1. law, govt and politics
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This Preliminary Official Statement and the information contained herein are subject to completion or amendment. The Bonds may not be sold nor may an offer to buy be accepted prior to
the time the Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor
shall there be any sale of the Bonds, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such
jurisdiction.
PRELIMINARY OFFICIAL STATEMENT DATED OCTOBER 10, 2014
NEW ISSUE – Full Book Entry
RATINGS:
Fitch:
AAA
Moody’s:
Aaa
Standard & Poor’s: AAA
(See “RATINGS” herein)
In the opinion of Bond Counsel, under existing law and assuming continuing compliance with the provisions
of the Internal Revenue Code of 1986, as amended (the “Code”), as described herein, interest on the Bonds will not
be includable in the gross income of the owners thereof for federal income tax purposes. Under existing law, the
interest on the Bonds is excluded from Virginia taxable income for purposes of the individual income tax and the
income taxation of corporations by the Commonwealth of Virginia under Sections 58.1-322 and 58.1-402 of the Code
of Virginia of 1950, as amended, to the extent that such interest is excludable from gross income for federal income
tax purposes. See “TAX MATTERS” herein for certain provisions of the Code that may affect the tax treatment of
interest on the Bonds for certain bondholders.
$230,325,000*
FAIRFAX COUNTY, VIRGINIA
PUBLIC IMPROVEMENT REFUNDING BONDS, SERIES 2014B
Dated Date of Delivery
Due October 1, as shown on the inside cover page
Interest on the Bonds will be payable on each April 1 and October 1, commencing April 1,
2015.
The Bonds are being issued, subject to favorable market conditions, to refund certain
outstanding bonds of the County and to pay costs of issuing the Bonds.
The Bonds maturing after October 1, 2024*, are subject to redemption prior to maturity as
a whole or in part at any time on or after October 1, 2024*, at a redemption price of par plus
accrued interest.
The Bonds will be general obligations of Fairfax County, Virginia, for the payment of
which the Board of Supervisors of the County is unconditionally obligated to levy and collect an
annual ad valorem tax, unlimited as to rate or amount, upon all property in the County subject to
local taxation.
This page and the inside cover page contain certain information for quick reference only.
They are not a summary of this issue. Investors must read the entire Official Statement to obtain
information essential to making an informed investment decision.
The Bonds are offered for delivery when, as, and if issued, subject to the approving
opinion of Sidley Austin LLP, Washington, D.C., Bond Counsel. The Bonds will be available for
delivery in New York, New York, through the facilities of DTC on or about November 4, 2014.
October _, 2014
* Preliminary, subject to change.
FAIRFAX COUNTY, VIRGINIA
PUBLIC IMPROVEMENT REFUNDING BONDS, SERIES 2014B
MATURITY DATES, PRINCIPAL AMOUNTS, INTEREST RATES AND PRICES/YIELDS
Base CUSIP† Number 303820
$230,325,000* SERIES 2014B BONDS
Maturity Date
October 1
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
Principal
Amount*
$17,300,000
5,040,000
4,855,000
15,525,000
2,950,000
9,555,000
9,690,000
41,810,000
41,390,000
44,665,000
25,555,000
11,990,000
Interest
Rate
%
Price or
Yield
%
CUSIP†
Suffix
† CUSIP® is a registered trademark of the American Bankers Association. The CUSIP numbers listed above are
being provided solely for the convenience of bondholders only, and the County does not make any representation with
respect to such numbers or undertake any responsibility for their accuracy. The CUSIP numbers are subject to change
after the issuance of the Bonds.
* Preliminary, subject to change.
Fairfax County, Virginia
BOARD OF SUPERVISORS
Sharon Bulova, Chairman
Penelope A. Gross, Vice Chairman
John C. Cook
John W. Foust
Michael R. Frey
Patrick S. Herrity
Catherine M. Hudgins
Gerald W. Hyland
Jeff C. McKay
Linda Q. Smyth
______________
COUNTY OFFICIALS
Edward L. Long Jr., County Executive
Patricia D. Harrison, Deputy County Executive
David J. Molchany, Deputy County Executive
David M. Rohrer, Deputy County Executive
Robert A. Stalzer, Deputy County Executive
David P. Bobzien, County Attorney
Christopher Pietsch, Director, Department of Finance
Susan W. Datta, Chief Financial Officer
________________
PAYING AGENT
Fairfax County Director of Finance
12000 Government Center Parkway, Suite 214
Fairfax, Virginia 22035-0074
(703) 324-3120
_______________
FINANCIAL ADVISOR
Public Financial Management, Inc.
4350 North Fairfax Drive, Suite 580
Arlington, Virginia 22203-1547
(703) 741-0175
_______________
BOND COUNSEL
Sidley Austin LLP
1501 K Street, N.W.
Washington, D.C. 20005
(202) 736-8350
________________
For information relating to this Official Statement please contact:
Susan W. Datta, Chief Financial Officer
Fairfax County, Virginia
12000 Government Center Parkway, Suite 561
Fairfax, Virginia 22035-0074
(703) 324-2391
No person has been authorized by Fairfax County (the “County”) to give any information or to make
any representations with respect to the County or the Bonds other than those contained in this Official
Statement, and, if given or made, such other information or representations may not be relied upon as
having been authorized by the County. This Official Statement does not constitute an offer to sell or
the solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person in any
jurisdiction in which it is unlawful for such person to make such offer, solicitation, or sale. The
information herein is subject to change without notice, and neither the delivery of this Official
Statement nor any sale made hereunder shall, under any circumstances, create any implication that
there has been no change in the affairs of the County since the date hereof. This Official Statement is
not to be construed as a contract or agreement between the County and the purchasers or owners of
any of the Bonds. Any electronic reproduction of this Official Statement may contain computer
generated errors or other deviations from the printed Official Statement. In any such case, the printed
version controls.
TABLE OF CONTENTS
Page
INTRODUCTION ........................................................................................................................................ 1
THE BONDS ................................................................................................................................................ 1
Authorization and Purposes; Refunding Plan ......................................................................................... 1
Description ............................................................................................................................................. 3
Optional Redemption*............................................................................................................................ 3
Selection of Bonds for Redemption........................................................................................................ 3
Notice of Redemption............................................................................................................................. 4
Security ................................................................................................................................................... 4
State Aid Intercept .................................................................................................................................. 4
Remedies ................................................................................................................................................ 5
No Litigation Respecting the Bonds ....................................................................................................... 5
FAIRFAX COUNTY .................................................................................................................................... 5
GENERAL DESCRIPTION ......................................................................................................................... 5
Overview ................................................................................................................................................ 5
Population ............................................................................................................................................... 6
Certain County Administrative and Financial Staff Members ............................................................... 7
County Employees.................................................................................................................................. 9
GOVERNMENT SERVICES ....................................................................................................................... 9
General Government Administration ..................................................................................................... 9
Public Schools ...................................................................................................................................... 10
Public Works ........................................................................................................................................ 12
Transportation....................................................................................................................................... 13
Parks, Recreation and Libraries ............................................................................................................ 17
Community Development..................................................................................................................... 17
Health and Welfare ............................................................................................................................... 18
Judicial Administration......................................................................................................................... 19
Public Safety ......................................................................................................................................... 19
Water Supply Service ........................................................................................................................... 20
ECONOMIC FACTORS ............................................................................................................................ 21
Economic Development ....................................................................................................................... 21
Employment ......................................................................................................................................... 22
Construction Activity ........................................................................................................................... 25
i
Housing................................................................................................................................................. 26
Colleges and Universities ..................................................................................................................... 27
Cultural Amenities................................................................................................................................ 27
DEBT ADMINISTRATION ....................................................................................................................... 28
Statement of Bonded Indebtedness....................................................................................................... 28
Limits on Indebtedness ......................................................................................................................... 28
Bond Referenda Authorization ............................................................................................................. 28
Other Tax Supported Debt Obligations ................................................................................................ 29
Lease Commitments and Contractual Obligations ............................................................................... 32
Debt Service on Tax Supported Debt Obligations ............................................................................... 34
Sewer Revenue Bonds .......................................................................................................................... 34
Debt Ratios ........................................................................................................................................... 37
Underlying Bonded Indebtedness ......................................................................................................... 39
TAX BASE DATA ..................................................................................................................................... 39
FINANCIAL INFORMATION .................................................................................................................. 43
Five Year Summary of Revenues, Expenditures and Fund Balances for General, Special
Revenue and Debt Service Funds .................................................................................................. 43
Financial Policies.................................................................................................................................. 44
Certain Financial Procedures ................................................................................................................ 45
Investment Management Policy ........................................................................................................... 46
General Fund Revenues, Expenditures, Transfers and Beginning Fund Balance ................................ 46
General Fund Summary ........................................................................................................................ 46
Revenues............................................................................................................................................... 47
Expenditures and Transfers .................................................................................................................. 49
FY 2014 Budget Preliminary Results ................................................................................................... 50
FY 2015 Budget ................................................................................................................................... 50
FY 2016 Budget ................................................................................................................................... 51
CAPITAL IMPROVEMENT PROGRAM ................................................................................................. 51
RETIREMENT SYSTEMS ........................................................................................................................ 51
Fairfax County Employees’ Retirement System (ERS) ....................................................................... 52
Fairfax County Police Officers Retirement Systems (PORS) .............................................................. 53
Fairfax County Uniformed Retirement System (URS) ........................................................................ 54
Educational Employees’ Supplementary Retirement System of Fairfax County (ERFC) ................... 56
Virginia Retirement Systems (VRS) .................................................................................................... 57
Fairfax County Retirement Systems – Plan Revisions from the Board of Supervisors........................ 58
Other Post-Employment Benefits (OPEB) ........................................................................................... 58
CONTINGENT LIABILITIES AND CLAIMS ......................................................................................... 59
APPROVAL OF LEGAL PROCEEDINGS ............................................................................................... 59
TAX MATTERS ......................................................................................................................................... 59
Opinion of Bond Counsel ..................................................................................................................... 59
Original Issue Discount ........................................................................................................................ 59
Bond Premium ...................................................................................................................................... 60
Backup Withholding ............................................................................................................................. 60
Other Tax Consequences ...................................................................................................................... 61
Future Tax Developments .................................................................................................................... 61
FINANCIAL ADVISOR ............................................................................................................................ 61
VERIFICATION OF CERTAIN FINANCIAL COMPUTATIONS .......................................................... 62
RATINGS ................................................................................................................................................... 62
SALE AT COMPETITIVE BIDDING ....................................................................................................... 62
CERTIFICATE CONCERNING OFFICIAL STATEMENT .................................................................... 62
ii
MISCELLANEOUS ................................................................................................................................... 63
FUTURE FINANCIAL INFORMATION .................................................................................................. 63
PRELIMINARY OFFICIAL STATEMENT DEEMED FINAL ............................................................... 64
APPENDICES
Organization of Fairfax County Government ............................................................................... Appendix I
Locations of Political Jurisdictions ............................................................................................. Appendix II
Map of Fairfax County ............................................................................................................... Appendix III
Management’s Discussion and Analysis and Basic Financial Statements ................................. Appendix IV
Book-Entry Only System ............................................................................................................ Appendix V
Proposed Form of Legal Opinion............................................................................................... Appendix VI
Continuing Disclosure Agreement ............................................................................................Appendix VII
Notice of Sale .......................................................................................................................... Appendix VIII
iii
OFFICIAL STATEMENT
FAIRFAX COUNTY, VIRGINIA
Regarding
$230,325,000* Public Improvement Refunding Bonds, Series 2014B
INTRODUCTION
The purpose of this Official Statement, which includes the cover page, the inside cover pages and
the appendices hereto, is to furnish information in connection with the sale by Fairfax County, Virginia
(the “County” or “Fairfax County”), of its $230,325,000* Public Improvement Refunding Bonds, Series
2014B (the “Bonds”).
THE BONDS
Authorization and Purposes; Refunding Plan
The Bonds will be issued under a resolution (the “Resolution”) adopted by the Board of
Supervisors of Fairfax County (the “Board of Supervisors”) on December 3, 2013, pursuant to Article
VII, Section 10(b) of the Constitution of Virginia and the Public Finance Act of 1991, Chapter 26, Title
15.2, Code of Virginia of 1950, as amended (the “Act”).
A portion of the Bonds is authorized to be issued to provide funds, with other available funds, to
refund and to redeem prior to their respective maturities certain outstanding bonds, including all or a
portion of the following outstanding bonds of the County referred to hereafter as “2004B Refunding
Candidates,” the “2005A Refunding Candidates,” the “2007A Refunding Candidates,” the “2008A
Refunding Candidates,” the “2009A Refunding Candidates,” the “2011A Refunding Candidates,” the
“2012A Refunding Candidates,” and the “2013A Refunding Candidates,” and collectively as the
“Refunding Candidates:”*
* Preliminary, subject to change.
1
Principal
Amount*
$39,580,000
Maturities*
2015-2019‡
Redemption Date
11/4/2014
Redemption
Price
100%
2005A
6,350,000
2024, 2025‡
10/1/2015
100
303820 S39,
303820 S47
2007A
23,460,000
2016, 2027‡
4/1/2015
100
303820 W75,
303820 Y24
2008A
58,605,000
2019, 2023,
2024, 2025,
2026‡
4/1/2018
100
303820 Z72,
303820 2B9,
303820 2C7,
303820 2D5,
303820 2E3
2009A
49,875,000
2021-2025‡
4/1/2019
100
303820 2U7,
303820 2V5,
303820 2W3,
303820 2X1,
303820 2Y9
2011A
25,890,000
2023- 2025
4/1/2021
100
303820 5V2,
303820 5W0,
303820 5X8
2012A
10,885,000
2023‡
4/1/2020
100
303820 6Q2
2013A
30,945,000
2023-2025‡
10/1/2021
100
303820 8G2,
303820 8H0,
303820 8J6
Series of
Refunded Bonds*
2004B
CUSIP Nos.†
30382A BU5,
303820 5A8,
303820 5B6,
303820 5C4,
303820 5D2
_____________
†The County shall not be responsible for the accuracy of the CUSIP numbers provided above. The CUSIP numbers are provided solely for the
convenience of bondholders.
‡Only portions of the outstanding maturities are expected to be refunded.
* Preliminary, subject to change.
The purpose of the refunding is to achieve present value debt service savings. The County’s
decision whether to refund any given Refunding Candidates is subject to prevailing market conditions at
the time of the sale of the Bonds. The County may refund only certain Refunding Candidates if refunding
such Refunding Candidates permits the County to meet certain savings targets. The Refunding
Candidates, if any, that are refunded with proceeds of the Bonds are referred to as the “Refunded Bonds.”
The final Refunded Bonds will be described in the final Official Statement.
