt service in year one,

The dedicated amount increased in year two, maybe by double, but you keep the debt service at 1.2 and throw the cash, you could maybe stretch what you're getting out of the five years, I suppose.

Yeah, conceptually, that would be accurate.

There's a number of variables there, and we can certainly run a scenario if that would help the board.

But those are ones with additional time, great additional certainty, in terms of the amount the board would like to accomplish.

And then the only way to set up a revolving loan fund is just with your cash, whatever you have.

Does it matter if it's ongoing or one time?

Just whatever you put in your fund.

No, it would just need to come from the general fund.

Construction.

So if you did, so Supervisor Pruitt mentioned like the mobile home example, but if you wanted to do a reconstruction or a preservation, I guess that would count as construction.

So I'll give you a very, so blighted, like let's take a blighted property for example.

I would imagine acquiring it could be considered land because the improvement wouldn't be worth it.

But if the county, I'm not saying I'd want the county to do this, but if the county then rebuild a house on it, I guess that's construction, so that's still there.

I think this gets into some specificity around where that land or the owner of that property would be in the end.

So I don't think that Bond County would have an issue

and then putting some type of structure on it.

Where we get a little tricky and there's little challenges when we when we issue bonds they're issued on a tax exempt basis and those really are for public uses and that's really that's why public facilities and infrastructure is a bullet point here.

If that land and improvements were to

I think I'm probably going to speak a bit but mostly in the form of to our final slide discussion rather than big questions if that's fine because I've been mulling this one a bit.

This board knows that this was

Something I was interested in, I was curious about.

I think option B and C.

And I want to kind of explain my thinking on this for this board because it might feel surprising But the 10 million dollar target that I know I have adopted that I talk about and share as a goal that I have during my tenure on this board It's not like a finish line and I cross it and then

Annual recurring funding that we should be willing to contribute into housing I see B and C and they get us to drop the confetti one year and then actually it makes it harder for us in following years to reach that because now I'm losing 1.2 million that I would have to try and make it to 10 million each subsequent year So I will hit it one year and then have a harder time hitting it every single year

It will ultimately cost us more than we will be able to pull down in that one year.

It will help Kaki catch up on her unfunded list.

And that is an actual thing.

We are losing ground every year on housings.

probably getting harder and harder to manage.

And this would help us make up some ground for a year.

But it wouldn't help us stay abreast of it.

It would actually make it slightly harder for us to stay abreast of it.

I feel like we're looking at this and we're all interested in this because we want a shortcut.

And I think the reality is there isn't a shortcut.

period, other than knuckling up and having the political will, if we believe in this, for annual dedications of funding, which is frustrating.

I want a shortcut.

And we could adopt option B. I could stand in front of impact at Nehemiah Action tomorrow and take credit and say, oh, we've accomplished it.

I did it.

I did it.

I do think, I mean, also I think this is what Supervisor Galloway was starting to gesture at.

There are certainly things that we need to be more comfortable thinking about as tools in our toolbox with the CIP.

Salvaging expiring complexes and properties.

escaping into these emerging, exploding offers.

And maybe even thinking proactively about the ones that we know are coming down the pipe.

Acquiring land, if we actually had a land acquisition policy, if we actually maybe updated our blight policy to include a thought for the acquisition of land.

And this is the big one.

Building our own social housing.

That's what CIPs for housing are used for.

That is, I think,

I don't think an appropriate use would be something that is so targeted and intended for kind of annual one-time operating funds because I mean the other thing Jacob you have you intonated toward this but is also probably best if we're using CIP money

on things that improve our future revenues, not things that make our future revenues more challenging, which this does.

It's hard to nail down a number, but Weldon Cooper suggests that we get about $0.39 more of a penny in costs than we do in revenues from an individual new resident.

This would be a CIP expense that makes our future services more more onerous.

I still think this board needs to think of how we're going to get to 10 million.

I think this is not the way because I think this gets us there for 2026 and then puts us back to where we started.

and the Jesus out of me.

I'm sorry.

But we don't know what it's even going to look like in two days, much less in five years.

I would be very concerned, given where we are.

But certainly, even if we didn't have any concerns at the federal level right now, what Mike is describing is concerning enough.

And I would just add that I really do think

Trying to get to this 10 million is a huge, it's really more complicated than it just seems.

But having said that, this board could look at acquisition of land, we have that blight ordinance.

I think looking at some of that is a much more viable option, certainly right now, given where we are.

The other thing I'd just,

and maybe Ann's going to get to this but Ann brought up something that Alexandria and I've forgotten the other, Richmond, they're cities and I'm

I don't see how we can do without redevelopment authority established how we can get to what Ann was referencing.

And maybe, I don't know that we even need to take a lot of time going into that right now.

Maybe Ann's going to ask that question again.

But I would be very concerned in this climate, financial climate, to take this move.

as much as I would love to figure out how to get to that 10 million.

Anyway, thanks very much.

Supervisor Mallek?

So let me go back up and start with some questions at the top.

Just one second.

When someone was talking about, oh, Jacob, you were talking about grant rules and things.

XYZ, some units if the county provided.

This is the site.

We've got it.

Would money that was put toward that be called a revolving loan fund, or would that be called just a regular, some other category?

So eligibility-wise, this seems to be the basis for how all these other ones, and I've only learned about a

partnering with others.

It's not just the local $10 million or $1.2 million.

It's all the philanthropic and outside private funding that's coming in that is the real difference that I see between something like that and taking the $4.2 million cash that we have and using it programmatically year after year after year after year.

We're not getting houses for people.

Partially.

I will say you mentioned the revolving loan fund.

So what you describe would not be part of a revolving loan fund.

Excellent.

Because revolving loan fund is typically when you have a pool or principle of funds that is then lent out with the anticipation that they're going to be repaid to basically reinvest into that pool that can be lent out again.

