$344M Needed To Finance Fairfax School Bond

FAIRFAX CITY, VA — Fairfax City officials are trying to figure out how they will pay an estimated $344 million over the next 20 years to finance capital improvements at three city schools.

Members of the Fairfax City Council and School Board met in a joint work session Tuesday to review the fiscal impact of the $220 million school bond referendum, which approximately 70 percent of city voters approved in the Nov. 5, 2024, election.

Davenport & Company LLC, the city’s financial adviser, estimated that the 5 percent debt service to pay back the $220 million bond over 20 years would come to $344,022,745.

“The budgetary impact of that roughly $220 million was about 18 to 20 pennies in the real estate tax rate,” Kyle Laux, senior vice president with Davenport, told city officials. “That’s kind of where we were roughly a year or so ago.”

Total Estimated Debt Service Over 20 Years

• $126,962,633 – Daniels Run Elementary Renovations
• $142,809,962 – Providence Elementary Renovations
• $74,250,151 – Fairfax High Roof Replacement

$344,022,745 – TOTAL

While the city would only pay around $1.8 million in FY 2027, which is the budget the council will adopt in May 2026, payments would increase in subsequent years, according to Laux. He added that payments would top out in 2030 and beyond at about $16 to 17 million annually.

“This would translate to the real estate tax rate,” he said. “I’m not saying it’s the only revenue source you have, but it’s clear you have to identify additional revenues to make payments like that. … We understand what that looks like relative to the city and its budget, but again, these are a pretty good order of magnitude estimates of how those payments would step up over several budget cycles.”

One alternative revenue stream Laux mentioned was adopting a 1 percent sales tax, which other communities around the state are interested in.

“Folks as far away as the Roanoke region are asking the exact same question as many, many local governments all across the state, whether you’re in southwest Virginia or Northern Virginia, you’re in Hampton Roads, are thinking about and asking about this 1 percent sales tax,” he said.

Earlier this year, Gov. Glenn Youngkin vetoed a bipartisan bill that the Virginia General Assembly that would’ve imposed a tax on some services and digital personal property. A portion of the revenue generated by the bill would’ve gone to school divisions based on school-age and high-need student populations.

Using the real estate tax rate as the only revenue stream, Davenport projected 2.5 cents of the FY 2027 budget would go to finance the school bond, with that increasing to 9 cents by the FY 2029 budget. Ultimately, the city would need 20 cents in real estate tax revenue to finance the debt service on the bond.

While Tuesday’s discussion focused on the school CIP, several other major projects are being considered in the city, including improvements to the city’s property yard and Sherwood Community Center, as well as a new fire station and garage at police headquarters.

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“In combination, that’s about another $150 million, potentially about half of what’s being proposed here for the $220 million,” said Juan Carlos Martinez, the city’s chief financial officer. “That would easily be another potential 10 cents just on the real estate tax rate. But the big difference is those projects were not voted on by the residents, and council has not fully adopted or appropriated those entire amounts yet.”

Last May, the council adopted a real estate tax rate of 1.055 or 2.5 cents per $100 of the total fair-market assessed value of the property. They also set the personal property and machinery and tools tax rate at $4.13 of the total fair-market assessed value.

Council members approved an overall FY 2026 budget of $290,212,082, which included changes to rates and levies, the FY2026-2030 CIP, and the FY 2026 health benefit contribution rates. It also included a 2 percent merit increase effective Jan. 1, 2026 for eligible general scale employees, and the programmed annual step increase for public safety employees who were moved to the step system.

At its Sept. 9 meeting, the city council will vote on whether to award professional service contracts for architectural design, engineering and construction management services to Architecture, Incorporated and Moseley, Incorporated for improvements to Providence Elementary and Daniels Run Elementary, respectively. The combined expenses for both projects will not exceed $3 million and are included in the FY 2026 budget.

Several council members expressed an interest in exploring potential public-private partnerships to help fund some of the CIP projects under consideration. City staff was directed to gather information about public-private partnerships to present at a future meeting, so that the council could consider sending out formal public-partnership requests.