The Town of Purcellville in 2020 avoided much of the controversy that has plagued it in recent years, but still wrestled with its budget, considered a utility systems sale even after rejecting a purchase offer and vexed its police officers by confining them to a leased space for another five years.
The First-Quarter Budget Adoption
In June, the Town Council voted to adopt a $4.8 million FY 2021 First Quarter operating budget that covered town finances only between July 1 and Sept. 30. The budget also included a nearly $300,000 Capital Improvement Program for the first quarter. The council justified the adoption of a first-quarter budget as a prudent response to a drop in expected revenues caused by government-mandated business restrictions and closures.
While Virginia law requires municipalities to adopt budgets that cover expenditures and revenues for the entire fiscal year, Town Attorney Sally Hankins said during the budget discussions she felt Purcellville’s first quarter budget “meets all of the intents of the statute, which is to plan ahead.”
The First Quarter FY 2021 budget was part of a larger budget picture for all four quarters of the fiscal year. Town Manager David Mekarski had originally proposed a $20.2 million FY 2021 budget but later reduced that by $1.2 million to account for a $480,000 expected drop in meals tax revenue, a $300,000 expected drop in real estate tax revenue, a $75,000 expected drop in the special tax district revenue and the elimination of a $305,000 transfer from the General Fund to the Sewer Fund.
During budget discussions, town leaders said they also expected a $160,000 drop in sewer usage fee revenue and a $116,000 drop in water usage fee revenue in Fiscal Year 2021, but said they intend to transfer money from reserve funds to compensate for those losses.
Nine days before the second quarter of the fiscal year hit, the Town Council voted to adopt a $14.7 million budget accounting for the second through fourth quarters of Fiscal Year 2021. That budget also included a $1.3 million Capital Improvement Program.
Neither the first-quarter nor the second-through-fourth-quarter budgets featured tax or utility rate increases over the previous fiscal year. Town leaders also cut a majority of capital improvement funding from the FY 2021 budget. Mekarski said that was done to help the town better cope with projected revenue drops.
Still, Town Engineer Dale Lehnig said the town is faced with pressing water projects totaling $15.5 million, with the top critical projects totaling $6.3 million and needing attention before June 2024.
Mekarski had urged the Town Council in the latter portion of the calendar year to authorize his team to take out a $3 million line of credit with an historically low interest rate to help fund those projects. But the council in October declined to do so, instead opting to focus on other creative projects in hopes that they will generate the town revenue.
If those projects don’t work out, the town could be forced to pull $8.5 million from the $12.4 million that rests across the water and sewer fund cash reserve accounts, leaving only $3.9 million in those reserves.
A Proposal to Sell the Utility Systems
In August, the Town Council discussed an idea to pay the international law firm Faegre Drinker Biddle & Reath $30,000 to draft and advertise a request for expressions of interest soliciting responses from companies interested in purchasing the town’s water and sewer systems. That discussion followed a Town Council vote in July to reject an unsolicited proposal from Aqua Virginia, in which the company proposed to purchase the town’s utility systems.
Mayor Kwasi Fraser said this week the initiative to pay the firm to help the town in its efforts to sell the utility systems “has no formal support of the town’s elected officials.”
Fraser said he discourages council members from giving “exceptional weight … to the advice from the former Mayor [Bob Lazaro] and Town Council who put us in this significant debt with the purchase of a grossly oversized wastewater treatment system in anticipation of growth that the people of Purcellville did not want.”
Lazaro, who served as mayor from 2006 to 2014 and as a Town Council member from 2004 to 2006, has said consistently through the years that the town, under his mayoral term in 2010, expanded the Basham Simms Wastewater Facility, which was completed in 2002, to meet state-mandated requirements.
“I take full responsibility for fulfilling the requirements of the law,” he said.
In general, the town is looking at ways to bolster its utility systems, since its water fund shrunk by 39% and its sewer fund shrunk by 16% from Fiscal Year 2019 to 2020.
JK Moving Proposes Annexation of 250 Acres
In October, JK Moving Founder, President and CEO Chuck Kuhn proposed the town consider annexing, and rezoning for commercial and light industrial use, 250 acres of property outside the town limits. About 120 acres of that land is the former Warner Brook property, which the Town Council in October 2018 voted to deny annexing.
According to Kuhn’s presentation, a proposed industrial park would have an assessed value of $101 million at buildout, which could provide the town with $1.8 million in one-time utility connection fee revenue, $224,000 in annual tax revenue and $140,000 in annual utility usage fee revenue.
In his presentation, Kuhn said the town is economically “in trouble” and that “change has to happen.”
Fraser refuted that claim by pointing to town leaders’ refusal to take out new debt to finance projects, their reduction of overall debt by more than $7 million, their upkeep of AAA credit ratings, their restructuring of debt to avoid balloon payments, their refinancing of debt to save more than $1 million and their welcoming of more than 100 businesses to town.
Fraser said Kuhn’s proposal has gained no traction with town leaders, noting that there is a common narrative among parties seeking annexation: “that growth will pay for itself and reduce our debt because we are—according to the narrative—at the edge of some financial cliff.”
“Failure to consider alternatives, such as long-term, low-interest loans to finance infrastructure projects that would last more than 40 years, play into the false narrative that dense growth and annexation are the solution to all our concerns,” Fraser said. “Instead, I believe such growth would only compound our financial, infrastructure, and traffic concerns.”
Council Keeps Police in Leased Space Through 2026
In late October, the Town Council voted to authorize the town staff to negotiate a new, five-year lease with the Lowers Risk Group for the Police Department to remain in the 4,300-square-foot building it has leased since 2005. The council authorized Town Attorney Sally Hankins to expend no more than $1.5 million to both execute the lease and perform security-related improvements to the building. The Police Department in the next five years also will expand its operations in the space by another 2,000 square feet.
The town is paying $9,700 monthly on its lease with Lowers, which expires in February. Police Chief Cynthia McAlister said the space, which was intended to house the town’s police force until 2015 at the latest, is inadequate and cramped. She has said on multiple occasions that the building is also not as secure as it should be.
Throughout 2020, the Town Council discussed the idea of building a new, permanent police headquarters to last the department 40 years. According to Moseley Architects projections, if the town builds one in the next three years, it should expect to pay a minimum of $6.4 million in hard costs. If it waits to build the headquarters until 2030, it will cost a minimum of $8.4 million.
Moseley had presented four location options for construction of a permanent headquarters—one just south of Woodgrove High School along Mayfair Crown Drive, one off Hirst Road across Maple Avenue from the fire station, one just west of the town limits off West Main Street, and another on 2.25 acres of the Basham Simms Wastewater Facility property.
Looking Toward Infrastructure Projects, Revenue Generation
During 2021, Fraser said town leaders would work with residents and businesses to support COVID-19 immunization efforts and economic recovery, invest in the town’s aging infrastructure and look to generate revenue from town-owned assets.
He said the town has invested more than $6 million on road, water and sewer projects and that the town in 2021 would focus on replacing a 60-year-old water main that carries about half of the town’s overall water supply, dredging the reservoir to enhance water quality and capacity, and working with the county to accelerate the Rt. 7/690 and Rt. 7/287 interchange projects to reduce traffic congestion.
In generating new revenue streams, Fraser said the town would look to install a second cell tower to increase coverage, contract with a firm to set up a nutrient bank and sell nutrient credits on the 189-acre Aberdeen property, work to bring in a western Loudoun aquatic and recreational center to provide the town with utility usage payments, add more events and sponsorships at Fireman’s Field, and determine ways to generate revenue from the town’s rights-of-ways.