Upon delivery and issuance of the Bonds by the County, proceeds thereof will be used to provide
for the payment and redemption of the Refunded Bonds by depositing with The Bank of New York
Mellon Trust Company, N.A., pursuant to an escrow deposit agreement, cash and non-callable, direct
obligations of the United States of America the maturing principal of and interest on which, together with
2
such cash, will be sufficient to pay all principal, applicable redemption premiums, and interest on the
Refunded Bonds to their respective redemption dates. The arithmetical computations of the sufficiency of
the cash and securities deposited with The Bank of New York Mellon Trust Company, N.A., to pay the
principal of and interest on the Refunded Bonds will be verified by Robert Thomas CPA, LLC, Shawnee
Mission, Kansas.
The sources and uses of the proceeds of the Bonds are summarized below.
Sources
Par amount of the Bonds
Net offering premium
Total Sources
$
___________
$___________
Uses
Deposit for payment of Refunded Bonds
Underwriter’s discount
Other issuance expenses
Total Uses
$
____________
$___________
Description
The Bonds will be dated the date of their delivery, will bear interest from their delivery date,
payable on each April 1 and October 1, commencing April 1, 2015, at the rates, and will mature in
amounts on October 1 in each of the years 2015 through 2026, inclusive, as set forth on the inside cover
page of this Official Statement. The Bonds will be issued in denominations of $5,000 and integral
multiples thereof under the book-entry system of the Depository Trust Company (“DTC”), and principal
and interest on the Bonds will be payable in the manner described in Appendix V, “BOOK-ENTRY
ONLY SYSTEM.” The Fairfax County Director of Finance is serving as bond registrar and paying agent
for the Bonds.
Optional Redemption*
The Bonds maturing on or before October 1, 2024*, are not subject to optional redemption before
their maturity. The Bonds maturing after October 1, 2024*, are subject to redemption prior to maturity, at
the option of the County, from any money available for such purpose on any date not earlier than October
1, 2024*, as a whole or in part (in integral multiples of $5,000) at any time, at a redemption price equal to
the principal amount thereof, together with the interest accrued to the redemption date on the principal
amount to be redeemed.
Selection of Bonds for Redemption
Bonds may be redeemed only in increments of $5,000 or integral multiples thereof. If less than
all of the Bonds of a maturity are called for redemption, the Bonds or portions thereof to be redeemed will
be selected by the paying agent and bond registrar in such manner as the paying agent and bond registrar
in its sole discretion may determine, each $5,000 increment being counted as one Bond for such purpose.
If a portion of a Bond is called for redemption, a new Bond in a principal amount equal to the
unredeemed portion thereof will be issued to the bondholder upon the surrender thereof.
* Preliminary, subject to change.
3
In the case of redemption of Bonds at the option of the County, the County will select the
maturities of the bonds to be redeemed.
Notice of Redemption
Not more than sixty (60) nor less than thirty (30) days before the redemption date of any Bonds to
be redeemed, whether such redemption be in whole or in part, the County will cause a notice of such
redemption to be filed with the bond registrar and to be mailed, postage prepaid, to the registered owner
of each Bond to be redeemed in whole or in part at his address appearing upon the registration books of
the County, but failure to mail such notice or any defect therein will not affect the validity of the
redemption. Each such notice is to set forth the date designated for redemption, the redemption price to
be paid, the maturities of the Bonds to be redeemed and, if less than all of the Bonds of any one maturity
then outstanding shall be called for redemption, the distinctive numbers and letters, if any, of such Bonds
to be redeemed and, in the case of any Bond to be redeemed in part only, the portion of the principal
amount thereof to be redeemed. If any Bond is to be redeemed in part only, the notice of redemption will
state also that on or after the redemption date, upon surrender of such Bond, a new Bond or Bonds in
principal amount equal to the unredeemed portion of such Bond will be issued.
Any notice of optional redemption of the Bonds may state that it is conditioned upon there being
available an amount of money sufficient to pay the redemption price plus interest accrued and unpaid to
the redemption date, and any conditional notice so given may be rescinded at any time before the payment
of the redemption price if any such condition so specified is not satisfied. If a redemption does not occur
after a conditional notice is given due to an insufficient amount of funds on deposit by the County, the
corresponding notice of redemption will be deemed to be revoked.
Security
The Bonds are general obligations of the County for which its full faith and credit are irrevocably
pledged. The Act requires that the Board of Supervisors shall, in each year while any of the Bonds shall
be outstanding, levy and collect an ad valorem tax, unlimited as to rate or amount, upon all property in the
County subject to local taxation sufficient to pay the principal of and the interest on the Bonds as the
same shall become due, which tax shall be in addition to all other taxes authorized to be levied in the
County.
State Aid Intercept
The provisions of Section 15.2-2659 of the Act, in substance, direct the Governor of Virginia (the
“Governor”), upon satisfactory proof of default by the County in the payment of principal of or interest on
the Bonds, immediately to order the Comptroller of Virginia (the “Comptroller”) to withhold all further
payment to the County of all funds, or any part thereof, appropriated and payable by the Commonwealth
of Virginia (the “Commonwealth” or “State”) to the County for any and all purposes until such default is
remedied. For as long as the default continues, the law directs the Governor to require the Comptroller to
pay to the holders of such Bonds or the paying agent therefor all of the withheld funds or as much as are
necessary to cure, or to cure insofar as possible, the default on such Bonds. The Governor shall, as soon
as practicable, give notice of such default and of the availability of funds with the paying agent or with
the Comptroller by publication one time in a daily newspaper of general circulation in the City of
Richmond, Virginia, and by mail to the registered owners of such Bonds. Although the provisions of
Section 15.2-2659 have never been tested in a Virginia court, the Attorney General of Virginia has opined
that appropriated funds can be withheld pursuant to its provisions.
4
Remedies
The Bonds do not specifically provide any remedies that would be available to a bondholder if the
County defaults in the payment of principal of or interest on the Bonds, nor do they contain a provision
for the appointment of a trustee to protect and enforce the interests of the bondholders upon the
occurrence of such default. If a bondholder does not receive payment of principal or interest when due,
the holder could seek to obtain a writ of mandamus from a court of competent jurisdiction requiring the
Board of Supervisors to levy and collect an ad valorem tax, unlimited as to rate or amount, upon all
property in the County subject to local taxation sufficient to pay the principal of and the interest on the
Bonds as the same shall become due. The mandamus remedy, however, may be impracticable and
difficult to enforce. The enforceability of rights or remedies with respect to the Bonds (but not the
validity of the Bonds) may be limited by bankruptcy, insolvency, or other Commonwealth or federal
laws, heretofore or hereafter enacted, and equitable principles affecting the enforcement of creditors’
rights.
No Litigation Respecting the Bonds
No litigation is pending or, to the best of the County’s knowledge, threatened (a) to restrain or
enjoin the issuance, sale, or delivery of any of the Bonds, the application of the proceeds thereof, or the
pledge of tax revenues for payment of the Bonds, (b) in any way contesting or affecting any authority for
the issuance or validity of the Bonds, (c) in any way contesting the existence or powers of the County or
(d) that, if determined adversely against the County, would have a material adverse effect on the County.
See “CONTINGENT LIABILITIES AND CLAIMS” for a description of litigation affecting the County.
FAIRFAX COUNTY
GENERAL DESCRIPTION
Overview
The County is located in the northeastern corner of the Commonwealth of Virginia (the
“Commonwealth”) and encompasses an area of 407 square miles. Its current estimated population
exceeds one million. The County is part of the Washington, D.C., metropolitan area, which includes
jurisdictions in Maryland, the District of Columbia and Northern Virginia.
The Fairfax County government is organized under the Urban County Executive form of
government (as defined under Virginia law). The governing body of Fairfax County is the Board of
Supervisors, which makes policies for the administration of the County. The Board of Supervisors is
comprised of ten members: the Chairman, elected at large for a four year term, and one member from
each of nine districts, each elected for a four year term by the voters of the district in which the member
resides. The Board of Supervisors appoints a County Executive to act as the administrative head of the
County. The County Executive serves at the pleasure of the Board of Supervisors, carries out the policies
established by the Board of Supervisors, directs business and administrative procedures, and recommends
officers and personnel to be appointed by the Board of Supervisors. (See Appendix I.)
In Virginia, cities and counties are discrete units of government and do not overlap. Fairfax
County completely surrounds the City of Fairfax and is adjacent to the City of Falls Church and the City
of Alexandria. (See Appendix II.) Property within these cities is not subject to taxation by Fairfax
County, and the County generally is not required to provide governmental services to their residents. The
County does, however, provide certain services to the residents of certain of these cities pursuant to
agreements with such cities.
5
In Fairfax County there are three incorporated towns, Clifton, Herndon and Vienna, which are
underlying units of government within the County, and the ordinances and regulations of the County are,
with certain limitations prescribed by Virginia law, generally effective in them. (See Appendix III.)
Property in these towns is subject to County taxation, and the County provides certain services to their
residents. These towns may incur general obligation bonded indebtedness without the prior approval of
the County (more fully discussed in “DEBT ADMINISTRATION – Underlying Bonded Indebtedness”).
Population
Fairfax County’s estimated 2013 population was 1,130,924. In 1980, Fairfax County was the
third most populous jurisdiction in the Washington, D.C., primary metropolitan statistical area, as defined
by the U.S. Bureau of the Census. By 1990, Fairfax County, with 818,584 residents, had become the
most populous jurisdiction in the Washington, D.C. area, adding an average of 22,170 people per year in
the 1980s. Population growth during the 1990s and 2000s slowed; on average, the County gained about
12,400 people per year during 2000-2013.
Fairfax County Population
Calendar Year
1940
1950
1960
1970
1980
1990
2000
Population
40,929
98,557
248,897
454,275
596,901
818,584
969,749
2001
2002
2003
2004
2005
984,366
1,004,435
1,012,090
1,022,298
1,033,646
2006
2007
2008
2009
2010
1,037,311
1,041,507
1,050,315
1,074,227
1,081,726
2011
2012
2013
1,104,147
1,118,683
1,130,924
_____________________
Sources: U.S. Bureau of the Census (1940-2000, 2010) and the Fairfax County Department of Neighborhood and Community Services
The following table reflects the population age distribution of County residents, based on the U.S.
Census Bureau’s 2010 Decennial Census. The survey estimated the County’s total population in 2010 at
1,081,726.
6
Household Population Age Distribution
Fairfax County
2010
Age Group
Under 20 years
20 – 34
35 – 54
55 – 64
65 and Over
Total
_________________
Number
285,405
218,781
339,757
131,493
106,290
1,081,726
Percent (%)
26.4
20.2
31.4
12.2
9.8
100.0
Sources: U.S. Bureau of the Census, 2010 Decennial Census and Virginia Employment Commission
Based on the latest data released by the U.S. Census Bureau, Fairfax County’s median household
income was $107,096 and median family income was $124,831 in 2012. Over 32.0% of the County’s
households and 39.8% of families had annual incomes of $150,000 or more. The following table shows
the 2012 household and family income distribution in the County.
2012 Household and Family Income Distribution 1
Income Level
Under $25,000
$25,000 – 49,999
$50,000 – 74,999
$75,000 – 99,999
$100,000 – 149,999
$150,000 or more
Median Income
____________________________
Household
7.2%
11.4%
14.2%
13.3%
21.3%
32.6%
Family
5.1%
10.2%
11.3%
12.0%
21.6%
39.8%
$107,096
$124,831
Source: Fairfax County Department of Neighborhood and Community Services, Demographic Reports 2013
1
Household Income is defined as that income which is available to all residents of a housing unit, regardless of relationship. Income is from all
sources, before taxes and deductions, and includes wages, business, retirement, SSI, alimony, child support, interest, etc. Family Income is
derived by including only those households containing two or more persons related by blood, marriage or adoption.
Certain County Administrative and Financial Staff Members
Edward L. Long Jr., County Executive, joined the County in 1977 as a Budget Analyst. He
served as a Senior Budget Analyst from 1980 to 1983 and as Assistant Director from 1983 to 1989. He
was appointed Director of the Office of Management and Budget in October 1989 and Deputy County
Executive-Chief Financial Officer (“DCE-CFO”) in 1997. Mr. Long retired as DCE-CFO in May, 2011.
Mr. Long was appointed County Executive effective April 25, 2012. Mr. Long has a Bachelor’s Degree
in Political Science from Emory & Henry College, Emory, Virginia and a Master’s Degree in Urban
Studies from the University of Maryland at College Park. He has served on the Fairfax-Falls Church
Community Services Board and is active and has held offices in numerous professional organizations in
the Northern Virginia region. Mr. Long serves as an adjunct professor at George Mason University and
American University. He served on the Government Finance Officers Association (“GFOA”) Standards
Committee on Governmental Budgeting and Management. In 1993 Mr. Long was recognized by the
Washington Metropolitan GFOA with the Anna Lee Berman Award for Outstanding Leadership in
Governmental Finance. In 2006, Mr. Long was awarded the A. Heath Onthank Award, the County’s
highest employee award, in recognition of his achievements in advancing and improving public service in
7
Fairfax County. In 2012, Mr. Long received the 2012 Distinguished Local Government Leadership
Award from the Association of Government Accountants.
Patricia D. Harrison, Deputy County Executive, has worked in the field of human services since
her graduation from Slippery Rock University, Slippery Rock, Pennsylvania in 1980 where she obtained a
Bachelor’s Degree in Therapeutic Recreation. She joined Fairfax County Government in 1986 and
directed the creation of inclusive and therapeutic recreation services for people with disabilities. Prior to
joining the County Executive’s office, she served as Director for the Department of Community and
Recreation Services for ten years. Ms. Harrison also holds a Master’s Degree with a concentration in
Therapeutic Recreation Administration from University of Maryland, College Park campus and obtained
a Certificate of Public Management from George Washington University. She maintains her credentials
as a Certified Therapeutic Recreation Specialist.
David J. Molchany, Deputy County Executive, joined the County in 1995. In 2003 Mr.
Molchany was recognized by Governing magazine as one of the top ten Public Officials of the Year. He
is also active in professional organizations at the international, national, state, and local levels of
government. Previous employers have included Sallie Mae, American Management Systems, and
Electronic Data Systems. Mr. Molchany is a 1983 graduate of Juniata College and holds a Bachelor of
Science degree in Marketing and Computer Science.
David M. Rohrer, Deputy County Executive, has worked with the Fairfax County Police
Department for almost 32 years and was appointed chief in 2004. In addition, Mr. Rohrer has also served
as deputy chief for investigations and operations support; Patrol Bureau commander; Special Operations
Division and district commander; SWAT first-line supervisor; and first-line patrol supervisor. Mr. Rohrer
has served two terms as chairman of the Metropolitan Washington Council of Governments Police
Chiefs’ Committee, and he is a member of numerous organizations, including the International
Association of Chiefs of Police; the Major Cities Chiefs’ Association; the Police Executive Research
Forum; and the Virginia Association of Chiefs of Police. Mr. Rohrer holds a bachelor’s degree in
administration of justice from George Mason University.