That

That's great.

Thank you.

Because the whole reason why I wasn't panicking about the annual debt service was because it was going to be multiplied by outside dollars.

So that's the whole basis for doing this, I think, is to bring in the other funding that can be leveraged.

Programmatic funding should be reduced.

So if someone has it off the top of their head, the programmatic side funding that we have that would be reduced

who needed these kinds of things that increased dramatically during COVID that are being budgeted for.

How many hundreds of thousands is that that would be in jeopardy if we did this?

So in the scenarios, and again these were just hypothetical scenarios, in comparing particularly the option A versus the option C, and I'll go to the option C slide

And option A, the annual, you know, so you're looking at out past 26, 27, 28, there would be about 1.2 million dollars plus that the board could use for programmatic expenses, whether that's making additional grants, you know, similar to what we're doing now with the Affordable Housing Investment Fund.

However, the other side of that is if we were to leverage the full $1.2 million, we would be obligated to about $1.2 million of annual debt service for the next 20 years.

And so the only additional programmatic revenues that would be available from that dedicated 0.4 cents

would be what's highlighted in green in this scenario through the out years.

When is the next borrowing time?

We just did one within the last number of months.

We haven't issued in the past year or so.

So our next issuance is planned for about a year from now.

Okay, great.

It crossed my mind when people were talking about paying for things with cash that in 2008, the county policies had a very high percentage of cash and much less borrowing for 20 years before.

And one of the things that was done to be able to keep projects going was to get back to a more normal person's approach.

Instead of buying a car in two years, you buy it in five.

I mean, it cuts down the cash.

that making the dollars go as far as possible I think is really, really important.

Henrico uses, for those of you who were at the housing conference, the Henrico description was incredible because they have a, I have to transpose my notes, but a whole system set up to use the blank

So we have, I think, the capability to do this.

It all seems to start with adopting the ordinance so that we then have the process to be able to send the RFP, because we can't do that now.

And right now, I have a sense that we're being sort of taken to the cleaners by people who want the cash dollars.

I mean, I read an article the other day that this is the new thing, is the venture capitalists are just, oh, there's lots of cash in affordable housing.

Let's make ourselves into an affordable housing thing and go get some.

And they really don't care about the tenants.

I mean, we're lucky.

We have developers here who build stuff at Ellicott Forever and take care of their residents.

Those are the people I want to be able to be in the game and figuring out a way that legally makes that extra points or whatever for somebody who does that.

It seems like that would be fair.

We have salvaged expiring.

years for sure, one that's in your district at least, that was heading up to its 30 years and got a huge amount of cash to make it, to get another 30.

But it did not have, it stayed in private ownership, which is still fine.

So what I was told for Richmond and Alexandria, they did not have, it was not through a housing authority that they did these things.

This was through their

because that was the whole point of the conversation was examples where in Virginia the Affordable Housing Trust Fund had worked, failed something.

So that's all I have to offer.

I'm still in favor of certainly getting the ordinance thing going and I'm certainly in favor of figuring out a way to do something because

But from what I see on the slides, you're at this point saying that for a million dollars of borrowing, you end up paying $1.69 million back over 20 years with the $84 whatever.

So the idea is basically you do this when you want to have it now, and it's worth the extra cost.

to make up for the fact that it cost you so much more.

in that sense.

And one of the issues that I have here- Aren't we doing it incrementally?

Yeah, we are somewhat doing it.

I shouldn't say that, but you should.

Yeah, you're right.

We are doing it incrementally.

But I would say that one of the issues here is how quickly can we adjust if an opportunity presents itself.

And what I'm hearing you saying, though, is that you borrow every two years.

Yeah, and that really goes into the planning aspect.

So when we look at the timing of issuing our debt, we're looking at our cash and our cash balances and our cash flows, and then particularly the cash needs for those capital projects.

And so we're very thoughtful of when we go to issue that debt, and having that information ahead of time of knowing when projects are going to need to be, you know,

Are we prohibited from issuing bonds and then just holding on to the proceeds?

So our practice in the past, and this really goes to the timing aspect, is we will reimburse ourselves with bond proceeds for the capital projects.

And so if you think about the operating side of our general fund budget, we have revenues coming in and expenditures going out.

and that has a balancing effect on our cash.

But when we have capital projects, that's really a draw on our cash until we replenish that cash from the borrowings or from the bond issuance.

And so, when I say we're looking at our cash balances, we're looking at the timing of how low will our cash balances go before we're ready to issue the bonds.

Now, we can, and we have issued bonds before

We've actually incurred the cost or had the expense.

And arbitrage does come into play, but I'm not too concerned about arbitrage.

I think we can work through that.

And that just requires an extra level of planning.

And so that doesn't bother me too much.

However, when we repeatedly go out to the bond market and work with our rating agencies, one of the things they're going to look at is have we

have we borrowed the funds and utilized those funds.

And so it is, I don't want to say it's challenging, but it's best practice to use those bond proceeds on a timely basis as opposed to having debts in our books for multiple

I'm going to offer up just a different way that I'd like to think about this, I'm not

because you've also mentioned, for example, incentives where you would do a tax increment financing, in which case it doesn't really borrow for it.

You don't have to put it in the budget really the same way.

It just is a way in which the developer has helped to finance their affordable units.

And we don't count that, but I think we should, because I think we should be looking for ways

So I agree also with Supervisor Pruitt.

I'm not in favor, frankly.

I'm going the CIT way.

I think, and I am concerned, we're talking about

Blinden Homes and buy the land.

I think that's okay as a general policy to do if it's a blighted area we can buy the land.

Okay that's one thing as long as we can put a triplex for a place or something like that on the ground because I think what we want to do is actually build more housing and I know we have enough we built over I think 2200 I'm not exact yeah I saw the number

If all those got built it would be close to 5,000 which is a good chunk of homes I agree with the tax doing it with the developers I've spoken to doing the tax increment that seems to really really be a motivator, pardon me, pardon me for them and maybe even include something in our ordinance that allows

to completion to be a fast track as far as the permitting process.

