City Council

CITY OF FREDERICKSBURG, VIRGINIA HON. KERRY P. DEVINE, MAYOR HON. CHARLIE L. FRYE, JR., VICE -MAYOR, WARD FOUR CITY COUNCIL HON. JANNAN W. HOLMES, AT-LARGE HON. WILL B. MACKINTOSH, PH.D., AT-LARGE HON. JASON N. GRAHAM, WARD ONE HON. JONATHAN A. GERLACH, WARD TWO Council Chambers, 715 Princess Anne Street HON. SUSANNA R. FINN, WARD THREE Fredericksburg, Virginia 22401 Work Session March 18, 2025 Planning Commission Interviews (2) FY 2026 Budget The Council of the City of Fredericksburg, Virginia held a work session on Tuesday, March 18, 2025, beginning at 5:30 p.m. in Large Conference Room. Council Present. Mayor Kerry P. Devine, Presiding. Vice-Mayor Charlie L. Frye, Jr., Council members Susanna R. Finn, Jonathan A. Gerlach, Jason N. Graham, Jannan W. Holmes and Will B. Mackintosh. Also Present. City Manager Timothy J. Baroody, Deputy City Manager Mark Whitley, Deputy City Manager David Brown, Assistant City Attorney Dori Martin, Finance Director Amanda Six and Clerk of Council Tonya B. Lacey. Planning Commission Interviews (2). Matthew Kelly – when asked to describe Fredericksburg he said Fredericksburg was in transition and having discussions on what the future identity is going to be. He said there are differing opinions on what those might be regarding growth and preservation. He said growth and preservation go hand in hand also with affordability. Mr. Kelly explained that when he was on the Council he voted for board and commission applicants who he did not necessarily agree with on their vision and views of the City. He said he did this because he thought the boards and commission should have different ideas being discussed. Councilor Kelly said he was not in total support in the direction the Council was going. He said he was more focused on preservation and character with the city and he thinks that is a concern in the city moving forward and where the city is going to be in the next 10-15 years. 1  Mr. Kelly said the Comprehensive Plan was a critical document that will keep the long- term vision of the City going. He said there needed to be more discussion on the goals within the Planning Commission document and moving it forward. Councilor Mackintosh asked Mr. Kelly how he would approach the question of the railroad station overlay district and he said it is important moving forward that the public understand what is going on and have input before an item arrives at the Council. He said with the Railroad Overlay District there were a lot of questions that were not answered. There are a lot of legitimate questions and concerns and there was policy that Council would not act until the item was fully vetted and all questions answered. He said the Council never really engaged and told the public what direction it wanted to go with the removal of the railroad district. Councilor Graham asked Mr. Kelly outside of the downtown triangle what he would want to look at as in the future of Fredericksburg. Mr. Kelly said his concern with the direction of the area plans is that it does not look at the whole city, it compartmentalizes it. He said the city needs to look at what is happening in the surrounding counties. The next critical issue he said the City was going to have was data centers and the water usage, electricity and things of that nature. Ms. Finn asked him to describe an instance where he felt the risk to delaying actions in pursuit of a regional effort was more advantageous in the planning versus tackling the issue independently as the city moved forward on its own needs. He said he did not think there was any risk. Fredericksburg must plan regionally especially when it comes to water usage, transportation and those things. He said it also includes police, fire and schools. The survival of the City requires the City to look regionally. Councilor Holmes asked Mr. Kelly how he found common ground and what common ground he has with the current Planning Commission. Mr. Kelly said the common ground is the Comp Plan and following the Comp Plan as much as possible and moving forward to those goals. He said when he was on Council, they followed the plan, and he asked how many this Council had followed. He said total agreement or common ground was not paramount for him, it is being able to have the conversations within the Planning Commission. He said he likes giving and taking ideas. Councilor Holmes said she enjoys all kinds of ideas but without common ground it is people talking at each other. She again asked how he found common 2 ground. Mr. Kelly said, the common ground in his time on Council, is that Fredericksburg is a unique, historic city that has potential but needs to maintain its character. Mayor Devine said the Council does share that vision, the city is a small City that is full of character and opportunity. Mr. Kelly said it would be beneficial if the Council gave the Planning Commission resources that they can use outside of staff, if they want more information on something but they must first get Council approval. Thomas Johnson – Councilor Gerlach asked Mr. Johnson to describe his vision for what Fredericksburg will look like in 30 years. Mr. Johnson said his vision in 30 years is connectivity throughout the City that is multimodal. He said he would like to think of Fredericksburg as the regional hub of the area with more urban environment and urban ideas. He would like to continue to see that no matter what a person’s status there will always be a place in Fredericksburg for anyone, who wants to live here. When asked how he finds common ground, Mr. Johnson said the hearing gave input and the small area plans give residents feedback on what they would like to see. This is all documented in writing and that vision can be the overarching authority. He said looking back on what the residents have already agreed on can be a benchmark. Mr. Johnson provided the Council with a handout on a synopsis of Alexandria’s Principles of Civic Engagement. Councilor Finn asked what the biggest challenges and biggest opportunities for the Planning Commission were. Mr. Johnson said they could be the same scenario, the growth of the City and the growth of the region. He said whenever there is