Robert A. Stalzer, Deputy County Executive, joined Fairfax County Government on June 5, 2000.
Mr. Stalzer previously served as Town Manager for the Town of Herndon, Virginia from 1988 until June
2000. He was Director of Planning and Zoning for Roanoke County, Virginia from 1983 until 1988. Mr.
Stalzer holds a Bachelor of Arts degree from Clark University, Worcester, Massachusetts, a Master of
Regional and City Planning degree from the University of Oklahoma, and a Master of Business
Administration degree from Syracuse University. Mr. Stalzer is a past president of the Virginia Local
Government Management Association and recognized as a credentialed manager by the International
City/County Management Association. Mr. Stalzer has served as an adjunct professor at Virginia
Polytechnic Institute and State University, Roanoke College, and George Mason University.
David P. Bobzien was appointed County Attorney by the Fairfax County Board of Supervisors
effective January 1993, after serving as a member of the Fairfax County Planning Commission and as the
Chairman of the Fairfax County Goals Advisory Commission. He is a past chair of the Local
Government Law Section of the Virginia State Bar, a past president of the Local Government Attorneys
of Virginia, a past president of Lawyers Helping Lawyers, the organization that assists lawyers in
Virginia suffering from substance abuse or mental illness, and the Immediate Past President of the
Virginia Law Foundation. In 2004-2005 he served as the president of the Virginia State Bar. Mr.
Bobzien is the current Chairman of the Virginia Continuing Legal Education Committee of the Virginia
Law Foundation and a board member of the Fairfax Law Foundation. He also serves as a member of the
American Bar Association’s Commission on Domestic and Sexual Violence and as the Fairfax Bar
Association’s delegate in the American Bar Association’s House of Delegates. Mr. Bobzien is a fellow of
8
both the Virginia Law Foundation and the American Bar Foundation. Prior to assuming his present
County position, he served as an assistant counsel in the Office of Professional Responsibility of the
United States Department of Justice. From 1975 to 1979 Mr. Bobzien was an associate in the Fairfax law
firm of Fitzgerald and Smith. He served as a captain in the Judge Advocate General’s Corps in the United
States Army from 1971 to 1975. Mr. Bobzien is a graduate of Holy Cross College Worcester,
Massachusetts and holds a J.D. from the University of Virginia and an LL.M. in Taxation from George
Washington University.
Christopher J. Pietsch was appointed Director of Finance for Fairfax County effective December
30, 2013. From 2003 until his appointment as Director of Finance, Mr. Pietsch served as the Director of
the Fairfax County Internal Audit Office. Prior to that, Mr. Pietsch spent 16 years working in bank
auditing as well as governmental auditing with the Commonwealth of Virginia. Mr. Pietsch is a graduate
of James Madison University, Harrisonburg, Virginia, with a degree in Finance. In addition, he is a
Certified Internal Auditor and a Certified Bank Auditor.
Susan W. Datta was appointed as the Chief Financial Officer of the County in May 2011. In
addition, she is Director of the County Department of Management and Budget. Ms. Datta received her
Bachelor’s Degree in American Government from the University of Virginia and a Masters of Public
Administration from the University of North Carolina at Chapel Hill. Ms. Datta worked as Assistant to
the County Manager in Catawba County, North Carolina, from 1984 to 1987. She joined the Fairfax
County Department of Management and Budget in May 1987 as a budget analyst.
County Employees
As of July 2014, the School Board supported 23,843.3 full time equivalent positions. Other than
school board employees 11,282 County employees were employed in activities funded directly or
supported by the General Fund of the County and 1,032 employees were employed in activities not
supported by the General Fund, principally the County’s Integrated Sewer System (the “Integrated Sewer
System”). Fairfax County employees are not represented by unions. Fairfax County public school
employees have, however, organized the Fairfax Education Association and the Fairfax County
Federation of Teachers to represent the interests of its members at public hearings and meetings before
the School Board and the Board of Supervisors. General County employees’ interests are represented at
these types of meetings by the Employees Advisory Council and other groups such as police, fire, and
sheriff employee organizations. None of these organizations is empowered to serve as negotiating agent
for its members for collective bargaining purposes. Collective bargaining by public employees in
Virginia is prohibited by law, a restriction upheld by the Supreme Court of Virginia.
GOVERNMENT SERVICES
Reflecting its urban character, Fairfax County provides a comprehensive range of public services
characteristic of its form of government under Virginia law and its integral position within the
Washington metropolitan area. The following subsections describe principal governmental services and
services performed in conjunction with other governmental entities.
General Government Administration
The County government center complex is located in the Fairfax Center area and is accessible by
U.S. Routes 50 and 29, near Interstate Highway 66. The 675,000 square foot government center houses
core County services and agencies. Two adjacent County office buildings provide an additional 486,000
square feet of space and house primarily human services and community development agencies and
departments of the County. The County also occupies a 135,000 square foot governmental center for
9
delivery of County services in the southeast part of the County, and has six remote governmental centers
throughout the County. The centers provide office space for members of the Board of Supervisors,
personnel, police, and building inspectors, and provide meeting rooms for community activities.
From FY 2004 through FY 2013, the International City/County Management Association
(“ICMA”) recognized Fairfax County’s performance measurement efforts with its “Certificate of
Distinction.” In 2009, ICMA created its third and highest level of recognition, called the “Certificate of
Excellence,” which Fairfax County has received from 2009 and through 2013 for its consistent efforts to
incorporate performance data into decision-making, sustain the program through training and process
improvement, and providing a high level of accountability and transparency while obtaining and sharing
community input.
Fairfax County’s Comprehensive Annual Financial Report for the fiscal year ended June 30,
2012, received the Certificate of Achievement for Excellence in Financial Reporting for the 36th
consecutive year from the Government Finance Officers Association (GFOA). Fairfax County has also
earned GFOA’s Distinguished Budget Presentation Award for the past 29 years. This award represents
the highest form of recognition in governmental budgeting and reflects the commitment of the governing
body and staff to meet the highest principles of public budgeting. The Association of Public Treasurers of
the United States and Canada (“APT”) has awarded the County certification for its investment policy
every year since 1998, confirming that the County meets the high public investment standards set forth by
the Association. Written investment policies submitted to the APT received vigorous peer team review for
conformity with principles of sound investment management, careful public stewardship, and adoption of
the profession’s best practices.
Public Schools
Fairfax County Public Schools (“FCPS”) is the largest educational system in the Commonwealth
of Virginia and the eleventh largest school system nationwide, ranked by enrollment. The system is
directed by a twelve person School Board elected by County residents to serve four-year terms. A student
representative with a one-year term participates in the School Board’s discussions but does not vote.
Because the School Board is not empowered to levy taxes or to incur indebtedness, the operating costs of
FCPS are provided by transfers to the School Board from the General Fund of the County and the federal
and Commonwealth governments (see the “FINANCIAL INFORMATION – General Fund Summary”
herein). Capital construction funding for public school facilities is provided primarily by the sale of
general obligation bonds of the County.
The FCPS system is a high quality system offering a variety of programs. There is a strong
academic program for college-bound students. Almost 96% of FCPS graduates enroll in post-secondary
educational programs. In addition to the traditional academic curriculum, the Thomas Jefferson High
School for Science and Technology provides a four-year college preparatory program for students who
have a strong interest and high aptitude in mathematics, science, computer science, engineering, or related
professional fields. The school is designated as one of the Governor’s magnet schools for science and
technology, and students from other Northern Virginia counties are admitted on a tuition-paying basis.
FCPS also offers an extensive program for students pursuing opportunities in technical careers,
with courses in business, health occupations, industrial technology, marketing, trade and industrial, and
family and consumer sciences studies. In addition, there are special programs offered for gifted children
and for students with disabilities spanning ages 2 through 21. FCPS also provides an extensive adult
education program offering basic education courses and general education, vocational, and enrichment
programs. Annually, over 40,000 community members participate in continuing education through more
10
than 4,200 academic, career, and life skill classes offered through the Adult and Community Education
program.
As of FY 2014, the School Board operates 189 schools and 7 special education centers:
Fairfax County Public Schools
Number of Public
Schools
139
23
22
3
2
7
196
Type of School
Elementary School
Middle School
High School
Secondary Schools1
Alternative High Schools
Special Education Centers
Total
_____________
Source: Fairfax County Public Schools
1
Grades 7-12.
As shown below, the number of students attending Fairfax County Public Schools increased
overall between FY 2005 and FY 2014. Enrollment for FY 2014 was 183,895, an increase of 19,487
students over the FY 2005 enrollment, and 2,636 over the FY 2013 enrollment.
Fairfax County Public Schools Enrollment
Fiscal Year
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
__________________
Number of
Public
School Students
164,408
164,284
164,486
166,307
169,538
172,391
174,933
177,918
181,259
183,895
Source: Fairfax County Public Schools FY 2015 Approved Budget
11
% Change
(.08)
0.12
1.12
1.94
1.68
1.48
1.71
1.88
1.45
The average per pupil expenditures based on FY 2015 approved budget operating costs for
several Washington metropolitan area jurisdictions are as follows:
Washington Metropolitan Per Pupil Expenditures
Per Pupil
Expenditures
$18,687
16,991
16,880
15,326
13,472
11,984
11,638
11,563
10,173
10,158
Jurisdiction
Arlington County
Falls Church City
Alexandria City
Montgomery County (Md.)
Fairfax County
Manassas City
Loudoun County
Prince George’s County (Md.)
Manassas Park
Prince William County
____________________
Source: FY 2015 Washington Area Boards of Education Guide
Of the Advanced Placement (AP) tests taken by FCPS students in 2013, 71% rated a score of 3 or
above (on a grading scale of 1 to 5). Students who score a 3 or above on at least three AP exams are
recognized by the College Board as AP Scholars; the total number of FCPS students recognized as AP
Scholars rose from 5,737 in 2012 to 6,502 in 2013. In 2013, 35,759 AP tests were given, an increase of
5.2% from 2011. As a result of increasing both student participation and performance, FCPS was one of
388 school districts in the U. S. to be named an Advanced Placement Achievement District by the College
Board in 2011. The Virginia Standards of Learning pass rates for FCPS students in the 2013-14 school
year were 81% in English and 81% in mathematics.
FCPS students also score above average in all areas of the Scholastic Aptitude Test as compared
to both the Commonwealth and the country.
2012 Average Scholastic Aptitude Test Scores
United States
Virginia
Fairfax County
_____________
Critical Reading
Writing
Math
Total
496
510
554
488
495
541
514
512
568
1498
1517
1663
Source: The College Board SAT Percentile Ranks, 2013 College-Bound Seniors
Public Works
The Department of Public Works and Environmental Services (DPWES) provides essential
management, professional engineering, design, and construction services in support of the construction of
roads, sidewalks, trails, storm drainage, sewers, street lights, bus shelters and public facilities (except
schools, housing, and parks). DPWES is also responsible for the acquisition of land for, and timely
construction of, public facilities projects contained in bond referenda questions approved by the voters of
Fairfax County. See “DEBT ADMINISTRATION – Bond Referenda Authorization” herein.
Wastewater generated in the County is treated at one County-owned treatment facility (Noman
M. Cole, Jr. Pollution Control Plant), four inter-jurisdictional treatment facilities (District of Columbia
12
Water and Sewer Authority’s Blue Plains Facility, and plants operated by the Upper Occoquan Sewage
Authority, Arlington County, and the Alexandria Renew Enterprises), and one private treatment facility
(Harbor View Wastewater Treatment Plant). The County’s treatment capacity in the six facilities totals
approximately 157.18 million gallons per day (“mgd”). In addition, the County has purchased 0.1 mgd of
capacity from the Prince William County Service Authority for future flow needs in the southern portion
of the County.
DPWES manages and operates the I-95 Sanitary Landfill located on approximately 500 acres in
the southern portion of the County. This facility is operated on a “special fund” basis, which utilizes
tipping fees to pay for the operation and capital expenditures of the landfill. Since January 1, 1996, the
landfill has been dedicated to the disposal of ash generated primarily by the incineration of municipal
solid waste at the Arlington/Alexandria Energy-from-Waste Facility and the Fairfax County I-95
Energy/Resource Recovery Facility (“E/RRF”). On older portions of the landfill, the County has initiated
closure activities which involve placing a synthetic or low permeability soil cap over the closed section of
the landfill along with installation of landfill gas extraction wells and leachate collection systems.
Capping activity has been completed on approximately 260 acres of the site. The closure project is a
multi-phase construction project to continue through the remaining life of the facility. The County has
established reserves for this purpose and has met the financial assurance requirements established by the
Virginia Department of Environmental Quality regarding closure and post-closure care. Additional
landfill requirements, whether debris or municipal solid waste, are met through separate contracts.
The E/RRF burns solid waste delivered to the facility from the County as well as portions of the
District of Columbia, Prince William County, and Loudoun County. The facility has a dependable
electric capacity rating of 63 megawatts for sale to Dominion Virginia Power, although it has the ability
to generate over 80 megawatts. Fairfax County and the Fairfax County Solid Waste Authority, which
was created by the County, entered into a service contract (the “Covanta Contract”) in August 1987 with
Ogden Martin Systems of Fairfax (now Covanta Fairfax, Inc.), under which Covanta Fairfax, Inc., was
obligated to design, construct, operate, and maintain a 3,000 ton per day resource recovery facility at the
I-95 Landfill Site. The County, under the Covanta Contract, is obligated to deliver certain minimum
annual tonnages of solid waste to the E/RRF and to pay Covanta Fairfax, Inc., tipping fees for the
disposal of such waste to provide funds sufficient to pay the operating costs of the E/RRF. Covanta
Energy Corporation, of which Covanta Fairfax, Inc., is an indirectly wholly-owned subsidiary, has
guaranteed the obligations of Covanta Fairfax, Inc., under the Covanta Contract.
During FY 2014, the E/RRF processed over 947,080 tons of material towards the County’s
delivery commitment, exceeding the guaranteed requirements by 66,299 tons. Covanta Fairfax, Inc.,
processed in excess of 1,013,379 tons of waste in FY 2014. The current Covanta Contract remains in
effect through February 1, 2016. On April 11, 2014, the County and Covanta Fairfax, Inc. entered into a
Waste Disposal Agreement (WDA) that is effective February 2, 2016, and has an initial five year term.
Under the WDA, the County’s delivery commitment is 650,000 tons (as may be adjusted under the terms
of the WDA).
Transportation
General
Fairfax County is served by various highway, rail and air transportation facilities. The Capital
Beltway (Interstate Highways 95 and 495), Interstate Highways 395 and 66, and the Dulles Toll Road
provide access to all parts of the Washington metropolitan area and major surface transportation corridors
along the eastern seaboard. The Washington Metropolitan Area Transit Authority (“WMATA”)
13
Metrorail system provides area residents with one of the largest and most modern regional transit systems
in the world.
