Z-Burger to End Free Burger Promotion — Z-Burger is ending its free burger promotion for furloughed federal workers. The local burger chain says they’ve given away more than $60,000 worth of burgers to more than 15,000 federal workers. The company says it’s losing too much money to continue, so the giveaway will end tonight (Thursday). “In order for us to stay in business, we had to make the hard choice,” said owner Peter Tabibian.
New Townhouses Coming to Westover — A new townhouse development is coming to the Westover neighborhood. The Westover Place townhomes are replacing a series of aging but mixed-income low-rise apartment buildings on N. Kensington Street. Prices for new homes in the development start in the $800′s. [Arlington Housing Report]
CivFed Calls for County Audit Staff — Delegates to the Arlington County Civic Federation voted 40-2 this week on a resolution that calls for Arlington to hire an independent, internal auditing and financial control staff. [Sun Gazette]
WRIT Buys Crystal City Building — Washington Real Estate Investment Trust has purchased The Paramount, a 17-story apartment building at 1425 S. Eads Street, for $48 million. [Globe St.]
Flickr pool photo by Lawrence Cheng Photography
Two weeks ago, opinion columnist Peter Rousselot wrote that Arlington County should explain its relatively large cash surplus.
Arlington Deputy County Manager Mark Schwartz has now responded.
In an op-ed, printed below, Schwartz says there are several reasons why the county government has nearly $300 million cash on hand. Chief among them: to provide a fiscal cushion that helps maintain the county’s high bond rating.
In his August 22, 2013 opinion piece “Peter’s Take,” Peter Rousselot asks, “Is Arlington’s cash surplus too large?” A fair question.
The short answer is “no.”
Residents should know that our balances are higher now than they were 10 years ago for three important reasons:
1. We have increased our reserves. At the urging of the rating agencies that review our finances, we increased our reserves from 2% to 5% of the General Fund balance. This fiscally prudent step provides us a bigger cushion (but still at the low end of what our neighbors do) in case of emergency and shows our commitment to smart budget planning. It also ensures that we maintain our AAA rating from the three national rating agencies. Arlington is one of only 39 counties out of over 3,000 that enjoy this prestigious rating, attesting to our sensible practices.
2. We have many more capital projects and needs in the community. A review of the County’s most recently adopted Capital Improvement Plan (CIP) for FY 2013 – 2022 includes considerable investments in building new schools, transportation, water and sewer projects, recreation, fleet, and government services. Each of these investments will maintain and improve the quality of our residential neighborhoods and urban corridors. Prudent budgeting calls for us to build up balances to fund these important projects from pay-as-you go capital (in combination with the sale of bonds). Capital projects require large investments for projects that will last many years and it is typical for cash balances to grow prior to execution of the projects.
3. There are several sources of funds that simply didn’t exist 10 years ago. These are:
a. Transportation Capital Fund (12.5-cents of our tax rate paid by commercial property owners) dedicated to invest in our streets, sidewalks, Metro, streetcar, and busses.
b. Stormwater Fund (1.3-cents of our tax rate paid by all taxpayers) dedicated to revitalize our aging infrastructure and to help improve the Chesapeake Bay.
c. Dedicated Development Fund (fees paid by developers and residents who improve their homes) to speed up permit processing and construction services.
d. Business Improvement Districts (BIDs) – in Rosslyn, Crystal City, and Ballston, commercial property owners pay a dedicated tax and the cash is set aside to meet work plans to enhance services in each of these areas.
The Transportation Capital Fund, much of the Development Fund, and BID programs are all commitments made by our business community and not paid for by our residential taxpayers.
A close reading of the details (as posted on the County’s website) shows that the maintenance of operating reserves and a strong liquidity position is critical to the County’s strong bond ratings. Every penny of our cash balances is accounted for, and reviewed annually – not only by our audit staff in the Department of Management and Finance, but also independently assessed by outside auditors.
The statements in our annual review of finances – Comprehensive Annual Financial Report (CAFR) – and countless other documents including Official Statements accompanying bond offers, our annual operating budget and our CIP provide a detailed map to where the money is. These documents are there for all to see, and, as always, we appreciate residents’ interest in County financials and operations. These funds are collected and maintained to support the programs adopted each year in our annual operating budgets, and over the longer term in our CIP.
Deputy County Manager
Suzanne Smith Sundberg, a member of the Arlington County Civic Federation Revenues and Expenditures Committee, has written an eight page report detailing what she characterizes as a lack of audit oversight over the county’s finances.
The county eliminated two internal auditing positions during budget cuts in 2010, Sundberg writes, a move that raised red flags with her committee at the time. Recent news items have supported their concern and point to need to create a permanent internal auditing office, she says.