growth there is change and making sure the change fits in the vision. He said this is also the opportunity. Councilor Graham asked Mr. Johnson if he had specific areas or improvements that he has thought about for the City or that he would like to see implemented. He said making Lafayette Boulevard more pedestrian friendly and he wanted to know what would come next for the giant retail centers, but he said he would like to see the stores that have taken hold in those retail centers maintain their location. Another area he mentioned was the University of Mary Washington. He said there would be growth there but what does that look like. Councilor Mackintosh questioned when it makes sense to use the rules and when does it make sense to give a little bit of wiggle room in the rule when it comes to exemptions and special use permits. Mr. Johnson said he would ask himself does this help or better the City to 3 be able to provide for all kinds of residents, does it contribute to finding a place for everyone to have a way to be in the City, the next filter would be community input. He said when there is a development project there is more to it than your perspective. Disclosures. Vice-Mayor Frye disclosed that his wife was employed by the Fredericksburg schools, but he could participate in the discussions fairly, objectively and in the public interest. Councilor Holmes disclosed that she was a member of a business, profession, occupation, or group of three or more members affected by the transactions, namely, she provides services to students of Fredericksburg City Schools under a grant funded contract but she is able to participate in the transactions fairly, objectively and in the public interest. Fiscal Year 2026 Budget. Finance Director Six presented a PowerPoint presentation she reviewed the following: the Agenda; Community, Workforce, Infrastructure; Fy 2026 General Fund Expenditures; FY 2026 Expenditure Highlights, School Funding; City’s Contribution Cost to Regional Detention Facilities; Debt Service Transfer; Workforce; Facilities Improvement & Equipment Replacement; FY 2026 General Fund Revenues; Revenue Highlights; Real Estate Tax Recommendation; Building Permit Revenues; Tax Assistance Programs; FY 2026 Recommended Use of Fund Balance; Financial Stabilization Levers; Target Dates for Adoption Timeline and Budget Calendar. (See Attachment I for more information). Councilor Holmes asked about the increase in the beds at the Juvenile Detention Center and the usage of the adult facility and she wanted to know if the adult usage had gone up. Mr. Baroody explained that Council adopted a potential stabilization fund several years ago because of the regular 10 to 20 percent swings in the Regional Jail. The swings are related to the debt service and the true up at the end of the year. He said it regularly goes up and then back down the next year, but it is mostly debt service. Mr. Whitley said there have been minor decreases in jail usage. In 2025, he said there was a huge break in debt service and now it is starting to get back to normal range of $4.5 to $5 million. He said he asked the City’s Professional Finance Management (PFM) to look at ways to smooth out the debt service payment, but all the jurisdictions must agree. Councilor Mackintosh asked about how the City is charged for its portion and Mr. Whitley explained that the City is charged not by where the person resides, but based on where 4 the crime was committed. Example: if a county resident did a crime in the City the City is responsible for paying the fees of that person. Councilor Finn asked when the last time was the City contributed to the detention stabilization fund. She expressed concern because they would be using half of the funding. Mr. Whitley said when they first started the fund they put in about $1 – 1.5 million and it was around 2020 they did a supplement and up it to the $2 million. He said it all goes according to budget he said the Council may want to put some back from the unassigned. He also noted that there would be a large true up coming for juveniles. Councilor Mackintosh asked how predictable the increase in debt service was and Mr. Whitley said he would try to find out. Vice-Mayor Frye asked staff if they could find out the ages of those in the juvenile center. He said this might help to determine if there is programing needed to target a particular age group. Mr. Whitley said he would try to find out but because of privacy they may not release that information. Councilor Graham asked if there was any way that the city would not have to pay the arbitrage fee and Ms. Six said not on the debt proceeds. Councilor Graham said one of the things he would like to do is on any bonds for water and sewer he would like to take some proceeds and put it toward the rapidly increasing water and sewer rates. Mr. Whitley said he would have to look and see. In regard to the workforce Councilor Graham asked what percentage of the workforce was at risk for retirement and Mr. Baroody said he would bring that information back. Councilor Graham asked how bad things would have to get from an economic activity standpoint that they would need to use the revenue stabilization. Mayor Devine asked how quickly they would receive the first quarter information. Mr. Whitley said they might know something around the first or second week of November. He said you don’t get anything back on real estate and personal property, but it will be the sales and meals tax is how they would determine where things are economically. He said the other indicator would be if they receive a letter from the Department of Education saying they are not providing title one funding. Councilor Gerlach asked when they would be deciding on the mid-year holdback. Mr. Whitely said it would be around December or early January. Councilor Gerlach asked if they would be receiving the Capital Improvements Plan before they must decide on the tax rate. Mr. Whitley explained that they used the fund balance for 5 cash capital of $4 million and it is already planned in the General fund and there is a transfer of $4 million to the capital funds. This is for small and medium projects. The only