Two major airports serve the County with daily national and international service. Washington
Dulles International Airport (“Dulles Airport”), located along the County’s western boundary, is also the
site of a designated Foreign Trade Zone. Ronald Reagan Washington National Airport, located a few
miles east of the County, is accessible by Interstate Highways 66 and 395. In 1987, control of these
facilities was transferred by a 50-year lease from the federal government to the Metropolitan Washington
Airports Authority (“MWAA”), a public authority created by inter-jurisdictional compact between the
Commonwealth and the District of Columbia. In June 2003, the lease was extended to 2067.
Ground transportation receives significant attention from the County, primarily in an effort to
relieve traffic congestion along the major arterials leading to Washington, D.C. and also to facilitate
cross-County movement, connecting established and developing centers of commerce and industry.
Recent efforts have included increased local funding for highway improvements, establishment of
transportation improvement districts, creation of County transit systems, continued participation in
WMATA, and other improvements which encourage increased use of Metrorail, bus services, and
carpooling. The County also participates in a regional commuter rail system to expand transportation
services available to County residents. In Virginia, the Commonwealth is generally responsible for
highway construction and maintenance. However, highway improvement needs in Fairfax County far
exceed the highway revenues available from the Commonwealth.
Since 1993, funding for County transportation projects has been received from Commonwealth
bond financing, Federal Highway Reimbursement Anticipation Notes, Commonwealth general funds, fuel
tax collections, County bond financing, Northern Virginia Transportation Authority tax collections and
other revenue sources. A few of the many projects supported by these funding sources have included the
Fairfax County Parkway, the County’s share of capital costs for the WMATA’s Metrorail system, the
Dulles Toll Road, and improvements to U.S. Route 1, U.S. Route 29, I-66, I-95, I-495, the Fairfax County
Parkway, State Route 7 and State Route 28.
Metro Transit System
Since 1970, Fairfax County and the other major political subdivisions in the Washington, D.C.,
metropolitan area have contracted with WMATA to finance, construct and operate a 103-mile Metrorail
subway and surface rail transit system. Funding for the construction of the Metrorail system has come
from direct Congressional appropriations and by direct local contributions. Five Interim Capital
Contributions Agreements between WMATA and the participating political jurisdictions were executed to
fully fund and complete the 103-mile adopted regional system. By 2018, 23 additional miles are expected
to be added to the system with construction of the Silver Line, with new tracks connecting downtown
Washington, D.C., to Washington Dulles International Airport. As of July 2014, 11.7 miles of the Silver
Line were complete and in operation.
WMATA’s Board of Directors periodically adopts a Capital Improvement Plan (“CIP”), which
prioritizes and maintains the existing capital plant and rolling stock of the Metrobus and Metrorail
systems. The regional counter-parties to WMATA periodically agree to updated funding agreements
regarding their portion of capital priorities and infrastructure renewal projects. The County issues bonds
as the primary source of the County’s share of WMATA’s CIP.
The County’s operating assistance to WMATA is funded from the General Fund, gasoline tax
receipts, and State aid. Fairfax County’s share of the bus and rail operating subsidies for FY 2004FY 2015 are shown in the following table:
14
Fairfax County WMATA Operating Subsidies
(Millions of Dollars)
Fiscal
Year
2004
2005
2006
2007
2008
Bus
Operations1,2
Rail
Operations1
ADA
Paratransit1
Less
State
Aid3
Less Gas
Tax
Receipts4
Adjustments
and
Interest
Applied
Net
General
Fund
$27.060
29.662
31.687
37.368
36.745
$18.582
17.375
18.849
17.496
19.267
$4.936
5.945
5.841
5.803
7.088
$22.112
22.033
19.809
19.406
21.375
$11.815
14.748
17.971
20.885
22.610
$5.174
0.000
1.200
1.990
1.287
$11.477
16.201
17.397
18.386
17.828
2009
45.292
2010
40.204
2011
45.387
2012
47.458
2013
48.829
2014
51.270
2015
57.330
__________________
17.665
22.622
15.598
19.481
26.209
27.520
38.447
7.565
9.164
11.347
12.410
12.424
13.046
14.019
39.836
46.003
44.745
46.252
49.734
56.617
72.789
23.490
17.799
21.838
26.163
28.568
25.907
27.500
0.000
0.300
0.300
2.259
0.056
0.300
0.150
7.196
7.888
5.449
4.675
9.104
9.012
9.357
Sources: Fairfax County Department of Transportation and Department of Management and Budget
1
The amounts shown for operating subsidies represent actual disbursements in those years. Adjustments based on final WMATA annual audited
figures are incorporated in the fiscal year in which the credit for an overpayment was applied or a debited amount was paid rather than the fiscal
year in which the credit or debit was earned. Fiscal Years 2014 and 2015 are adopted budget amounts.
2
Includes other service enhancements.
3
Virginia law permits the use of State aid for transportation to fund transit program operating costs in addition to transit program capital costs.
4
A 2% retail gasoline tax is dedicated to mass transit costs in those Northern Virginia jurisdictions covered by the Northern Virginia
Transportation Commission (“NVTC”). The receipts from this tax are paid to NVTC which then allocates these funds to participating
jurisdictions for payment of transit operating, capital and debt service costs.
Tax Districts
Transportation improvement districts provide another source of funding for transportation
improvements in the County. The County, together with Loudoun County, a neighboring jurisdiction,
formed the Route 28 Highway Transportation Improvement District (the “Route 28 District”) in 1987 to
accelerate highway improvements proposed by the Commonwealth to State Route 28. State Route 28
runs approximately parallel to the County’s western border and connects State Route 7 in eastern
Loudoun County to U.S. Route 50 and Interstate Highway 66 in western Fairfax County. The initial
improvements, which consisted of expanding State Route 28 from two to six lanes, with additional
turning lanes, are now complete. State Route 28 provides access to Washington Dulles International
Airport, as do the Dulles Access Road and the Dulles Toll Road, both of which connect the Capital
Beltway to Dulles Airport. Such improvements were financed from proceeds of a special improvements
tax (the “Route 28 Special Improvements Tax”) collected from owners of real property zoned for
commercial and industrial use in the Route 28 District and bonds issued by the Fairfax County Economic
Development Authority (the “EDA”) secured by the Route 28 Special Improvements Tax collections.
In 2001, the Virginia General Assembly enacted legislation permitting the creation of one or
more special transportation taxing districts located between the West Falls Church Metrorail station and
the Dulles Airport area to provide a means of financing an extension of rail service in the Dulles Corridor.
The structure of any such district is modeled after the existing Route 28 District. In February 2004,
15
pursuant to a petition submitted by landowners representing a majority of the assessed value of property
zoned for commercial or industrial use in the Tysons and Reston commercial districts, the Board of
Supervisors formed the Phase I Dulles Rail Transportation Improvement District (the “Phase I District”)
to provide funds to support the County’s share of Phase I of a proposed expansion of the Metrorail system
to Dulles Airport and beyond (“Phase I”). Funds for financing the County’s $400 million share of the
Phase I expansion of the Metrorail system are provided from a real estate tax levy on all property zoned
for commercial and industrial use in the Phase I District (the “Phase I Special Improvements Tax”). As of
December, 2013 the County has provided to MWAA its required $400 million share for the Phase I
Project from the proceeds of the Phase I Special Improvements Tax and from bonds issued by the EDA
secured by the Phase I Special Improvements Tax collections. The County provided approximately $68
million in additional funds for the completion of the Phase I Project from financing sources other than the
Phase I Special Improvements Tax. Metrorail service for Phase I began in July 2014. Phase II of the
proposed expansion of the Metrorail system (“Phase II”) will complete the 23-mile line to Dulles Airport
and beyond into Loudoun County. In October 2009, the County received a valid petition to form another
special tax district comprised of the Reston-Herndon-Dulles commercial districts to provide $330 million
toward the County’s portion of the Phase II financing. The Phase II tax district was approved by the
Herndon Town Council on November 11, 2009, and by the Fairfax County Board of Supervisors on
December 7, 2009. On May 9, 2014 the United States Department of Transportation (“USDOT”)
approved an application of the County to receive loans in the aggregate principal amount of up to
$403,274,894 to fund county obligated Phase II project costs (the “TIFIA loan). The County is currently
negotiating the terms of the TIFIA loan with USDOT.
County Transit Systems
Within the County, the Fairfax Connector System provides feeder bus service to Metrorail
Stations. The Fairfax Connector operates 85 routes to 13 Metrorail Stations which include the Dunn
Loring, Franconia-Springfield, Greensboro, Huntington, McLean, Pentagon, Pentagon City, Spring Hill,
Tysons Corner, Van Dorn Street, Vienna, West Falls Church, and Wiehle-Reston East stations. Private
contractors operate and maintain the service and have the responsibility to employ and supervise all
transit personnel, while the Board of Supervisors maintains control and approves all policies for bus
service such as routes and service levels, fare structures, and funding assistance. The Fairfax Connector
System is supported from General Fund and fare box revenues. The FY 2015 Adopted Budget Plan also
includes support of $20.8 million from State aid. The Fairfax Connector carried approximately 10.7
million passengers in FY 2013. Fairfax Connector System expenditures totaled approximately $84.9
million in FY 2014, including capital expenditures. The County runs three permanent maintenance and
garage facilities for the Fairfax Connector System, with bus operations management provided by a thirdparty contractor.
Commuter Rail
Fairfax County is a member of the Northern Virginia Transportation Commission and, in
cooperation with the Potomac and Rappahannock Transportation Commission, is a participating
jurisdiction in the operation of the Virginia Railway Express (“VRE”) commuter rail service. As of
December 2013, the service consisted of seven peak period trips from south of the County in the City of
Fredericksburg to north of the County in the District of Columbia and six peak trips that run from west of
the County in the City of Manassas to north of the County in the District of Columbia. Under a Master
Agreement among VRE’s participating jurisdictions, the County is to contribute to capital, operating, and
debt service costs of the VRE on a pro rata basis according to its share of ridership. The County’s share
of the FY 2015 commuter rail operating and capital budget is $4.7 million.
16
Parks, Recreation and Libraries
Fairfax County provides a variety of recreational, educational, and cultural activities and services.
In FY 2013, the Fairfax County Public Library (the “Library”) made more than 13.1 million loans and
recorded more than 5.2 million visits to its 23 branches, and reported more than 4.6 million user visits to
its web site. The Library offers free events and activities, including puppet shows for toddlers, story time
for school-aged children, book discussion groups for teens, author visits for adults, and English
conversation classes for English for Speakers of other Languages customers (or new arrivals). The
Library also makes library services available and accessible to people who have disabilities or are
homebound.
The Department of Community and Recreation Services provides a variety of recreational,
community, and human services for County residents. These services include senior adult programs and
centers, therapeutic recreation services for individuals with disabilities, a variety of youth programs
including recreational activities at youth centers, community-based recreational opportunities, support for
Fairfax County’s various volunteer sports councils and leagues, and a variety of volunteer opportunities.
Fairfax County also operates an extensive park system that provides a variety of recreational
activities and facilities. Under the direction of a 12-member Park Authority Board appointed by the
Board of Supervisors, the Fairfax County Park Authority (“FCPA”) works with constituents, government
leaders and appointees to implement Park Authority Board policies, preserve and protect natural and
cultural resources, and facilitate the development of park and recreation programs and facilities. FCPA
oversees operation and management of a 23,265-acre County park system with 421 parks, nine recreation
centers with swimming pools, fitness centers, racquetball courts, program space, eight golf courses, an ice
skating rink, skateparks, campgrounds, 203 playgrounds, 668 public gardens, five nature centers, an
equestrian center, 731 athletic fields including 31 synthetic turf fields, ten historic sites, two waterparks, a
horticultural center, and more than 320 miles of trails. In FY 2013, FCPA welcomed over 16.5 million
visitors to parks, groomed fields for 174,000 competitors, and worked to control non-native invasive
plants, promote native species and preserve woodlands and green open spaces.
FCPA charges fees for the use of certain park facilities including the recreation and fitness
centers and golf courses, which are operated on a cost recovery basis, and represent approximately 60%
of FCPA’s funding. The remaining operating funds are appropriated by the Board of Supervisors from the
County’s combined general fund, providing the main operating funds for natural and cultural preservation
and protection, administrative tasks, general access parks, planning and development, and park
maintenance and operations. User fees do not cover the cost of new development of facilities, land
acquisition, or the major renovation of existing facilities. These improvements are funded primarily
through revenue bonds and general obligation bonds. General obligation bonds are primarily used for the
renovation of existing facilities.
The Northern Virginia Regional Park Authority (“NVRPA”), an independent entity in which the
County participates, operates 21 parks covering approximately 10,000 acres throughout Northern Virginia
including the County. NVRPA is continually in the process of completing, acquiring, developing, or
expanding its regional park facilities.
Community Development
The Fairfax County Redevelopment and Housing Authority (“FCRHA”) was established in 1966
to meet low and moderate income family housing needs. It owns or administers housing developments in
Fairfax County with staff and funding provided from County, federal, Commonwealth, and private
sources. As of January 2012, the FCRHA owned 75 properties, which are comprised of over 3,600
17
apartments, townhouses, senior retirement homes, and assisted living facilities, as well as specialized
housing such as mobile home pads and beds in group homes. The FCRHA also administers 3,527 federal
Housing Choice Vouchers. In FY 2013, 17,450 people were served through the FCRHA’s three major
affordable housing programs: Public Housing, the Housing Choice Voucher program, and the Fairfax
County Rental Program (FCRP). In FY 2012, the average income of households served in these three
programs was approximately $26,387, or 27% of Area Median Income for a family of three (the average
size of the households served). This meets the U.S. Department of Housing and Urban Development’s
(HUD) definition of “extremely low income.”
FCRHA has provided financing with low-income housing tax credits for privately owned
developments that reserve a total of 1,135 units for lower income tenants. Fairfax County’s Workforce
Housing policy, adopted by the Board of Supervisors in 2007, is a proffer-based incentive system
designed to encourage the voluntary development of new housing affordable to a range of moderateincome workers in Fairfax County’s high-rise/high-density areas. The County’s Comprehensive Plan
provides for a density bonus of up to one unit for every workforce unit provided by a developer, with the
expectation that at least 12% of units in new developments be affordable or workforce housing.
In April 2004, the Board of Supervisors adopted its Affordable Housing Preservation Initiative to
preserve affordable housing units. The centerpiece of the Initiative was the creation of the “Penny for
Affordable Housing Fund.” Beginning in FY 2006, the County’s budget each year included the
equivalent of one penny on the County’s real estate tax rate for the preservation and production of
affordable housing in the County. In FY 2010, the Penny Fund was reduced to the equivalent of half of
one penny. In FY 2013, this funding equated to $9,975,000 for affordable housing.