Because they say some of them take a long time and that costs a lot of money.

So maybe that's a special way to building all these units with X number, 20% of affordable housing, and we put it on a fast track.

Pardon?

put in more.

Because I'm also concerned with what Supervisor McKeel said going, we don't know what's happening in the federal government.

They do things at the federal government level.

We've heard about things that have already happened today that were going to impact us.

That's going to go also down to the state

and, frankly, driving me crazy.

It's almost like we were in the pre-pandemic when COVID happened.

And then Mr. Richardson, we went into a lockdown mode of three months, six months, six months.

And I think that was very important.

I think it was very wise.

And I think it saved our community as opposed to maybe some others.

But there's thoughtful thinking here.

And I think we also need to look at new ways

So additional funding to our coffers.

So that's my two cents.

I guess there weren't any questions.

I'm sorry.

I just copied Supervisor Pruitt.

I just might want to just add one thing, which is we're talking about a variety of different strategies.

I think Saudi strategies have their place, right?

The idea of capturing blighted properties potentially is land, right?

And they're all in the rural area where you can't actually point me this this isn't the kind of thing that gives us the kind of actual and the opportunities to acquire land for development as exciting as I think that is and is into that as I hear me when I say I'm with the current development area boundaries I don't

actually are having a conversation about expansion of the development area.

Maybe then we could have a serious conversation about, like, hey, how about we acquire X-mini A-clips, right?

But that's not the thing that's before us.

I say all this just to kind of get at what I think is an important nugget that I feel and I want to communicate and share with this board.

Supervisor McKeel, I'm going to very briefly pick on you.

It's OK.

You said $10 million is complicated.

I don't think this is actually a complicated problem.

I think it's a hard problem.

We can get to $10 million in a way that is quite simple.

It is hard.

It is hard for our constituents, it's hard for us as a decision-making body, but like 30 cents on personal property and one cent on real estate more than what we advertise gets us there.

And that is simple.

I'll take your amendment.

I'll take your amendment.

And I worry every time we talk about housing, we confront the hard.

We run up against that wall of the difficult choice.

And we say, oh, what are some complicated things we can do instead that don't actually get us there?

I think if we really do want to make a deep and generic, we have to accept that there are going to be hard choices.

And this is, to me, I think the most immediate one.

And that is, I believe in this number.

I think it is an appropriate number.

Well, I don't want to spar back and forth.

But I don't disagree with you on what you said, the complicated versus the hard.

Yes.

I have additional comments to make when I have a moment.

I want to clarify a few things because the way, and I don't think that Supervisor Pruitt was being critical, but I don't think I've explained to myself, as I think Mike said, that he'd like this board to understand how they're thinking, I've explained to myself the impact actually just a week ago.

that if they thought for a minute that I was replacing CIP dollars with the 10 million dollars that they should call BS on me because that's not what it is.

But what we have to try to do is not, I don't care if it's 5 million, 10 million, 20 million.

We have to grow the capacity beyond that.

We're not going to really fix this problem down the road.

I'll use Southwood as the example.

If we would have known what Southwood was to us from a financial standpoint back then in the way that we supported it over and over again, if that was parked in our CIP, it was an ongoing project that reached a level or a dollar amount that would have made sense to be in the CIP from a support standpoint and all those one-time dollars we've thrown at it over the last six or seven years would have been free for other things.

So I'm not trying to be cute with constituents that I've stood in front of for years saying I supported the 5 million we got there.

I've supported the 10 million.

It was simple, right, to raise it by a penny and the thing, but there were no motions made to make us vote on that.

So we'll never know.

We're out from, we're not held to anything now.

Swishiwashi.

So, you know, budget time is when it's time to make motions and put people on the nose and decide what your priorities are.

And we're still within that budget.

So $10 million this year is hard.

You're right.

I'm happy to start making votes on where I think we need to be.

Happy to do it.

But whether we get a 10 or we get an 8 or we stick with where we're at,

We have to find some more interesting ways to create more financial capacity to deal with the housing issue.

And that's why I brought up the CIP issue.

We do it for everything else.

We do it for roads.

We do it for our parks.

We do it for our schools.

If we have a big project that we know is going to be a multi-year project and we think it's worth it, then I think the CIP is the better avenue for something like that.

RST.

Maybe RST could have been a project that said,

Well, if we had been using the CIP and we had some capacity there, maybe we could have taken on the infrastructure costs of that and kept it at 70% units affordable and not moving it back down to 15% units affordable.

But all we had at that time was what?

Half a million dollars?

The hell are we going to do with that?

So this isn't just about Ned trying to get cute and worry about what

people are going to say that I've committed to or not committed to.

Trying to solve this problem in a way that's bigger than $10 million.

Because we've had, two years ago, we had $20 million in requests.

You know, when's the trust fund conversation?

I mean, we've got tools.

We've got tools beyond the trust fund conversation.

All of that's going to require dollars to go into it.

And if we can have some cash, some ongoing money, and the CIP all in the same direction,

I think that finally builds some capacity in this county that people could count on.

If you saw a $15 million five-year request that wasn't necessarily allocated to a project, and you're an affordable housing developer out there, you might come knocking on the door in a different way than if you see $4 million or $10 million in a housing fund.

It's a different level of commitment that you're suggesting to the people.

Maybe I'm wrong, but that's what I think.

I appreciate all of this.

I didn't think anybody would arrive at a decision yet today, including myself, because I didn't know what the out year ramifications were going to be.

But if you all are deciding right now that we shouldn't be thinking about affordable housing in our CIP, I think that's a bad decision.