other project in the CIP that they may use any debt for would be the Wastewater Treatment Plant unless Council says otherwise. Mayor Devine asked what a penny was worth, and it is $585,000. Councilor Mackintosh talked about the elimination of the transportation planner position which has been funded for a while, and he asked were they unsuccessful in hiring that position because of labor market conditions. Mr. Baroody said it has been filled for three of the five years, and it hasn’t been filled in the last couple of years. He said they have struggled to attract candidates for the position and that is part of the reason for eliminating it. Mr. Baroody said the City has a former VDOT engineer on staff, as well as Jamie Jackson who has 20 years of experience with transportation and transit and Mike Craig who is carrying the load, and he was very confident in this team. He said this would not be forever and it was a hard decision, but they had to give up something to fill the most critical positions. Mr. Whitley reminded the Council that there was a capital projects manager position in public works that is vacant and is a part of that team. He listed the vacant positions like the one in water and sewer, Capital Projects Manager, Transportation Planner position which became the Transportation Projects position and the Public Works project positions. They were having trouble filling each of those positions, so they took one for now. Councilor Holmes asked if the Transportation Planner would help to execute projects that the City has already gotten funding for. Mr. Brown added that the smaller projects the City has completed but the larger projects are now being managed by VDOT on behalf of the City. Mr. Baroody said VDOT has been great partners taking the lead on those projects. The cost of recouping VDOT is included in the project budget. Mayor Devine recognized a cost that was not in the budget and that was for Preston Bryant who did a lot of work for the City by getting the City a lot of money. Mr. Bryant’s contract is up, and they need to consider whether they want to renew working with him for another year. Mr. Baroody explained that Mcquire Woods have been working with the City for multiple years, specifically Preston Bryant who is that principal who helped the City. He helped the City win three different awards of $56 million in total for the wastewater treatment plant. He was also the lead helping the City advance the City Council’s legislative agenda. Other 6 victories were from the legislative agenda, the permit deadline extension and noise issue and concerns downtown. Mr. Baroodys said there was money in the professional services line and the wastewater and sewer lines in FY 2026 to extend the contract for a year. The council gave Mr. Baroody the thumbs up to extend the contract for another year. Councilor Holmes had questions on the process of the outside agencies. Her concern was that many of the agencies have been holding flat for several years but nothing cost the same as they did in 2023 which means in essence they are getting less. She would like to know if the numbers of Fredericksburg residents are higher, if this is the case she feels there should be some discussion. Councilor Mackintosh asked staff to explain the agencies that have been zeroed out. Councilor Holmes said she really would like to see how many residents of Fredericksburg they are serving and how does it compare to 2023 so that she can make recommendations. Councilor Mackintosh asked why there was a 628% increase in the Public Information Officers budget and Mr. Whitley explained that the position was moved over from the Police Department and there were some costs that were formally in the Council’s budget that were moved over to include the broadcasting of the Council, Planning and Architectural Review Board. Mayor Devine asked if Council had thought about a rate they would like to advertise for the Real Estate. The staff recommended a $.03 increase. Mr. Graham said he recommends advertising $.06 but only to advertise he was not recommending the Council raise it $.06. The $.03 equals $1.8 million. Councilor Mackintosh stated that he was a little nervous about the $1 million from the revenue stabilization fund. He said he was worried things would get choppier 6-18 months out. He said if they draw down the revenue stabilization fund now to deal with what they think will be weakness in some of the consumer-based taxes; will the City have dry powder for eighteen months out if there is an impact on personal property taxes and real estate taxes. He said he would like to leave wiggle room to not spend the $1 million from the revenue stabilization fund to have more cushions in case revenues get worse in a year. Fund Balance. Mr. Whitley said with the revenue stabilization they would use two and a half for revenue stabilization, $1 million to Virginia Retirement System (VRS) or Other Post- 7 Employment Benefits (OPEB) and a half a million to the capital reserves. He said he had not heard back from VRS in regard to the decreasing rate of return on the million dollars that Councilor Graham had asked about. Mr. Whitley asked Council if they had any guidance or thoughts on the use of fund balance before the next meeting. Councilor Graham said the tradeoff between protecting ourselves from future volatility versus current volatility. He said that today volatility greatly exceeds what he would consider the potential for future volatility. He said he would like to take OPEB trust down from $1 million to $500,000 and take that additional $500,000 and put it in the revenue stabilization because he was more worried about the near future than the distant future. He said if the economy was more stable, he would support putting the $1 million in OPEB trust. Councilor Mackintosh was also in agreement with Councilor Graham, he said he was more worried about the next 18-24 months and less worried about later years. Adjournment. There being no further business to come before the Council at this time. Mayor Devine declared the session officially adjourned at 8:39 p.m. ______________________ Tonya B. Lacey, MMC Clerk of Council City of Fredericksburg 8