Other County services include efforts to increase local employment opportunities by encouraging
and retaining business and industrial development through the County’s Economic Development
Authority. On July 1, 2007, the County established an Office of Community Revitalization and
Reinvestment (“OCRR”). The mission of the OCRR is to facilitate strategic redevelopment and
investments within targeted commercial areas of the County that align with the community vision, and
improve the economic viability, appearance and function of those areas. Among other initiatives, the
OCRR is charged with working with property owners and the community to facilitate interest and
participation in commercial development activities, and to develop public/private partnerships that further
the County’s revitalization, redevelopment, and reinvestment efforts.
Health and Welfare
The County provides services designed to protect, promote, and improve the health and welfare
of Fairfax County citizens through a decentralized human services program. Based on individual needs,
County human service centers define a comprehensive assistance plan that utilizes the services provided
by all County departments. The County operates human service centers in locations convenient to
residents to provide financial, medical, vocational, and social services. The Fairfax-Falls Church
Community Services Board (“CSB”) responsible for planning, organizing, and providing services to
individuals who have a mental illness, intellectual disability, or a substance use disorder. The CSB
provides state mandated services to assist, improve, and maximize the potential of individuals affected by
these conditions and strengthen their capacity for living self-determined, productive, and valued lives.
The CSB is part of the Fairfax County Human Services System providing its services at many sites
throughout the County, including six community mental health centers, several outpatient sites, a
detoxification center, group homes, consumer-operated drop in centers, and several specialized residential
treatment sites.
18
The County also provides subsidized day care programs for older adults and children of lowincome families, two special needs centers that serve emotionally disturbed or physically challenged
children, and group homes for youth with serious emotional disturbances. Residential treatment services
are also offered in the areas of substance abuse as well as substance abuse outpatient and specialized day
treatment programs. Vocational and residential programs are also available for adults with intellectual
disabilities and serious mental illness.
Financial assistance and social services are available to eligible residents. For low-income
families and individuals, the Department of Family Services (“DFS”) administers federal,
Commonwealth, and local programs, such as public assistance, employment and training, and subsidized
child care, as well as programs targeted to at-risk children, such as child abuse prevention, Child
Protective Services, Foster Care and Adoption, and services purchased under the Comprehensive Services
Act. For older adults, DFS also administers programs that include federal funds granted to localities,
Commonwealth funds and additional support from the County. The federal and state governments
partially reimburse DFS for the cost of administering the programs based on an annual allocation to the
County as well as program costs. DFS operates the County’s after school child care program in over 130
school-age child centers (located in the public schools and one recreational center) that serve more than
10,000 children during the school year and more than 2,500 children during the summer. Since FY 1986,
the County has provided a comprehensive County transportation service, Fastran, for qualified elderly,
disabled, and low-income persons. Transportation is provided by bus, van, or cab on a door-to-door basis
to County programs, medical care, grocery stores, and other destinations.
Judicial Administration
Fairfax County’s court system is one of the most sophisticated systems in Virginia in its use of
advanced case management techniques and rehabilitation programs. The County uses automated systems
to support case docketing and record retrieval, electronic filing and imaging in the land recordation
process, juror selection, service of notices and subpoenas, and the processing of criminal and traffic
warrants and collecting delinquent tax obligations.
The County has undertaken rehabilitation efforts through the Juvenile and Domestic Relations
District Court and the Office of the Sheriff. These efforts include work training programs and counseling
services for both adult and juvenile offenders. Additionally, residential treatment services are provided
for juvenile offenders, and a work release program is provided for offenders confined in the County’s
Adult Detention Center.
Public Safety
A number of agencies share responsibility for public safety in Fairfax County. The Police
Department, which is responsible for law enforcement, had an authorized strength of 1,335 police
officers, 31 animal control officers, and 354 civilian personnel, with 6 positions supported by grant
funding, effective July 1, 2014. The agency is accredited by the Virginia Law Enforcement Professional
Standards Commission, which signifies the Department’s compliance with standards that are specific to
Virginia law enforcement operations and administration. The commanders of the eight police district
stations located throughout the County have considerable latitude to tailor their operations to provide
police services in ways most responsive to the needs of their respective communities, including
community policing endeavors. The department has specialized units that operate as both standing
(staffed full time) and non-standing units (staffed as needed), including the Helicopter Division, which
operates two helicopters to provide support to general police operations, traffic monitoring, emergency
medical evacuation, and rescue support; the Criminal Intelligence Unit, which provides an effective
response to organized criminal activity including terrorist-related, gang, and bias crimes; the Gang Unit,
19
which provides regional leadership directed at combating gang crime through prevention and enforcement
initiatives; and the Language Skills Support Unit, which serves to bridge the gap in the diverse cultures in
the community by providing language support for the successful resolution of major criminal
investigations.
Over the past 10 years, the County has maintained one of the lowest rates of serious crimes
among jurisdictions in the Washington, D.C., metropolitan area and among comparable suburban
jurisdictions throughout the United States. Additionally, the Police Department has continually attained a
clearance rate for violent crimes such as murder, rape, and robbery far above the national averages for
such offenses. At the same time, Fairfax County has maintained one of the lowest per capita costs for
police services of all the local jurisdictions in the Washington metropolitan area.
Fire and rescue services are provided by 1,379 paid uniformed personnel, 189 paid civilian
support personnel, and approximately 200 operational volunteers as of April 2014. The County operates
38 fire and rescue stations. The department operates various specialty units, including paramedic engine
companies, a hazardous materials response unit, a technical rescue operations team, an arson canine unit,
and a water rescue team whose members are certified in swift water rescue. The department also supports
regional, national, and international emergency response operations through maintaining and supporting
the Urban Search and Rescue Team (“US&R”). US&R operates under the auspices of the Department of
Homeland Security for domestic responses and is sponsored by the United States Agency for International
Development/Office of Foreign Disaster Assistance for international deployments. In addition to
emergency response, the department provides various non-emergency services.
In May 2004, the Office of Emergency Management was established as a separate agency serving
as the County’s focal point for emergency preparedness and internal and external coordination to respond
to natural, technological, and terrorist-related emergencies. In FY 2013, thirteen employees provided
emergency management services for Fairfax County, including the Towns of Clifton, Herndon and
Vienna. The major areas of focus include emergency management planning and policy, the County-wide
emergency training and exercise program, public preparedness and education, and enhancement of
response and recovery capabilities.
Water Supply Service
Fairfax Water (“FW”) provides water service to residents of Fairfax County, the City of Fairfax,
the City of Falls Church, the Town of Herndon and the Town of Vienna. FW, which operates the largest
water system in the Commonwealth of Virginia, was established by the Board of Supervisors in 1957 to
develop a comprehensive, Countywide water supply system through the acquisition of existing systems
and the construction of new facilities. FW is an independent body administered by a ten-member board
appointed by the Fairfax County Board of Supervisors. FW finances its capital improvements through the
issuance of revenue bonds that are not backed by the full faith and credit of the County but principally
repaid by revenues derived from charges for services rendered. FW’s basic retail water charge is
currently $2.42 per 1,000 gallons, plus a quarterly service charge (currently $9.80 for most single-family
homes and townhouses). To pay for treatment and pumping capacity which is used only during periods
of high demand, FW also levies a peak use charge of an additional $3.55 per 1,000 gallons on customers
who exceed their winter quarter consumption by 6,000 gallons or 33%, whichever is greater. There also
are fees for initial connection to the system and for opening, closing, or transferring an account.
FW utilizes two sources of water supply (Occoquan and Potomac Rivers), operates associated
treatment, transmission, storage, and distribution facilities, and provides service to approximately 235,000
retail customers in Fairfax County, with an average daily consumption of about 79 million gallons per day
(“mgd”). In addition, FW supplies about 66 mgd to other suppliers for resale, principally in the City of
20
Alexandria, Loudoun County, and Prince William County. The average population served by FW is
estimated at 1,700,000 persons and the combined maximum daily capacity of the supply and treatment
facilities is 345 mgd, which is sufficient to meet current demand.
Under an agreement with the Board of Supervisors, FW annually submits a 10-year capital
improvement program which is reviewed and approved by the Board of Supervisors as part of the
County’s total capital improvement program. FW’s 10-year Capital Improvement Program for FY 20132022 includes projects totaling $644,137,000.
On January 2, 2014, the City of Falls Church sold the Falls Church Water Utility to FW, and the
City of Fairfax sold its water utility to FW. These transactions added approximately 46,000 customers to
FW.
ECONOMIC FACTORS
Economic Development
Economic development activities of the County are carried out through the Fairfax County
Economic Development Authority (“EDA”), whose seven commissioners are appointed by the Board of
Supervisors. EDA promotes Fairfax County as a premier location for business start-up, relocation and
expansion, and capital investment. It works with new and existing businesses to help identify their
facility and site needs, and assist in resolving County-related issues and provide other business assistance.
Pursuant to its enabling legislation, EDA encourages investment in the County with tax-exempt conduit
revenue bond financing.
The total inventory of office space in the County was estimated at 114.8 million square feet at
the end of 2013. At year end, 11 buildings totaling just under 2.7 million square feet of space were
under construction. During 2013, over 1 million square feet of office space was delivered of which
600,000 square feet was speculative. The direct vacancy rate for the office market was 14.4% as of year
end 2013. Including sublet space, the office vacancy rate was 16.7 percent.
The base of technology-oriented companies, particularly in computer software development,
computer systems integration, telecommunications, and Internet-related services, has served as a strong
magnet for the expansion and attraction of business and professional services. Government contractors,
as well as diversified business and financial services, have added to the demand for prime office space in
a number of key employment centers throughout the County.
Federal civilian employment in the County makes up 4.1% of the total jobs in the County.
Federal jobs declined slightly in 2013. Due to sequestration, federal procurement spending in the County
decreased from $26.4 billion in FY 2012 to $23.1 billion in FY 2013. However, this decreased level of
federal procurement was still over 12% higher than the 2008 level. County General Fund revenue rose
2.5 percent in FY 2014, primarily due to an increase of 4.5% in current year real estate tax receipts.
Personal property tax revenue was flat in FY 2014, while Business Professional and Occupational License
(BPOL) revenue fell 2.7%. The decline in BPOL was primarily due to a decline in consultant category as
a result of federal sequestration. Many BPOL categories, such as retail, builders and developers and real
estate brokers, experienced growth.
There are 100 hotels with 75 or more rooms in the County, totaling over 17,400 hotel rooms and
over 11 million square feet of space. Hotel development parallels commercial construction in terms of
diversity of concept and design with a variety of product and service mixes (all-suites, business meeting
facilities, and leisure facilities) in the marketplace.
21
Improvements to the County’s transportation system, including increased service levels at
Washington Dulles International Airport, has helped increase corporate activities dependent on immediate
access to travel throughout the region, country, and world. The Metrorail service extension (the Silver
Line) from the East Falls Church station, through Tysons through Dulles Airport, to Route 772 in
Loudoun County will continue to help foster economic growth.
The Board of Supervisors and the County actively support revitalization and redevelopment
throughout the County, particularly in its more mature business areas. Many enhancements have been
made to the residential and commercial neighborhoods in Annandale, Bailey Crossroads/Seven Corners,
the Lake Anne section of Reston, the Springfield and McLean central business districts, Merrifield, and
the Richmond Highway corridor in the southeastern portion of the County. A number of capital
improvement projects and other construction in process or already completed have improved the
appearance and quality of life of these communities.
The most notable area of redevelopment in the County, Tysons—Fairfax County’s
“downtown”—is undergoing a transformative land-use replanning effort. Spurred by the Metrorail
expansion project, the County is working to set the stage for Tysons’s evolution into a more urban-scale,
pedestrian-friendly environment, with more housing, recreation and open space in addition to more-dense
office and retail development. Tysons currently has over 38.7 million square feet of office, retail, and
other commercial space and is behind only downtown Washington’s Central Business District and the
East End submarkets in the entire Washington D.C. metropolitan area in total office inventory, and has
11.2 million square feet of residential space. Now that Phase I of the Metrorail expansion has been
completed, it is expected that Tysons will continue to have significant growth in population, employment
and commercial, retail and residential space over the next several decades. County staff continues to
evaluate potential arrangements for financing the public share of Tysons infrastructure improvements and
to facilitate co-operative funding agreements with the private sector. County staff, in cooperation with
private participants, created a new 501(c)(6) membership organization known as the Tysons Partnership
in January 2011. The Tysons Partnership provides a comprehensive approach to tasks that include
marketing and branding, transportation, urban design/planning, public facilities and community amenities
and finance. On January 8, 2013, the Board of Supervisors established, by ordinance, the Tysons
Transportation Service District No. 1 (the “Tysons Service District”) to provide transportation
infrastructure and transit services within Tysons. As the governing board of the Tysons Service District,
the Board of Supervisors is empowered to levy and collect a tax on any property within Tysons Service
District’s boundaries to finance the transportation infrastructure and transit services projects. The tax rate
of $0.04 per $100 of assessed value was adopted by the Board of Supervisors as part of the FY 2014
Adopted Budget Plan, and this rate remains unchanged as part of the FY 2015 Adopted Budget.
Employment
More than 34,100 payroll business establishments (units) including global, corporate and regional
headquarters, technology firms, sales and marketing offices, and business services are located in Fairfax
County, employing over 585,000. Local businesses create employment in diversified areas like computer
software development and systems integration, technical services, management consulting, government
contracting, Internet-related services, wholesale and retail trade, and financial services. The following
table presents data on the average number of payroll establishments and employment by major industry
classification in Fairfax County as of fourth quarter 2013.
22
Businesses and Employment by Industry
Fairfax County, Virginia1
Number of
Establishments
Industrial Classification
Agriculture, Forestry, Fishing and Hunting
Mining, quarrying, and oil and gas extraction
Utilities
Construction
Manufacturing
Wholesale Trade
Retail Trade
Transportation and Warehousing
Information
Finance and Insurance
Real Estate and Rental and Leasing
Professional and Technical Services2
Management of Companies and Enterprises
Administrative and Waste Services
Educational Services
Health Care and Social Assistance
Arts, Entertainment, and Recreation
Accommodation and Food Services
Other Services except Public Administration
Unclassified
Total
Average Payroll
Employment for Quarter
15
10
18
2,315
447
1,241
2,647
399
804
1,614
1,505
10,066
346
1,928
595
3,670
347
2,081
4,775
3
34,826
63
260
1,048
24,358
6,346
13,483
54,927
7,026
21,731
23,376
9,676
154,073
21,681
39,475
10,292
48,692
6,396
40,483
20,971
3
504,360
____________________
Source: U.S. Bureau of Labor Statistics, Quarterly Census of Employment and Wages, Fairfax County, fourth quarter 2013
1
Excludes self-employed business owners.