And we still have to grapple with the rest of our budget and what we're going to do and where we're going to put money.

So please don't think of this as an either or.

I wasn't thinking that the $1.2 million to fund the debt service was necessarily coming from the 0.4 cents dedicated.

We've got a board strategic reserve set there where we can move monies around from.

So we could keep the $1.2 million in the full housing fund.

We've got what, $1.8 million in there?

So that $1.2 million could come right out of there to pay the debt service, and we don't lose the $1.2 extra dollars that was dedicated for the housing fund.

It's to your point.

It's about making decisions.

Yeah, that would leave us with only, what, $0.700,000, but how much did we spend out of the Board's strategic reserve last year and the current fiscal year?

And the only thing in coming out of last year's budget that I remember us talking about was if the emergency assistance fund ran out, you could come to us and we have that reserve that we could go to.

Well, let's not let it sit around another year.

There's a pool of cash that could be used.

And don't forget that the pipeline with all those units are at 80% AMI.

The new metropolitan statistical area median income is $125,800.

80% AMI for a family of four is $104,000, something like that household income.

And $4 million, $6 million, $10 million doesn't get us a long way to helping folks at 60% AMI or god forbid even lower.

So we have to come up with better strategies and tools

that go beyond our normal way of thinking.

All right, I'm done.

I'll have to get in for a sec.

Wrong, too, because I missed out on that.

OK, so someone made the comment, $1 million

to get $1.6 million over 20 years.

That does not make sense.

But you get $20 million for that over the 20 years.

No, no, no.

This is just per million.

Okay, now I understand.

Great.

Okay, so to me it's the solution, the reason I'm trying very hard to get somewhere with some of these options.

is because just sending what cash we have out the door without the contracts, without the competition, without the RFP, without county dollars to be able to help to put the financing together on all of these things that other communities are doing where they're getting 8 or 10 different sources.

They're not building the things they're building and renovating the hundreds of units here and there.

on taxpayer dollars.

They're doing it based upon all this other outside money.

And this is established local businesses who are doing this work in other communities who have these structures available.

Our local guys are working in Fairfax, working in Chesterfield, doing this.

So we know that this is not a new deal, new thing.

So $0.30 on the property tax and all

because it will drive out the moderate income older residents who don't qualify for the waiver program.

And there has to be a better way to bring outside dollars in to make this happen.

So I think I'm sensitive to the financial chaos in the world right now.

It's chaotic in my household.

But it's also chaotic for all the people who need the houses that we could be building if we can figure out a way to get all this outside dollars to work in our community as others are.

So that's all I have to say.

So can I just ask if staff has any?

You've been hearing a lot here.

Do you all have any comments or thoughts?

I think I'll go first.

If others would like to chime in, please do.

I think the intent of this is going back to Mr. Sumner, one of his first lives.

We talked about the spectrum of housing needs.

There's a wide range of needs and there needs to be a wide toolbox of solutions.

And this is one we've explored and really have a lot more confidence.

We've looked at this board.

This is an option to build with the board.

It's not to say that it needs to be used today or tomorrow, whenever that may be.

But this is something, if the board is not ready to build something in the CIP now, that's OK.

Decision can still be made later and get some of that while these other conversations play out.

And so there's the kind of the board that immediate action they take on May 7th when they adopt a budget and adopt a CIP.

But there's still opportunities to refine what that strategy looks like in multiple years.

And so what I've heard from the board is don't amend the CIP today, but not closing that door for the future.

That was the only thing that I would have said, board, is that

I think Mr. Sumner and the finance team, by meeting with our bond council and by meeting with our financial advisors, Davenport, who does work all over the East Coast, that we're trying to... Mr. Gallaway asked the question, and that is, I'm looking to see how we leverage.

And that was through the CIP.

And I think the staff did a good job today of explaining to you how that would work.

Today, if that money stays in the recommended budget and the point four stays in there as 1.2 million dollars of ongoing money, you can revisit that at any point in time that you want to, if it's the will of the board, to look at dedicating 1.2 million through the CIP.

I think also the timing of us issuing debt is something of significance because

When it comes to strategy of the boards, we have to bundle this with other stuff.

We can't do this by itself.

That was advice from the financial advisors is it would not be seen as favorable unless it's bundled with other debt.

That would be this year?

Yes, ma'am.

No, no, I didn't understand your question.

You're talking about this fiscal year?

You said earlier that we would look at doing issuances one year from now.

I think today our goal was to try to frame that out in terms of the dos and the don'ts, if there are any, and then what's possible.

The other thing is we continue to do our work in the manager's office on management contingencies because of the uncertainties that we see that are coming out of the federal government.

We're not in a normal spot right now.

with how things are going at the federal level and how things are going at the state level related to our financial relationship with either the state and federal government and this board has specifically asked for us to begin to pay close attention to that as it relates to

from the federal and the state level.

And so let me just ask, and then Jack, I want you to be able to respond.

But for what you're saying, my understanding is, just to put it in my simplistic way, we have time to come back to this at a later date.

That's an option for the board to consider.

No.

One of the reasons why we brought back the housing continuum is to show that there are multiple tools that will need to be used to

to address affordable housing in our community.

And this is a tool we hadn't explored before or really discussed with the board before.

But it is a tool.

And we kind of walked through what the trade-offs are and how we could utilize that tool if the board wanted to use that.

Andy previously, a few moments ago, said,

It's probably not more than a couple hundred thousand a year.

That balances $1.9 million in one-time funding.

I can't recall what it was when it was created a few years ago, but it was not more than $3 million, if I recall correctly.

Someone mentioned Southwood, and that's a perfect example of leveraging movement.

They paid $7 million for the land, have spent $20 million on the rehab, and they brought in the $30 million.

So our $6 million, or whatever it is, has been multiplied.

go-to place when we're talking about things we're doing right.

