Alexandria Taxpayers United

February 9, 2009

Budget Shortfall Grows; Will Your Taxes Sprout Next?

Filed under: Uncategorized — mattgall @ 5:17 pm

Alexandria’s previously estimated $10.5 million budget shortfall for the current fiscal year is continuing to grow.  Even with the projected real estate revenue loses being lower than expected, other revenue projections have not followed suit.

Reasons for the growing budget shortfall include a 50% decline in business licenses, as well as the cities 324 foreclosures so far this year.  Alexandria also owes Fairfax County around $1 million in sales tax and real estate tax settlement refunds.  The forecast for the 2010 budget is equally troubling.  Revenue projects for the 2010 fiscal year (beginning July 1), are around $35 million less than previously projected.

$6.1 million in spending cuts are currently being implemented.  Is this budget shortfall for both the current fiscal year and the 2010 budget a sign of tax hikes on the horizon?

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2 Comments »

  1. There are solutions to Alexandria’s budget shortfall other than raising taxes. Most municipalities across the United States lease land and rooftop space to wireless carriers. These long-term cell site leases generate, on average, $1,500/month (i.e., $18,000/year) of municipal revenue. Cell site revenue per site in Alexandria is likely greater than that — say, $25,000 per site per year.

    Cell site rental streams are predictable and can be monetized by companies specializing in “cell site lease buyouts.” Banks will not lend against these rental streams because carriers can, at least hypothetically, terminate cell site leases without much notice. Banks can therefore not be absolutely sure that the site will continue to generate revenue. And banks tend to be uncomfortable with “binary risk” — that is, the site will either keep paying (“1″), or it won’t (“0″).

    Companies that specialize in cell site lease buyouts, on the other hand, take “portfolio risk” — that is, because they purchase the rental streams associated with many sites, the termination of any particular site will not impact them much. Assuming the lease buyout company has purchased, say, 1,000 cell site leases, the loss of a single lease will reduce overall revenue by one-tenth of 1% only.

    Depending on the number of years of rent sold, Alexandria might raise $150,000 – $200,000 per site, essentially by entering into a “public-private partnership” with a party that can help the city monetize “non-core” assets — assets that are a “windfall” to the city and have otherwise nothing to do with services rendered by the city. It would surprise me if Alexandria does not have at least 20 cell sites. If so, cell site lease buyouts could generate $3-4 million for the city, and a tax hike could be avoided.

    For more information, please visit http://www.rfscapital.com or contact me, Eric Overman, at North River Partners, a lease advisory firm (www.northriverpartners.com).

    Comment by Eric Overman — February 23, 2009 @ 12:20 am | Reply

  2. I love your site!

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    Comment by Michael Tim — February 28, 2009 @ 1:17 pm | Reply


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