2
The Services category includes professional and technical services, health care and social assistance, management services, educational services,
accommodation and food services, arts, entertainment and recreation, administrative and waste services, and membership organizations and trade
associations.
The following is a list of the largest private, base sector (non-retail) employers in Fairfax County
as of June 2014. Companies are alphabetized in their size category.
Largest Private Employers in Fairfax County
4,000-7,000+ Employees
Company Name
Booz Allen Hamilton
Federal Home Loan Mortgage Corp. (Freddie Mac)
General Dynamics
Inova Health System
Northrop Grumman
SAIC*
Type of Business
Professional, Scientific and Technical Services
Finance and Insurance
Professional, Scientific and Technical Services
Health Care and Social Assistance
Professional, Scientific and Technical Services
Professional, Scientific and Technical Services
* SAIC employment reported prior to the September 2013 split into two independent companies (SAIC and Leidos).
23
1,000-3,999 Employees
Company Name
AECOM
AT&T
BAE Systems
CACI International
Capital One
Catholic Diocese of Arlington
CGI
CSC
Deloitte
Erickson Living (Greenspring)
ExxonMobil
EY (Ernst & Young)
HCA Virginia
HP
IBM
ICF International
Insperity
Kaiser Foundation Health (Kaiser Permanente)
Lockheed Martin
ManTech International Corp.
MicroStrategy
MITRE
Navy Federal Credit Union
Oracle
PricewaterhouseCoopers
Quest Diagnostics
SI Organization
Sprint
SRA International
TASC
Time Warner Cable
Verizon
Wells Fargo Bank
Type of Business
Professional, Scientific and Technical Services
Information (Telecommunications)
Professional, Scientific and Technical Services
Professional, Scientific and Technical Services
Finance and Insurance
Educational Services/Other Services
Professional, Scientific and Technical Services
Professional, Scientific and Technical Services
Professional, Scientific and Technical Services
Health Care and Social Assistance
Wholesale Trade (Petroleum/Oil)
Professional, Scientific and Technical Services
Health Care and Social Assistance
Professional, Scientific and Technical Services/Information
Professional, Scientific and Technical Services
Professional, Scientific and Technical Services
Administrative Services
Health Care and Social Assistance
Professional, Scientific and Technical Services
Professional, Scientific and Technical Services
Professional, Scientific and Technical Services
Professional, Scientific and Technical Services
Finance and Insurance
Professional, Scientific and Technical Services
Professional, Scientific and Technical Services
Health Care and Social Assistance
Professional, Scientific and Technical Services
Information (Telecommunications)
Professional, Scientific and Technical Services
Professional, Scientific and Technical Services
Information (Telecommunications)
Information (Telecommunications)
Finance and Insurance
500-999 Employees
Company Name
The Boeing Company
Exelis
Hilton Worldwide
L-3 Communications
MV Contract Transportation
Securitas Security Services USA
SODEXHO USA
Sunrise Senior Living
USIS
Washington Gas
Type of Business
Professional, Scientific and Technical Services
Professional, Scientific and Technical Services
Accommodation and Food Services
Professional, Scientific and Technical Services
Health Care and Social Assistance
Administrative and Support Services
Accommodation and Food Services
Health Care and Social Assistance
Administrative and Support Services
Utilities
____________________
Source: Fairfax County Economic Development Authority, June 2014
24
Unemployment in the County has historically been, and continues to be, well below the national
average, even in challenging economic times. The average unemployment rate in Fairfax County in 2013
was 4.3%. The average Virginia and U.S. unemployment rates during 2013 were 5.5% and 7.4%,
respectively. Reflecting the global recession that began in late 2007 and escalated a year later, Fairfax
County’s average annual unemployment rate rose to a high of 5.0% in 2010 but has since declined,
reflecting an overall leveling out of the economic downturn. The following table shows the average
annual unemployment rate in Fairfax County as compared to Virginia and national averages in the past
decade as well as the July 2014 unemployment rates.
Average Annual Unemployment Rates
Calendar
Year
2004
2005
2006
2007
2008
Fairfax
County
2.7%
2.5
2.2
2.2
2.9
2009
2010
2011
2012
2013
July 2014
__________________________________
Virginia
3.7%
3.5
3.0
3.1
4.0
4.9
5.0
4.5
4.2
4.3
4.2
United States
5.5%
5.1
4.6
4.6
5.8
6.9
7.1
6.4
5.9
5.5
5.4
9.3
9.6
8.9
8.1
7.4
6.2
Source: U.S. Bureau of Labor Statistics
According to the Bureau of Labor Statistics, the total number of jobs in the County was 576,400
in the first quarter of 2014. Self-employed persons are not included in these counts. The following table
presents total covered employment in recent years:
Covered Employment1
Covered
Employment in
% Change
First Quarter Fairfax County
2003
525,100
2004
533,900
1.7%
2005
555,900
4.1
2006
568,400
2.2
2007
579,500
2.0
2008
585,000
0.9
________________________________________
First Quater
2009
2010
2011
2012
2013
2014
Covered
Employment in
Fairfax County
568,500
563,100
572,900
585,100
586,200
576,400
% Change
(2.8)
(0.9)
1.7
2.1
0.2
(1.7)
Source: U.S. Department of Labor, Bureau of Labor Statistics, Quarterly Census of Employment Wages
1
Covered employment means employees covered by state and federal unemployment laws.
Construction Activity
The following table includes data for residential and commercial construction activity in the
County:
25
Building Permits
Fiscal
Year
2004
2005
2006
2007
2008
Industrial and
Commercial Properties
Estimated
Number
Value (000s)
4,0341
$ 405,788
4,0131
460,814
4,4131
450,382
4,9741
1,297,296
5,0461
619,613
Residential Properties
Estimated
Number
Value (000s)
16,4421
$ 800,358
23,2531
1,145,145
17,1681
918,839
11,4191
757,848
1
10,719
548,759
2009
8,7801
2010
8,977
2011
9,371
2012
9,454
2013
10,610
_____________________
4,3611
3,946
4,595
4,308
3,907
327,454
428,941
480,268
538,307
509,957
413,719
375,126
397,435
602,444
710,488
Estimated
Housing Units
Started
Number
6,780
4,353
2,784
1,599
2,238
1,361
1,150
1,797
3,023
1,930
Sources: Building permits provided by Fairfax County Department of Public Works and Environmental Services, and estimated housing units
started provided by Weldon Cooper Center, University of Virginia.
1
Includes new and alteration/repair permits issued. Does not include trade permits issued.
A partial list of major new or expanded office projects within the County announced in 2013 is
shown below:
New or Expanded Commercial Projects
Name of Company
Amazon Web Services
Blackbag Technologies
China Unicom Americas
comScore
Dimension Data
DLT Solutions
FrontPoint Security Solutions
Mandiant Corporation
OBXtek
Salient Federal Solutions
TCoombs Associates
________________________
Nature of Operations
Information Technology
Software
Telecommunications
Social Media/Internet
Information Technology
Information Technology
Information Technology/ Security Services
Information Technology
Information Technology
Information Technology
Information Technology
Projected
New/Additional
Employment
500
6
4
75
85
22
179
80
65
530
100
Source: Fairfax County Economic Development Authority
Housing
In 2013 single-family detached housing units represented 47.6% of the total housing units within
Fairfax County. Single-family attached housing accounted for 24.3%, and multi-family housing made up
the remaining 28.0%. As of January 2014, the median market value of all owned housing units, including
condominiums, in Fairfax County was estimated by the Department of Neighborhood and Community
Services to be $442,370.
26
Housing Units by Type of Structure
1980
No.
1990
2000
No.
2013
No.
%
No.
%
125,580
59.3
163,029
53.9
181,591
50.6
194,786
47.6
Attached2
30,833
14.6
67,306
22.3
87,171
24.3
99,683
24.3
Multi-Family3
55,333
26.1
72,129
23.8
90,198
25.1
114,603
28.0
Total
211,746
____________________
100.0
302,464
100.0
358,960
100.0
409,072
100.0
Single-Family:
Detached1
%
%
Sources: U.S. Bureau of the Census, U.S. Census of Housing (1980) and Fairfax County Department of Neighborhood and Community Services
1
Single-family detached includes all single-family homes and mobile homes.
2
Single-family attached includes duplexes, townhouses, and multiplex units.
3
Multi-family includes condominiums, apartments and other units in structures with a common entryway.
The average sale price of housing units within the County is listed below:
Average Sale Price Housing Units
Type of Structure
All Homes
Detached Homes
Attached Homes
____________________
2011
$471,317
624,355
313,458
2012
$492,480
641,066
332,435
% change
4.5%
2.7
6.1
Source: Realestate Business Intelligence, an MRIS Company
Colleges and Universities
Sixteen institutions of higher education are located in Fairfax County: Averett University,
Central Michigan University, Everest College, George Mason University, ITT Technical Institute,
Marymount University, Missouri State University (Department of Defense Studies), Northern Virginia
Community College, Potomac College, Sanford-Brown College, Stratford University, University of
Phoenix, the Virginia Polytechnic Institute and State University (Virginia Tech), two campuses of the
University of Virginia (both Virginia Tech and the Falls Church campus of the University of Virginia are
located in the Northern Virginia Graduate Center) and Webster University. George Mason University,
with an enrollment of more than 32,000 students, offers over 195 degree programs. The Northern
Virginia Community College serves more than 72,000 students in credit courses and non-credit workforce
and professional development programs at six campuses and two centers throughout Northern Virginia.
American University, George Washington University, Catholic University, and Virginia Commonwealth
University also operate programs in the County’s secondary schools and on military installations within
the County.
Cultural Amenities
Wolf Trap Farm Park for the Performing Arts, a cultural facility internationally renowned for its
ballet, symphony, concert, and opera offerings, and the only national park for the performing arts in the
U.S., is located in north-central Fairfax County. Nearly 300 cultural organizations – theater and opera
companies, music and dance groups, community arts centers, festivals, and other activities – are based in
and around the County. The County also assists in supporting the Fairfax Symphony, an internationally
recognized orchestra that provides a variety of musical programs and outreach services to County
27
residents. Other well-known attractions in the County include Mount Vernon, the home of George
Washington; Woodlawn Plantation, George Washington’s wedding gift to his nephew; and Gunston Hall,
home of George Mason, author of the U.S. Bill of Rights and the first Constitution of Virginia. The
region also boasts professional baseball, basketball, football, ice hockey and soccer.
DEBT ADMINISTRATION
Statement of Bonded Indebtedness
Pursuant to the Constitution of Virginia and the Act, a county in Virginia is authorized to issue
general obligation bonds secured by a pledge of its full faith and credit. For the payment of such bonds,
the Board of Supervisors of the County is required to levy, if necessary, an annual ad valorem tax on all
property in the County subject to local taxation.
As of June 30, 2013, the County had outstanding the following amounts of general obligation
bonds:
Total General
Obligation Bonds
Purpose
School
General Government
Total General Obligation Bonded Indebtedness 1
_______________
$1,310,858,900
737,981,100
$2,048,840,000
Source: Fairfax County Comprehensive Annual Financial Report FY 2013
1
See “Debt Service on Tax Supported Debt Obligations” herein for outstanding general obligation debt service as of June 30, 2014.
The County does not rely upon short-term borrowings to fund operating requirements. The
County has never defaulted in the payment of either principal or interest on any general obligation
indebtedness.
Limits on Indebtedness
There is no legal limit on the amount of general obligation bonded indebtedness that Fairfax
County can at any time incur or have outstanding. However, all such indebtedness must be approved by
voter referendum prior to issuance. Since 1975, the Board of Supervisors has established as a financial
guideline a self-imposed limit on the average annual amount of bond sales. In May 2006, the Board of
Supervisors increased the bond sale target to $1.375 billion over a 5-year period, or an average of $275
million annually, with the flexibility to expand to a maximum of $300 million based on market conditions
and/or priority needs in any given year. The actual amount of bond sales will be determined by
construction funding requirements and municipal bond market conditions.
The Board of Supervisors also has imposed limits which provide that the County’s long-term debt
should not exceed 3% of the total market value of taxable real and personal property in the County. The
limits also provide that annual debt service should not exceed 10% of annual General Fund
disbursements. These limits may be changed by the Board of Supervisors, and they are not binding on
future Boards of Supervisors of the County.
Bond Referenda Authorization
The following chart presents by purpose Fairfax County’s authorized but unissued general
obligation bond indebtedness as of October 1, 2014:
28
Authorized Purpose
School Improvements
Transportation Improvements and Facilities
Parks and Park Facilities
Public Safety Facilities
Library Facilities
Flood Control
Total
_____________
Amount Authorized
but Unissued as of
October 1, 2014
$551,711,200
85,139,500
83,812,100
87,277,200
25,000,000
30,000,000
$862,940,000
Source: Fairfax County Department of Management and Budget
Other Tax Supported Debt Obligations
The Board of Supervisors of the County directly or indirectly appoints all or a portion of the
governing body of several legally independent local and regional authorities that provide services to the
County and its constituents. Such authorities include those that issue revenue bonds that are not general
obligations of the County and issue debt supported directly or contingently by appropriations of tax
revenues by the County. The full faith and credit of the County are not pledged to secure such bonds.
In March 1994, the Fairfax County Economic Development Authority (“EDA”) issued
$116,965,000 of lease revenue bonds to finance the County’s acquisition of two office buildings occupied
by County agencies and departments. In October 2003, EDA issued $85,650,000 of lease revenue
refunding bonds to refund $88,405,000 of the 1994 lease revenue bonds. As of October 1, 2014,
$35,150,000 of such lease revenue bonds are still outstanding. The County is absolutely and
unconditionally obligated by the terms of a lease agreement with EDA to pay amounts equal to debt
service on EDA’s bonds. The County’s obligation to make such payments is subject to the annual
appropriation by the Board of Supervisors of sufficient funds for such purpose. The coincidental terms of
the bonds and the lease agreement extend to November 15, 2018.
Beginning in 1996, the Fairfax County Redevelopment and Housing Authority (“FCRHA”) has
issued $42,460,000 of revenue bonds in seven series to finance the construction or renovation of five
community center buildings, two adult day health care centers, one Head Start facility and one senior
center. The County was obligated by the terms of triple net lease agreements or payment agreements with
FCRHA to pay amounts equal to debt service on FCRHA’s bonds. The County’s obligation to make such
payments is subject to the annual appropriation by the Board of Supervisors of funds for such purpose.
The coincidental terms of the various bonds, lease agreements and payment agreements extend to May 1,
2029. On March 10, 2010, EDA issued $43,390,000 revenue bonds (Six Public Facilities Projects) (the
“2010 Bonds”) and provided a portion of the proceeds of the 2010 Bonds to the County to enable the
County pursuant to its lease agreements with FCRHA to purchase five facilities financed from FCRHA
bond issuances in 1996, 1998, 1999 and 2004. FCRHA used the funds provided by the County to redeem
or defease the four series of bonds that financed the applicable facilities. As of October 1, 2014,
$33,085,000 of the 2010 Bonds are still outstanding. Two original series issued by FCRHA in 2003, and
2005 financing respectively a head start facility and a senior center remain outstanding.