The discussion just now reminded me of when I was 17 and worked in the bank the summer after high school.

And the manager assigned me the task of my $30,000 house, mortgage, 1967, 6% loan, figure out how much you're going to pay for it.

I freaked when I found out it was like $87,000.

That is life.

None of us who don't have a million dollars in our pocket are going to pay cash for things like this.

And I just wanted to remind us to be thinking about that, because it's the same everything that buying a car for two years versus five does.

Our economy seems to be based on all of us trying to stretch their own band as far as we possibly can and still

do it all right.

So as I said, I'm still in favor of doing more than we can and I will try to get more details on these other things I've heard so that others will have that information.

And I guess that's all I had for today.

Quick point of clarification, not to be a Debbie Downer, but I just wanted to know

Yeah, those are planned to be ongoing dedications.

Thank you.

May I just leave one extra thought for people to think about going forward?

I mentioned it last meeting as well.

I would suggest, given how far we are at the meeting, the next two items are really touching base on human services priorities.

Then any other adjustments.

Any other adjustments may be the right time to bring back any straw votes or anything else.

Recording in progress.

And my understanding is before we come back to these issues and other issues related to the project, the next presentation is on the people services funding program.

Thank you.

I'll be giving a presentation on this part of the work session.

This is to bring back some information under request from the board member.

This is a process that has 25 programs that are funded at a total of $1.6 million.

This was formerly called the agency budget review team process.

The board renamed that process to give it a more easy to understand and transparent name with human services funding program.

So this process has been really under a lot of revision over the last two years, endorsed by the board of supervisors the past few Julys.

Really, this came out of a report two years ago for the Human Services and Needs Assessment.

Really, the takeaway of all of these changes is trying to reallocate funding to what are those programs that will do the most

The greatest contribution to the board's strategic plan around addressing human services priorities.

The four biggest emerging needs areas of family homelessness, mental health, community safety, and navigation for seniors was identified two years ago.

And also what's been in the works over the last two years is really breaking away from some of the traditional funding amounts that year to year were more incremental.

It was challenging for new programs to get in.

There was rules around the programs in terms of the amount of new funding they could have.

Other programs changed each year.

And so this was really a change this year of really a re-prioritization as funding was increased.

And so what was, in addition to the usual evaluation of programs by the either staff or the community volunteers, we put through a prioritization really which pushed agencies into one of four tiers.

And I'll break those out in a moment.

and are really funding those accordingly.

So another slide the board has seen before where those programs in tier one received the greatest funding over tier two, then followed by tier three and so on.

So a new slide that the board has seen before is not seen before.

This really breaks out those four tiers with the description on there where tier one is really about those most direct services and the most vulnerable basic needs and vulnerable populations.

There was a total of 1.5 million requested and 1.09 is recommended.

The next tier of important critical services there was 1.2 million requested and a recommendation of a little over half a million.

Tier 3 and 4 had smaller requests and no funding there.

Overall, the funding for this program was an increase of $360,000 or 29%.

This was really foreshadowed based on some board direction about two years ago where funding has increased.

to really about a total of $460,000 over the last two years.

So this is really, as we talk about, lining our strategic plan and the budget.

One of those programs, as we are adding new resources, those will drive the outcomes most related to the board's strategic plan.

Yes, the quality of the program and the prioritization within those four tiers.

And yes, any kind of past funding rules of thumb, incremental changes, those have been removed.

Back when I asked for the CIP thing, I was talking about the Emergency Assistance Fund, specifically that funding.

The information on that was part of the Board of Supervisors Q&A number 4 that was set on March 25th.

Tell me the date again.

March 25th was the date.

And you can move on.

I may have a follow-up.

This is not something I've had.

I appreciate that a lot of changes have gone on with this.

This is something I know the board has reflected concerns about, and also, of course, the affected individual.

agencies is not quite the right word, the individual nonprofits that are recipients.

So I haven't asked very many particularized questions on this yet.

But if we're going to set aside the time for it, I will say, have there been any major shifts?

So I'm thinking, for example, OAR.

We gave OAR a tremendous amount of money in the previous process, like, comparatively.

They were very large.

I think for a lot of nonprofits, the amount is significant for them symbolically, even if it's not a big number.

And so if it was a small number that got smaller,

in large, this shift towards focusing on vulnerable populations and safety net programming certainly reordered a number of the nonprofits.

Does this 1.6 capture contractual things?

My understanding is that it doesn't, right?

Can you help me, because this is sometimes, I know this came up a lot when we talked about our previous process.

what the actual decision point, who the decision maker is.

Because I assume it is professional staff in your office that is actually making the final dollar amount.

But there was, I think, previously the understanding that the grading board in some way was also making a decision on the funding amount, which I understand is not correct then, and certainly isn't correct now.

Yeah, so the applications that come through the pool, those

We're allowed this year to have a slightly abbreviated application and were reviewed by

Those who were in the traditional pool were reviewed by a combination of volunteers and staff.

And then both of those panels, staff only, staff and volunteer combo, have the same set of responsibilities and criteria for scoring.

And final question, again, as much

My inquiry, previously we were trying to align the funding process along an idea for focal areas and we kind of didn't quite do that.

We funded a bit in one, we didn't use it, it got carried over for another thing.

My understanding is that

and we are instead using this tiered approach which in some way carries over that thinking but the specific focal areas are not being carried through.

You made a... Unclear.

I'll reflect back to you and then you decide.

We used, we gave additional points to application so there was a scoring based on completion,

and effectiveness of the application.

And then there were prioritization points awarded if the agency provided a safety net service, the basic needs, housing, shelter, food, and or served a particularly vulnerable population, seniors, households with kids under five, sexual assault, domestic violence.

people with disabilities.

That's a dimension I missed.

Great.

That were questions.

Thank you.

Thank you.

I don't have any real questions other than to just thank you all for this work.