“Recent events in Arlington County — mounting discontent over the ongoing taxpayer support devoted to keeping the Artisphere afloat, taxpayers’ demonstrated opposition to the Columbia Pike streetcar at the recent town hall, and the public outcry over the eye‐popping $1 million price tag for a single bus Super Stop — provide clear evidence that citizens are losing confidence in their local government and its ability to utilize resources in an efficient, effective, and practical manner,” Sundberg writes.
The county employs an external auditing firm, CliftonLarsonAllen. Sundberg, however, pointed to the case of an Arlington County employee convicted of embezzling $12,000 from the county fair as evidence that external auditing is not comprehensive enough to catch many financial irregularities.
County Manager Barbara Donnellan has included $250,000 in one-time funds for “an internal audit function in the Department of Management and Finance” in her proposed FY 2014 budget – still subject to County Board approval – but Sundberg says that doesn’t go far enough.
“Although it’s a welcome step in the right direction, the County Manager’s proposal in her FY 2014 budget is vague and appears insufficient to support the establishment of a robust, permanent internal audit function in Arlington County,” she writes. “No effective internal audit function can ever be established if it is treated as an afterthought, subject to elimination or significant reduction when money is tight. In fact, the most advantageous time to have a strong, independent audit function is during economic downturns when difficult choices must be made and every dollar counts.”
Sundberg suggests that Arlington look to Fairfax County or Montgomery County for examples of effective internal auditing mechanisms.
Fairfax County has two separate internal auditing offices. Montgomery County created an Office of the Inspector General in 1997. Sundberg cites data suggesting that both counties save millions of dollars annually thanks to their internal controls. Arlington, she says, should do the same.
“If Arlington County cannot or will not provide sufficient resources, authority, and independence to sustain a robust and permanent internal audit function, then the establishment of an office of inspector general or special independent auditor — or whatever statutory option may be available — is all the more necessary,” she writes.
Sundberg’s report represents her own analysis and opinion. It has not been endorsed by the Civic Federation.
(Updated at 10:20 a.m.) The good news for Artisphere, the county’s struggling cultural center in Rosslyn, is that it just had a certified hit in the form of its month-long Frida Kahlo photo exhibit. The bad news is that it’s still falling short of meeting a number of financial goals laid out in a new business plan last year.
The Frida Kahlo exhibit, held from Feb. 23 to March 25, drew 13,119 visitors to Artisphere, according to a recently-released quarterly report. That’s well over three times the audience of Artisphere’s next most popular exhibit to date, a collection of Mongolian clothing, artifacts and art that drew 3,831 visitors over the course of a month and a half in the spring of 2011.
Though the Kahlo exhibit helped bring in visitors, Artisphere failed to capitalize in terms of catering and concession revenue. Artisphere has yet to find a “resident caterer” to pick up the slack left by the closing of the venue’s in-house bar/restaurant last year. As a result catering and concession income for the first three quarters of the financial year was only $24,170, compared to the prorated business plan goal of $63,188.
Artisphere is also falling short of meeting its goal for facility rental income — a key component of the new business plan. Rental income has brought in $214,752 through the third quarter, compared to the goal of $273,600. In a letter to County Manager Barbara Donnellan, the Arlington Economic Development (AED) officials now in charge of overseeing Artisphere predict that rental income will pick up in the fourth quarter and put Artisphere “only slightly under its projections” for the year.
Another disappointment is income from education programs — $17,540 compared to a Q3 goal of $46,800 — but Artisphere managers expect to make up some ground through revenue from summer camps.
Admission and ticket income, meanwhile, is only just short of its goal. Artisphere has collected $147,156 in visitor income compared to the Q3 goal of $149,987. When it first launched in 2010, however, Artisphere was expected to bring in $789,912 per year in admission and ticket income.
Artisphere has “seen many recent successes in its programming, bringing in very popular performers and events that have attracted significantly higher levels of ticket sales,” according to AED officials. That momentum may be difficult to maintain, though, following the sudden resignation of Artisphere’s Programming Director last month.
The course aims to address the unique needs women face with money management. Some of the topics covered include budgeting, insurance basics and investing.
“The premise of the program is that women have unique financial needs,” said Virginia Cooperative Extension Financial Counselor Jennifer Abel. “Women are more likely to leave the workforce to care for young children and the elderly. On average, they have lower life earnings and yet they live longer than men.”
Abel will teach the first session and bring in other certified financial planners for the following weeks.
The classes start on January 25 and run every Wednesday until February 22, from 6:30-8:30 p.m. There is an optional $25 fee for attendees who would like to purchase class materials. To register, email email@example.com or call 703-228-6417.