In July 2000, the Fairfax County Board of Supervisors entered into a Master Development
Agreement with a private developer to finance and construct a 135,000 square foot government center in
the southeastern region of the County. In November 2000, $29,000,000 of Certificates of Participation
(“Certificates” or “COPs”) were issued, secured by a triple net lease on the property between the
developer and the County. The County was obligated by the terms of the lease agreement to pay an
29
amount equal to the debt service on the Certificates. The County accepted the government center as
substantially complete in February 2002. A portion of the proceeds of EDA’s 2010 Bonds were provided
to the County to enable the County to exercise an option to purchase the government center (the “South
County Government Center Purchase”). The purchase price provided by the County was used to defease
the COPs. The County is obligated by the terms of a contract with the EDA to pay amounts equal to debt
service on the EDA’s 2010 Bonds. The County’s obligation to make such payments is subject to the
annual appropriation by the Board of Supervisors of sufficient funds for such purpose. The coincidental
terms of EDA’s 2010 Bonds and the contract extend to April 2032.
In June 2003, EDA issued $70,830,000 of revenue bonds (Laurel Hill Public Facilities Project),
backed by a contract with the County. Approximately $55,300,000 of the bonds were allocable to the
financing of a new public secondary school in the southern part of the County and $15,530,000 of the
bonds were allocable to the financing of a new 18 hole public golf course in the southern part of the
County. The County is obligated by the terms of a contract with EDA to pay amounts equal to debt
service on EDA’s bonds. The County’s obligation to make such payments is subject to the annual
appropriation by the Board of Supervisors of sufficient funds for such purpose. The coincidental terms of
the bonds and the contract extend to June 2033. In April 2012, EDA issued its $47,745,000 Revenue
Refunding Bonds (Laurel Hill Public Facilities Projects) to refund a portion of the bonds. As of October
1, 2014, $44,005,000 of such bonds issued in 2012 are still outstanding.
On January 27, 2005, EDA issued $60,690,000 of revenue bonds (School Board Central
Administration Building Project Phase I) (the “School Board Building Bonds”), backed by a contract with
the County. The bonds were issued to finance the purchase of certain property, including an existing
office building thereon, the purchase of certain land adjacent thereto and the improvement of the existing
building for use by the School Board as an administration building. The County is obligated by a contract
with EDA to pay amounts equal to debt service on the School Board Building Bonds. The County’s
obligation to make such payments is subject to the annual appropriation by the Board of Supervisors of
sufficient funds for such purpose. The coincidental terms of the School Board Building Bonds and the
contract extend to April 2035. In June, 2014, EDA issued $170,690,000 Fairfax County Facilities
Revenue and Refunding Bonds Series 2014 A (County Facilities Projects) to refund a portion of the
School Board Building Bonds. As of October 1, 2014, $1,470,000 of the School Board Building Bonds
are still outstanding.
On December 27, 2005, the Fairfax County Park Authority (“FCPA”) issued two promissory
notes in the aggregate amount of $12,900,000 for the purpose of providing a portion of the purchase price
of a conservation easement for preservation purposes on an approximately 41 acre parcel of land, and
options to purchase certain land. This land is known as “Salona,” an historic site within the County. The
County is obligated by the terms of a contract with FCPA to pay amounts sufficient to pay the principal
and interest installments on the promissory notes when due. The County’s obligation to make such
payments is subject to the annual appropriation by the Board of Supervisors of sufficient funds for such
purpose. The coincidental terms of the promissory notes and contract extend to December 2025.
On February 16, 2006, FCRHA issued a $40,600,000 Bond Anticipation Note (Affordable
Housing Acquisition) Series 2006 (the “Series 2006 Note”). The Series 2006 Note was issued for the
purpose of providing a portion of the funds required for the purchase of a multi-family rental housing
complex, known as Crescent Apartments, to further FCRHA’s goal of preserving existing affordable
housing in Fairfax County. In 2007, 2008, 2011 and 2013 FCRHA issued bond anticipation notes, each
time to refinance previous bond anticipation notes issued for the financing or refinancing of the Crescent
Apartments project that were not paid from County money set aside to promote affordable housing. The
currently outstanding Bond Anticipation Notes (Affordable Housing Acquisition) Series 2013A (the
“2013A Notes”) were issued in the principal amount of $24,650,000. The final maturity of the Series
30
2013A Notes is March 1, 2015. The County is obligated by a contract with FCRHA to make payments
equal to the debt service on the 2013A Notes. The County’s obligation to make such payments is subject
to annual appropriation. As of October 1, 2014, $21,465,000 of the 2013A Notes remain outstanding.
On November 28, 2007, FCRHA issued $105,485,000 Bond Anticipation Notes (Affordable
Housing Acquisition) Series 2007B (the “Series 2007B Notes”). The Series 2007B Notes were issued for
the purpose of providing a portion of the funds required for the purchase of a multi-family rental housing
complex located in Annandale, Virginia. In 2008, FCRHA issued bond anticipation notes to refinance the
Series 2007B Notes. On August 20, 2009, FCRHA issued its Revenue Bonds (Affordable Housing
Acquisition) Series 2009 in the aggregate amount of $94,950,000 (the “Series 2009 Bonds”) to pay a
portion of the principal amount of the 2008 outstanding bond anticipation notes. A portion of the
principal amount of the 2008 bond anticipation notes, and the interest due on such notes, was paid from
money set aside to promote affordable housing. The County is obligated by the terms of a payment
agreement with FCRHA, subject to the appropriation of funds for the purpose, to pay amounts equal to
the interest on and the principal of the Series 2009 Bonds. The coincidental terms of the Series 2009
Bonds and the related payment agreement extend to October 2039. As of October 1, 2014, $85,520,000
of the Series 2009 Bonds remain outstanding.
In July 2011, EDA issued $99,430,000 of Revenue Bonds (Wiehle Avenue Metrorail Station
Parking Project). The bonds were issued to finance a portion of the costs of construction of a public
parking facility to serve the Wiehle Avenue Metrorail Station that is being constructed as part of the
extension of Washington Metropolitan Area Transit Authority’s Metrorail System in the Dulles Corridor.
The County is obligated by contract with EDA to pay amounts equal to debt service on EDA’s bonds.
The County’s obligation to make such payments is subject to the annual appropriation by the Board of
Supervisors of sufficient funds for such purpose. The coincidental terms of the bonds and the contract
extend to August 2034. As of October 1, 2014, $99,430,000 of such bonds remain outstanding.
In May 2012, EDA issued $65,965,000 of Revenue Bonds (Community Services Facilities
Projects) backed by a contract between the County and EDA. The bonds were issued to finance the
improvement of certain properties to be used by the County as a mental health facility and as a
neighborhood community center. The County is obligated by a contract with EDA to pay amounts equal
to debt service on such bonds. The County’s obligation to make such payments is subject to the annual
appropriation by the Board of Supervisors of sufficient funds for such purpose. The coincidental terms of
the bonds and the contract extend to March 2042. As of October 1, 2014, $63,580,000 of such bonds
remain outstanding.
In November 2013, the County issued a $11,085,000 special subfund revenue bond (the “2013
VRA Bond”) to Virginia Resources Authority (“VRA”). In return for issuing the 2013 VRA Bond, VRA
provided the County with a portion of the proceeds realized from its autumn 2013 pooled financing bond
transaction. The 2013 VRA Bond was issued to finance renovations to a complex that serves as a senior
housing and assisted living facility, a senior center and an adult day health care center in the County. The
County is obligated by a contract with VRA to pay amounts equal to the debt service on the 2013 VRA
Bond. The County’s obligation to make such payments is subject to the annual appropriation by the
Board of Supervisors of sufficient funds for such purpose. The coincidental terms of the 2013 VRA Bond
and the contract extend to October 2033. As of October 1, 2014, $10,530,000 of the 2013 VRA Bond
remains outstanding.
In December 2013, EDA and the County entered into a master credit agreement with Bank of
America, N.A., pursuant to which a revolving line of credit in an amount of up to $100,000,000 is made
available to the County to provide interim financing for projects within the County’s Capital
Improvement Program or other similar projects.
31
In December 2013, EDA and the County entered into a loan agreement with T.D. Bank, N.A. (the
“2013 Loan”), pursuant to which the proceeds of the loan in the amount of $25,000,000 are made
available to the County to provide financing for the costs of the planned replacement of County-owned
building subsystems such as roofs, electrical systems, HVAC, plumbing systems, carpet replacement,
parking lot and garage repairs, fire alarm replacement and emergency generator replacement that have
reached the end of their useful life. The County is obligated by a contract with EDA to pay amounts
equal to the debt service on the loan. The County’s obligation to make such payments is subject to the
annual appropriation by the Board of Supervisors of sufficient funds for such purpose.
In June 2014, EDA issued $170,690,000 of Fairfax County Facilities Revenue and Refunding
Bonds Series 2014 A (County Facilities Projects) (the “2014A County Facilities Projects Bonds”). The
2014 A County Facilities Projects Bonds were issued to provide funds to finance the costs of the
construction of a building to serve as a public safety facility for the County and the construction of a
related parking garage, to refund and redeem prior to their respective maturities certain outstanding
School Board Building Bonds and to capitalize interest on a portion of the Series 2014A County Facilities
Projects Bonds up to and including the October 1, 2016, interest payment date. The County is obligated
by a contract with EDA to pay amounts equal to debt service on such bonds. The County’s obligation to
make such payments is subject to the annual appropriation by the Board of Supervisors of sufficient funds
for such purpose. The coincidental terms of the Series 2014A County Facilities Projects Bonds and the
contract extend to October, 2034. As of October 1, 2014, $170,690,000 of the Series 2014A County
Facilities Projects Bonds remain outstanding.
In June 2014, EDA issued $30,175,000 of Fairfax County Facilities Revenue Bonds Series 2014
B (Federally Taxable) (County Facilities Projects) (the “2014B County Facilities Projects Bonds, and
together with the 2014A County Facilities Projects Bonds, the “2014 County Facilities Projects Bonds”)
to provide funds to permanently finance the leasehold acquisition from LAF, LLC, of the Workhouse Arts
Center located in the southeastern corner of the County, for a price sufficient to enable the lessee to retire
all of its indebtedness relating to the Workhouse Arts Center. The County leased the 55-acre site and
existing historic structures of the Lorton Correctional Complex to the lessee in 2006, and the lessee
incurred over $50 million in debt through EDA to finance improvements to convert the Complex into a
center for visual and performing arts. The County plans to provide for the continuation of the existing
educational and cultural programs at the Center, while the County conducts a study of the optimum uses
of and develops plans for further improvements to the Center. The County is obligated by a contract with
EDA to pay amounts equal to debt service on such bonds. The County’s obligation to make such
payments is subject to the annual appropriation by the Board of Supervisors of sufficient funds for such
purpose. The coincidental terms of the bonds and the contract extend to October, 2033. As of October 1,
2014, $28,770,000 of such bonds remain outstanding.
Lease Commitments and Contractual Obligations
The County leases certain real estate, equipment, and sewer facilities under various long-term
lease agreements. In addition, pursuant to contracts with Arlington County, the Alexandria Sanitation
Authority, the District of Columbia, and the Upper Occoquan Sewage Authority, the County is obligated
to share the capital costs and associated debt service of certain facilities.
In 1989 and 1990, EDA issued $26,765,000 of parking revenue bonds to finance construction of
parking structures near the Vienna Metrorail Station and the Huntington Metrorail Station in Fairfax
County. All obligations relating to the construction of such parking structures have now been paid. EDA
issued $25.735 million in bonds on November 10, 1999, to finance a second parking structure at the
Vienna Metrorail Station. In August 2005, EDA issued $18,695,000 in bonds to refund all of the callable
1999 parking revenue bonds. The parking revenue bonds are payable under a lease with WMATA from
32
revenues to be derived by WMATA from parking surcharges at these and other parking facilities in
Fairfax County. In the event such revenues are not sufficient to pay debt service on the parking revenue
bonds and under certain other conditions, the County is, in effect, obligated, subject to annual
appropriation by its Board of Supervisors, to make payments to EDA sufficient to pay such debt service.
As of October 1, 2014, $10,920,000 of such bonds remain outstanding.
In February 1990, the Northern Virginia Transportation Commission (“NVTC”) issued $79.4
million of bonds to finance certain costs associated with the establishment of commuter rail services (the
Virginia Railway Express) in the area of Northern Virginia bordering Washington, D.C. Fairfax County
has joined with other jurisdictions through a Master Agreement to bear certain costs associated with
operating and insuring the rail service as well as servicing the debt issued by NVTC. The Master
Agreement requires that the County’s governmental officers charged with preparing its annual budget
include an amount equal to its share of the costs of the Virginia Railway Express. Each jurisdiction’s
share is determined by a formula set out in the Master Agreement. Fairfax County’s share of this cost
was $4.5 million in FY 2013. An additional $23 million in NVTC commuter rail revenue bonds were
issued in early 1997 to purchase new rail coaches. Debt service on these bonds is being funded
predominantly by Commonwealth and federal funds and VRE revenues.
On October 29, 2003, EDA issued $33,375,000 transportation contract revenue bonds to provide
$30,000,000 to the Commonwealth Transportation Board (CTB) for construction of certain interchanges
on Route 28 in the Route 28 Highway Transportation District, which is partly in Fairfax County and
partly in Loudoun County. EDA on August 26, 2004, issued $57,410,000 transportation contract revenue
bonds to provide an additional $60 million for construction of additional interchanges. The bonds issued
in 2003 and 2004 financed the construction of six interchanges. In March 2007, EDA issued $41,505,000
transportation contract revenue bonds to finance a portion of constructing an additional four interchanges
in the Route 28 Highway Transportation District. In July 2008, EDA issued $51,505,000 transportation
contract revenue bonds to finance additional costs of constructing the additional four interchanges on
Route 28. See also the discussion of taxes levied by the County in the Route 28 Highway Transportation
Improvement District, located partly in the County, to pay debt service on CTB and EDA bonds in
“GOVERNMENT SERVICES – Transportation – Tax Districts” herein. In May, 2012, EDA issued
bonds to refund a portion of the bonds issued in 2003 and 2004. As of October 1, 2014, $41,505,000 of
the bonds issued in 2007 remain outstanding, $50,755,000 of the bonds issued 2008 remain outstanding
and $85,275,000 of the bonds issued in 2012 remain outstanding.