And I really like the targeted look of the vulnerable groups in our community that many of them have lost their safety already.

So this is really good, and I appreciate it.

And with that, I'll just let it go.

Thank you.

Thank you.

Thank you.

So could you provide, I mean, I did ask this question a while ago, so I'm sorry to do it now.

what is the process of evaluating what they're planning to do with the money that you all go along because sorry I never got an answer when I asked this question three or four weeks ago so can you help me understand now I always when I'm looking at Excel sheets or whatever the first thing I always do is look for big changes and when I see big changes then I go oh let's find out what that is and to find out that there's

My 90s don't have the information that shows leadership and organization and things like that.

It makes me nervous.

So both the volunteer and the staff will review the applications for completion and then for effectiveness, essentially.

Have you answered the questions the way we think you should answer the question?

We ask some threshold questions in the application that make you eligible, like have you had an audit and I can't remember how frequently the audits are required and when.

and of course if you're registered with VDACs which requires that you have filed a 990, that you have a volunteer board, that you submit an annual report for the State Corporation Commission.

We do not frankly have the staff to review every one of those documents or a set of listed criteria for what we would consider a good response on any one of those documents.

So they're not required to supply the audit and the 990 to you.

That information is provided to the Department of Finance and Budget.

We will do a review of the audit to make sure there are no red flags, it's complete.

I think there's a lot where I mean I appreciate the reason the reasons that you don't have the more lengthy stuff now but having back it's always a catch-22 do you provide enough background to have people like me understand what's going on or do you have a simpler process that just shows this and this leaves me with a whole lot of questions that I don't have answers for and I'm sorry about that but that's you know all this money is real money here so I'm trying to understand whether people what I don't want to do

is have us just throw money at things to get ourselves feeling good, when there isn't a really good delivery of services verified, trust and verify, in a whole straight incident.

I want to share that one example was somebody who identified outcomes that were, let's say, 100 and then they achieved them at 95.

They got a lower score because they failed to meet their objectives and so they actually were in a different

I think

Starting this year, a third of the applications will get a slightly deeper review along that process so that we can answer some of those questions one layer deeper in future years.

And so we have heard the request for a deeper dive around organizational health.

Well, I think one of the benefits, which is

there now is having a longevity meant that there was more than just, oh, let's start this now and get funding now.

I mean, if people had to be in business for three years and do things, they had a record.

In addition to budget development there is effort throughout the year to track these agencies so if there are changes, I'll give you two examples not recommended last year were approved but are not going to have funding distributed with the local food hub and MACA as their organizational situations change that is something we track throughout the year to make sure the money is not going out the door.

So that is one that we are not able to be everywhere at all time for these 25 plus agencies.

We do have, I don't want to call them successes, because it's obviously not a good thing when someone who's providing services no longer exists, but at least to protect the county's stewardship to ensure that funding does not go out the door if the service is not going to be provided.

All right, with that, that brings the final topic for today's agenda, which is really just the identification of any remaining board adjustments to the budget.

Really, I say this, as the board noted before, on May 7th is when the board will approve the budget.

I think a lot of this is our role as staff to support the board's supervisors as they make these new decisions.

Any additional information that we need to bring forward,

with the different scenarios, alternatives, changes in funding, changes in how tax rates are allocated, changes in use of one-time funding, really anything out there the board can consider.

Put on the slide, the same slide the board saw back on March 19th, really these are called the

A little straightforward summary of options.

The board does have an ongoing and one-time reserve of dependencies if adjustments were desired beyond just reprioritizing any use of ongoing or one-time funding.

And then the CIP adjustments we've discussed before.

There is that $1.9 million available from the CIP advanced strategic prior reserve.

The board is not required to allocate that, but those are options out there should the board desire to do something different.

So because this is the final work session, I really don't have any more content other than just prepare for next steps.

There's certainly, if the board would have additional questions or a discussion on either of the public hearings on April 23rd and 30th, those would be options, as would be the May 7th.

Thank you.

But it is coming upon us quickly enough that there has been some discussion about having actual votes today if board members want to make proposals to differ from the proposed budget at this point, which would be the budget based on the previous, when we set our maximum tax rate and accepted the proposed budget at that time.

So we'll go through an order to see if there are, and we can go more than once, if there are specific proposals that we can move on.

No, I actually had points of clarification that were clarified, so I thank you very much.

Before we go further, may I make a clarification?

Pudge.

Is that covering everything?

So I've only had one.

But I haven't gotten a lot of pushback, frankly.

People seem to understand that they really appreciate the 3.2 cents going for public safety.

I think I'd have more people wanting to see more money going to schools.

That's what I've heard from my constituents.

I haven't heard as many from the affordable housing folks.

But I do get a lot of emails and calls from people wanting more for the schools.

But having said that, I'm pretty much satisfied knowing we can change things next year.

And let me ask these couple of questions before I make my suggestion.

What's missing up there?

I think in terms of order operations, I would probably look at the reserve of contingencies first.

For the County Government General Fund, that number is around $8 million to $9 million.

I believe the schools have about $13 million.

I have a slide from a previous work session.

$13 million.

$13 schools.

$11 million.

Yeah, it's about $20 million total.

Yeah.

In the general fund, $9 million, which is really about reimbursements for the Department of Social Services.

In the county government special revenue funds, there is a little over $6 million, which is primarily the housing choice voucher program.

and the total reserve in the budget.

Because the rest of it's been programmed.

Correct.

All right.

My suggestion here, just given the history and knowing what could be coming, I mentioned it earlier that my thought was 1.2 of this could be used for the CIP.

1.2 of the board's strategic reserve could be used to offset the debt service for the CIP piece, but it doesn't sound like we're going to go that route just yet, that that's an option that might be explored down the road.

So I would certainly be, I'd be willing to move that 1.2 million to our housing fund.

