03/14/13: Big plans in need of big explanations

This op-ed appeared in The Virginian-Pilot on the date shown.

AN OUTSIDER observing the news coming out of Nor-folk over the last 10 days or so might wonder exactly what’s going on.

Plans for a new hotel-conference center, which will require more than $70 million of public money, were announced. Almost immediately, the possibility of spending millions of dollars on the refurbishment of Scope was floated.

Within days, this newspaper reported that a real estate tax hike of two cents, with the money to be used for school construction, “has the votes to pass” the City Council. A couple of days later, we learned that the city’s real estate assessments have remained almost flat, after three years of declining assessments.

Both the hotel-conference center and Scope improvements are to be paid from the public amenities fund, which receives revenues from the meals and lodging tax. The fund isn’t large enough to pay cash for these projects but will be able to pay the debt service on the bonds that will need to be issued.

The tax increase for school construction — one cent is expected to generate about $1.7 million — also will be used to pay the annual debt service. The estimated cost of the four schools at the top of Norfolk’s list is in excess of $100 million.

Despite the horrible optics of these announcements — and let’s face it, announcing spending for niceties while simultaneously proposing a tax increase is truly bad optics — there is another issue that ties these two things together: Norfolk’s debt.

Almost two years ago, the council was quite concerned with the size of its debt. After a five-year spending spree, it had ballooned to more than $1 billion, or about $4,300 for each resident.

City Manager Marcus Jones was urging the council to slow down its borrowing. Councilman Barclay Winn called it “a concern” while Andy Protogyrou called it “worrisome.”

The 2012 financial statements of the city show the bonded debt to be nearly $1.3 billion.

If council members were concerned and worried back then, they should be even more concerned and worried now.

I received my new real estate assessment this week, to be effective July 1. My assessment, unlike the average citywide, went down again. My property is now valued almost the same as it was in 2006. Ironically, it was in 2006 that Norfolk last undertook a spending spree.

The big difference between now and then is that the real estate tax rate in 2006 was $1.27 per $100 of assessed value. Today, it is $1.11. By definition, that means less revenue to the city. According to the latest budget, real estate taxes account for almost 25 percent of the general fund revenues.

Trying to service higher debt on fewer revenues sounds like Washington has come to Norfolk.

The residents of Norfolk deserve an explanation as to how the city intends to have everything it needs along with everything it wants.

So far, what’s been offered raises more questions than answers.