Leave the 700,000 in there.

It looks like the emergency assistance fund has got less coming in

Yes, artificially, the number of requests is the same.

The amount of money distributed is lower.

We set our annual cap at $2,500 when we first started.

The money went really super fast.

We decreased it to between $800 and $1,000.

And in the current fiscal year, you

No, last year we had both ARPA funds and redistributed ARPA funds.

Let me just clarify one thing.

I think the board understands this.

The $1.9 million is one-time funding.

So to get it in the housing fund would be really for one-time use.

Correct.

Yes.

Understood.

I felt the board understood that, but I just wanted to clarify that.

So we have 1.2 coming from the 0.4 cents dedicated, and then we had roughly 3 million coming from one-time monies.

So that's 4.2.

This would move it up to 5.4 and put that 1.2 in there.

It's still, in my mind, we then wanted to maybe explore the CIP or the debt service, the monies parked in there for that.

But if other pressing needs or other things that we wanted to use it for come up, then it's sitting there for it.

I'd rather just go into the year knowing that those extra dollars are there.

Really the rationale is, okay, let's not let the 4.2, we know the 4.2 is going to get depleted quickly.

And then we'd have to do a quick maneuver somewhere on a board agenda to move monies or if we wanted to move from the strategic reserve then and that.

Let's just put it in there now.

We know we're going to need the need.

The housing voucher program is not an Albemarle County program.

It's a federal program that we administer and disperse the funding for.

I'm supportive of the motion as it lies.

I want to say that on this.

I do want to just highlight what I heard Kaki say and what I know we've discussed before, which is that the demand on a SERP is in some ways being like, control is throttled.

Tacky's strategy and her team's approach to this is to always have some amount of money available.

It's better to serve people a little bit throughout the year than to meet the need in front of you for two months and run out.

I would be more comfortable with this if we carved off a bit of the money that we're comfortable moving with.

Not a majority of it, not even a significant chunk, but I might.

We can entertain an amendment to the motion if the person who made the motion is sure.

Can the dollars be used that way from the housing fund?

Sorry.

It's the Albemarle County Emergency Relief Program.

Just thank you for the public.

That's not vouchers.

That's not vouchers.

So $200,000 into ACERP, which would near double it, but not by $4.60.

And question, Kaki, could you address that?

It would be substantial.

It would mean most of the folks, so a requirement is that you come, your basic eligibility is that you have a shutoff notice

So we are the last money, the last opportunity to stay in your housing as is generally for people.

And most people are asking for between need in order to pay that last month's rent or whatever it is.

It's between $1,800 and $2,200 a month.

And if our restriction is $800 or $1,000 that you can only get from our fund, they must find that additional source somewhere else.

That is sometimes a burden that is too great for them.

We all know that we have a normal stream because again we're tightening and loosening the boundaries of what we distribute based on the amount that we've had and so while in the last two years we've been funded in the budget with $260,000 we have gotten additional

We have a motion to not allocate any monies to ACERP, but to simply allocate 1.2 to the hip.

So I would be willing to withdraw my motion and allow Mr. Pruitt to proceed with his.

So a motion from Supervisor Pruitt, a second from Supervisor Mallek.

Is there any additional discussion?

Yes, I would like to make a. Which I would raise to you, after this vote, you can then do the same thing because there's still money in the strategic priorities reserve.

So there's 1.9 in it currently? 1.9.

Ann and Ned have all talked openly about a comfort moving 1.2 of that.

OK.

Ms.

Mallek, Ms.

LaPisto-Kirtley Those are the two topics I wanted to address today.

I have raised this to this board before, but if today is the day we're committing things to votes, I don't think I have the nose.

But I'm going to say it, because the math makes sense to me.

We are allocating an additional $1 million to the Economic Development Fund.

I believe in the work that the Economic Development Fund is doing.

in a calendar year.

$3 million is the amount that we have in there already, not adding any additional funds.

I would allocate that $1 million that we are saying that we would allocate to the economic development fund an additional fund, bringing it to $4 million.

I will say it is a motion.

I'd like to respond just to the rationale here because I want to remind, I think we're getting to two critical points in economic development in our county.

One, we are approaching some things and we're seeing how the state monies are shaking out for our huge investment we've made out north.

We got a $700,000 grant that we had sent out that was the first of a couple things that were going.

Some of the other work, depending on what comes from the state, that money could be needed to have to advance that forward.

The second piece that I might suggest, given some conversations with some developers who have not done business in our county before, is economic development can be a mechanism by which to do affordable housing projects.

So I think

Well, the logic behind your thinking is something I can be supportive of.

I think we have the flexibility throughout a given year that if an economic development project came forward in this county that also dealt with affordable housing, we've got the dollars there to do it.

We've never really done that before.

I mean, we've used the EDA for Southwood, but it wasn't really something that was an economic development project per se.

So that might be a little political dancing that you like to call out, Supervisor Pruitt, but knowing how the budget can work in a year, if we wanted, if the monies that are in our housing fund go away, we could move monies out of another fund if we wanted to.

at some point, we're allowed to do that.

But I for one, given especially our housing summit this year with some of the things that other jurisdictions are going through, their economic development authorities, I think could be advantageous to us for housing as well.

And I would agree, Ned, on just keeping that money where it is because we need that flexibility because you don't know what's going to be coming to you and that is a way we're diversifying our tax base.

I concur.

I will just say that I would like the privilege of a closing round on my own, which is the thing I feel in this moment.

I might suggest that if it is greater than 3 million, we have the ability, we spent an hour and a half earlier in this session talking about how we actually have a lot more agility in our budget than we like to give ourselves credit for sometimes.

And I would suggest that we always keep that kind of agility in mind when we're talking about plussing up these kinds of funds.

Supervisor McKeel?

You asking me if I have any other changes?

If you have any motions you'd like to make?

No, I'm fine.

Thank you.

Motion to move the point for schools and the four cents to housing fund.

Is there a second?

Okay.

Motion fails for lack of a second.

for ACER to actually put $800,000 into the AHIF.

AHIF, sorry, AHIF.

I would like to see that get us to help a lot of people during the year.

And the reason why I say that, it's a personal story.

When I was campaigning the last time I went up to a house and a woman with her son, two kids, they were

If I may speak to the motion that is on the floor.

Sure.

I don't know if that's what I asked.

I think $1 million in annual funding for ACERP is not unrealistic or unfeasible, which is what this would bring you to.

This would bring us to $1,060,000.

I'm going to actually step back from that.

Instead of what we previously did, take the $1.2 million from the CIP Advancing Strategic Priorities Reserve and dedicate $800,000, not a million, but $800,000 to AHIP and $400,000, not $200,000, to ACIRM, the Emergency Relief Program.

We have a motion and a second.

I think this is important because we have I think too many people and I'm looking at what's going to happen in the coming year and I'm very frightful of what's going to happen in the coming year but I think we have a lot of people that are really hurting and I think we can frankly help them whereas another million in the housing trust fund which is good also but how long I've seen that the numbers that they use for building affordable housing I mean a million dollars

to give us what we want and the amount of time that it takes.

The thing I would raise is everything we're talking about, this whole process, is tinkering at the margins.

And I will confess to this board when the previous motion passed, I had a chill.

I was shocked that we were able to accomplish that.

Very excited.

So I don't in any way mean to say that I think this is a minor ordering of preferences.

if we are looking at relatively small dollars in the term.

I don't know that many projects will live and die, that any projects would live and die on a difference of $200,000 in our overall funding pool.

If they do, then this would be a different conversation.

Where do you go first when your money runs out?

If you came back to us and we didn't have a sewer program and you go to the county executive and say we got six months left and we're out of money, where do we go?

So I think the first thing I would do before we even look at those contingencies is just say, in our usual budget management, is there anything one-time unusual that's changed we can do something with, whether it be a revenue or an expenditure?

Just something that we, and we do this all the time, of something unexpected happens to the department and just through our normal budget management, we can address that.

And they tend to be relatively small.

So after that's done, then I think we would look at the reserve contingencies next to say, would that be an option?

We'd look at the other demands out there and figure, is that the right tool?

And we would need to bring that to the board.

We haven't been at a point where mid-year we fully depleted that, but if we were in that situation or we knew we need to hold that for obligations, whatever those may be, we would then probably, unless we were gonna be making any other, before we got to any really significant service impacts,

We didn't really need to look at that 2%.

I think it's kind of a question of how impactful that is.

Because if we were in the middle of a, I'll call it a pandemic recession, where we're falling very deep very fast, that may be a different response than if it's just maybe a one time acute thing we need to resolve.

But that would be really probably a total conversation.

But certainly if there was a need to address more,

If the Department of Social Services came to us, that would be a conversation we would have with them in working with the executive's office on how to address that.

I'm going to vote no against this motion.

I want to keep the million in the housing fund and add the two to the emergency assistance fund.

That's, as Mike has said before, doubles you up and then we'll watch it this year and see what kind of changes it makes or different impact we can make knowing we have a contingency to go to.

I will say that a couple hundred thousand dollars, unless my memory is wrong,

We have had some projects that come forward to us.

They're not getting us a ton of units, but that kind of money actually can help more for home ownership stuff.

Where if a land trust comes and they have an opportunity that they maybe have two, six, eight units in a place where they can buy the land,

and getting $100,000 or $200,000 from the county in the past.

If I'm not mistaken, we've done a project like this that helped bring seven or eight homes online.

And I thought it was only a couple hundred thousand dollars that we used.

But then it's permanent home ownership.

And we have some really good developers and people in the community who can turn $200,000 or $300,000 into lifetime permanent home sales.

So that, to me, I'd like to see us do more of.

I think we have a motion and a second.

Ms.

Mallek?

No.

Ms.

McKeel?

No.

Mr. Pruitt?

Aye.

Mr. Andrews?

Yes.

Mr. Gallaway?

No.

Ms.

LaPisto-Kirtley?

Aye.

I just do want to say, again, I think this is an ordering of the good, that we are disagreeing over how we would order different very good alternatives.

Anything else from us?

No, I meant just general discussion.

It's relative to the budget.

I am interested, and I want to state it as part of this budget process, that when we think that the safety strategic plan, I don't know, what are we calling that?

For the police and fire?

Staffing study.

The staffing study that we do.

I know that we have voted the idea to the county executive of carrying that 3.2 forward as a dedicated fund to be informed by that study.

I am definitely going to be looking to that study because if it comes back and we think we can maybe carry 2 cents or 3 cents or 2.5 cents, that the portion that's remaining up to the 3.2, we shift that to dedicating it to affordable housing for the coming year.

Thank you.

I see those 3.2 cents as public safety dollars and affordable housing.

Just to recap, over the next week we'll have the final three town halls shown on the slide.

We'll have public hearings on the budget, the tax rate April 20th and 30th, and then all this will be brought back on May 7th.

I think we'll clarify the materials for May 7th that are posted online.

Though it wasn't part of the board's proposed budget, the board's direction to reallocate that $1.2 million based on the motion.

So that's clear to the public.

There's always, just with the timing of the materials, there's always the chance where what the board adopts will be a little different than what was published.

And we make that very clear in our materials that we'll work that into what Mr. Davidson will timestamp and put it onto the website.

With that, I have

We also have the actions that the board took today reflect in the town hall information both Wednesday night and Thursday night for our town hall meetings.

So that doesn't affect all six board members.

Some of you have already finished your town halls.

But we had said as we go through these seven town halls if there are things that are changed

Thank you for clarifying that.

I have nothing else.