On May 26, 2011, EDA issued $205,705,000 Transportation District Improvement Revenue
Bonds (Silver Line Phase I Project) Series 2011 which provided $220 million to provide a portion of the
financing for the expansion of Metrorail of approximately 11.5 miles of rail line through the County’s
primary urban center, Tysons to Reston. As of October 1, 2014, $189,740,000 of such bonds remain
outstanding. On October 10, 2012, EDA issued an additional $42,390,000 Transportation District
Improvement Revenue Bonds (Silver Line Phase I Project) Series 2012 to provide $48,400,000 for this
purpose. Debt service on the bonds is paid from a special improvements tax levied by the County on
commercial and industrial use property located in the Phase I Dulles Rail Transportation Improvement
District within the County. As of October 1, 2014, $40,220,000 of such bonds remain outstanding.
On June 9, 2011, the Mosaic District Community Development Authority (the “CDA”) issued
$46,980,000 Revenue Bonds, Series 2011A, and the CDA issued in July, 2011 an additional $18,670,000
Revenue Bonds, Taxable Series 2011A-T (collectively, the “CDA Bonds”). Proceeds from the CDA
Bonds were used to finance certain public infrastructure improvements within the Mosaic District
Community Development Authority District (the “Mosaic District”) to support a mixed-use development
to be constructed within the Mosaic District. The CDA Bonds are payable primarily from certain
incremental real estate tax revenues collected by the County in the District and certain special
33
assessments imposed and collected within the by the County within the Mosaic District. The payment of
incremental real estate tax revenues and special assessments, as applicable, by the County to the CDA to
be used for debt service payments on the CDA Bonds is subject to appropriation by the County. As of
October 1, 2014, $46,980,000 of the CDA Bonds issued in June 2011 remain outstanding and
$18,670,000 of the CDA Bonds issued in July 2011 remain outstanding.
Debt Service on Tax Supported Debt Obligations
Total principal and interest payments on the County’s outstanding tax supported debt obligations,
including general obligation bonds and other tax supported debt obligations are presented in the following
table:
Other Tax
Supported Debt Obligations1
General Obligation Bonds
Fiscal Year
Ending June 30
Principal
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034-2042
Total3
$ 181,790,000
180,610,000
174,660,000
165,010,000
157,645,000
149,665,000
142,180,000
133,135,000
123,655,000
113,965,000
108,150,000
98,635,000
89,945,000
78,215,000
66,495,000
56,520,000
43,035,000
34,405,000
23,530,000
13,215,000
$2,134,4600,000
Interest2
Principal
$ 93,816,800
83,681,764
75,490,094
67,769,104
60,498,234
53,250,375
47,001,449
41,118,159
35,824,431
30,152,474
24,790,280
20,505,763
16,823,390
12,956,488
9,552,630
6,488,375
4,223,475
2,421,375
1,050,775
264,300
$687,679,732
$ 48,534,502
29,759,094
30,438,849
36,553,773
37,198,872
24,059,151
24,609,618
25,165,278
25,766,139
22,653,724
23,250,000
23,552,500
23,885,000
24,585,000
25,320,000
26,030,000
26,865,000
27,730,000
26,685,000
99,615,000
$632,256,501
Interest
Total3
$ 24,248,379 $ 348,389,680
25,263,898
319,314,756
24,250,772
304,839,715
22,958,772
292,291,649
21,320,878
276,662,984
20,050,361
247,024,887
18,980,624
232,771,690
17,870,211
217,288,648
16,729,010
201,974,580
15,636,359
182,407,557
14,622,266
170,812,546
13,588,846
156,282,108
12,536,687
143,190,077
11,467,314
127,223,801
10,360,909
111,728,539
9,200,538
98,238,913
7,994,105
82,117,580
6,735,521
71,291,896
5,421,092
56,686,867
14,633,046
127,727,346
$313,869,585 $3,768,265,818
______________________________________________
Source: Fairfax County Department of Management and Budget
1
Does not reflect anticipated payments by the United States Treasury with respect to the County’s Public Improvement Bonds Series 2009E
(Federally Taxable - Build America Bonds).
2
Includes the debt service on the Series 2013A Notes relating to the purchase of the Crescent Apartments complex, including the $21,465,000
principal amount of the Series 2013A Notes due on March 1, 2015, which is expected to be refinanced.
3
Totals may not add due to rounding.
4
Amounts listed are as of June 30, 2014. Includes debt service on the County’s Public Improvement and Refunding Bonds, Series 2014, the
2013 VRA Bond, the 2013 Loan and the 2014 County Facilities Projects Bonds each of which were incurred after June 30, 2013.
Sewer Revenue Bonds
In 1986, the County issued $75 million of an authorized $179 of million sewer revenue bonds
pursuant to a General Bond Resolution adopted by the Board of Supervisors (the “General Bond
Resolution”). The proceeds were expended to finance the expansion of the wastewater treatment facilities
34
at the Noman M. Cole, Jr., Pollution Control Plant from 36 mgd to 54 mgd and the County’s share of the
cost of expanding facilities at the District of Columbia’s Blue Plains Wastewater Treatment Plant. The
treatment capacity of the Blue Plains Plant expanded from 309 mgd to 370 mgd, and the County’s share
increased from 16.02 mgd to 31.0 mgd. In 1993, the County issued $72.1 million sewer revenue
refunding bonds to advance refund for debt service savings a portion of its outstanding sewer revenue
bonds. In July 1996, the County issued the remaining authorized but unissued $104 million sewer
revenue bonds to finance additional expansion and improvements to its Noman M. Cole, Jr., Pollution
Control Plant. On November 15, 2003, the County redeemed from available funds of the Integrated
Sewer System the outstanding balance of its 1993 sewer revenue refunding bonds. On October 14, 2004,
the County issued its $94.005 million sewer revenue refunding bonds to advance refund for debt service
savings all of the callable 1996 sewer revenue bonds. On June 17, 2009, the County issued its
$152.255 million sewer revenue bonds to finance a portion of the upgrade costs allocable to the County at
certain wastewater treatment facilities that are owned by, or that provide service to, the County, the
purchase of additional capacity at certain wastewater treatment facilities for the benefit of the County and
the costs of certain additions, extensions and improvements to the County’s sewage collection, treatment
and disposal systems. On August 8, 2012, the County issued its $90.710 million sewer revenue bonds to
finance a portion of capital improvement costs allocable to the County at certain wastewater facilities that
are owned by or that provide service to, the County, which are required by the Commonwealth to reduce
nitrogen discharge, the purchase of additional capacity at certain wastewater treatment facilities for the
benefit of the County and the costs of certain additions, extensions and improvements to the County’s
sewage collection, treatment and disposal systems. On April 16, 2014, the County issued its $61.755
million sewer revenue refunding bonds to advance refund for debt service savings a portion of the callable
2004 sewer revenue bonds.
Wastewater treatment capacity and services are also provided to the Integrated Sewer System
pursuant to contracts with Arlington County, the Alexandria Renew Enterprises (“ARE”), the District of
Columbia, and the Upper Occoquan Sewage Authority (“UOSA”), whereby the County is obligated to
share the capital costs and associated debt service of certain facilities. The County’s obligations to such
entities are payable solely from the revenues of the Integrated Sewer System on a basis, under the General
Bond Resolution, subordinate to its sewer revenue bonds, and are not general obligations of the County.
Further information concerning these obligations is included in Notes J and K to the Basic Financial
Statements shown in Appendix IV.
The County has entered into a service agreement with ARE that obligates the County for 60% of
the cost of capacity of the ARE wastewater treatment plant and a joint use system, including debt service
on ARE bonds issued for ARE system improvements where the County does not otherwise provide for its
share of the capital cost of such improvements. The County’s share of previous upgrades was $200
million. The County’s share of additional upgrades, as estimated by ARE, is approximately $80 million.
The County obtained permanent funding from the Virginia Water Facilities Revolving Fund in FY 2001
and again in FY 2002 for a portion of its share of the initial costs from the proceeds of two loans
aggregating $90 million. The County issued to the Virginia Water Facilities Revolving Fund the
County’s $40 million subordinated sewer revenue bonds which now bear interest at the rate of 2.35% per
annum and $50 million subordinated sewer revenue bonds which now bear interest at the rate of 2.35%
per annum, in evidence of its obligation to repay the loans. The County expects to provide the balance of
its share of the costs of ARE’s improvement project from other borrowings and available Integrated
Sewer System funds.
In January 1996, UOSA issued $330.86 million of bonds: $288.60 million to finance the cost of
expanding its advanced wastewater treatment plant from 32 mgd to 54 mgd and $42.26 million to
refinance certain of its outstanding bonds. In January 2004, UOSA refunded a portion of this debt for
debt service savings and accordingly revised the participating member jurisdictions’ debt service
35
schedules. In November 2004, July 2005, and again in February 2007, UOSA refunded additional
portions of its outstanding debt. In February of 2007, UOSA issued $90,315,000 of Regional Sewer
System Revenue Refunding Bonds to advance refund another portion of the outstanding bonds issued in
1996. In December 2007, UOSA issued $119,715,000 in bonds to finance the expansion and replacement
of certain systems within its wastewater treatment plant. In December 2010, UOSA issued $85.18
million in bonds to finance UOSA capital improvements including interceptor and pump delivery
systems, nutrient reduction projects and miscellaneous plant and hydraulic improvements. See the table
below for the County’s debt service obligations on outstanding UOSA bonds. In 2013 UOSA issued two
series of refunding bonds for debt service savings and accordingly reduced the participating member
jurisdictions’ debt service payment requirements.
The debt service on the County’s outstanding sewer revenue bonds, its subordinated sewer
revenue bonds payable to the Virginia Water Facilities Revolving Fund evidencing loans for a portion of
the County’s costs associated with the ARE improvement project, and its subordinated obligations
payable for capacity under its contract with UOSA, is reflected in the following table.
Other Sewer Debt Service
Obligations
Sewer Revenue Bonds
Fiscal Year
Ending June 30
2015
2016
2017
2018
Principal
$7,615,000
7,655,000
7,980,000
8,365,000
Interest
$12,909,756
13,241,350
12,938,500
12,562,625
SRF/VRA1
$6,203,277
6,203,277
6,203,277
6,203,277
UOSA2
$20,604,047
20,728,134
20,726,324
20,718,077
Total3
$47,332,080
47,827,761
47,848,101
47,848,980
2019
2020
2021
2022
2023
8,810,000
9,295,000
9,780,000
10,295,000
10,835,000
12,133,250
11,680,625
11,203,750
10,701,875
10,173,625
6,203,277
6,203,277
6,203,278
3,412,199
-
20,704,969
20,695,221
20,336,891
23,310,214
20,862,983
47,851,497
47,874,124
47,523,919
47,719,287
41,871,608
2024
2025
2026
2027
2028
11,410,000
11,985,000
12,510,000
13,020,000
13,530,000
9,617,500
9,055,650
8,542,325
8,058,950
7,548,713
-
20,848,373
20,889,455
28,398,071
21,703,416
21,682,488
41,875,873
41,930,105
49,450,396
42,782,366
42,761,201
2029-2043
153,495,000
51,546,163
-
125,721,516
330,762,679
Total
$296,580,000
___________________
$201,914,656
$46,835,141
$427,930,179
$973,259,975
Source: Fairfax County Department of Public Works and Environmental Services
1
Debt service on the County’s subordinated sewer revenue bonds issued to the Virginia Water Facilities Revolving Fund evidencing the County’s
obligation to repay $90 million in loans made to the County by Virginia Resources Authority from the Fund.
2
Based on the County’s share of scheduled UOSA debt service. Does not reflect any anticipated payments by the United States Treasury on
outstanding UOSA Build America Bonds.
3
Totals may not add due to rounding.
4
Amounts are as of June 30, 2014.
36
Debt Ratios
The following data show trends in the relationship of the general obligation bond indebtedness of
the County to the estimated market value of taxable property in the County and to its estimated population
and the trend of general obligation debt service requirements as a percentage of General Fund
disbursements.
Trend of Debt as a Percentage of
Estimated Market Value of Taxable Property (in 000s)
Fiscal Year
Ended June 30
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
___________________
Bonded Indebtedness1
$1,814,517
1,931,008
1,963,218
2,045,423
2,109,908
2,131,273
2,318,699
2,554,051
2,734,135
2,514,452
Estimated
Market Value2
$144,009,286
159,587,438
194,378,020
235,106,092
245,338,140
244,973,908
222,951,827
204,324,080
210,318,077
211,298,487
1
Percentage
1.26%
1.21
1.01
0.87
0.86
0.87
1.04
1.25
1.30
1.19
Source: Fairfax County Comprehensive Annual Financial Report FY 2013. Bonded Indebtedness for Fiscal Year 2013 included herein differs
from the data shown in Tables 3.1, 3.2 and 3.4 of the Statistical Section of the County’s Fiscal Year 2013 Comprehensive Annual Financial
Report based on the treatment of bond premium and discounts. In the Comprehensive Annual Financial Report, Fiscal Year 2013 Bonded
Indebtedness represents principal outstanding plus unamortized premium (minus unamortized discount). In the table above, Bonded Indebtedness
is based on outstanding principal without adjustment for unamortized premium or discount. The total includes General Obligation Bonds and
other tax supported debt payable from the General Fund including the County’s obligation to make payments with respect to “Other Tax
Supported Debt Obligations.”
2
Estimated market value is based on recorded values as of January 1 of the prior fiscal year, and reflects the original book value and does not
reflect any adjustments made during the fiscal year.
37
Debt Per Capita
Fiscal Year
Ended
June 30
Bonded
Indebtedness
(in 000s)1
Estimated
Population
(in 000s)2
Bonded
Indebtedness
Per Capita
Debt Per Capita
Fairfax County as Percentage of
Per Capita
Per Capita
Income3
Income4
2004
2005
2006
2007
2008
$1,814,517
1,931,008
1,963,218
2,045,423
2,109,908
1,022
1,034
1,037
1,042
1,046
$1,775
1,868
1,893
1,964
2,018
57,547
61,837
64,698
67,691
70,822
3.08%
3.02
2.93
2.90
2.85
2009
2010
2011
2012
2013
____________
2,131,273
2,318,699
2,554,051
2,734,135
2,514,452
1,052
1,082
1,104
1,119
1,131
2,026
2,144
2,313
2,444
2,223
69,241
67,094
64,637
68,847
68,847
2.93
3.10
3.45
3.78
3.23
1
Source: Fairfax County Comprehensive Annual Financial Report FY 2013.
Bonded Indebtedness for Fiscal Year 2013 included herein
differs from the data shown in Tables 3.1, 3.2 and 3.4 of the Statistical Section of the County’s Fiscal Year 2013 Comprehensive Annual
Financial Report based on the treatment of bond premium and discounts. In the Comprehensive Annual Financial Report, Fiscal Year 2013
Bonded Indebtedness represents principal outstanding plus unamortized premium (minus unamortized discount). In the table above, Bonded
Indebtedness is based on outstanding principal without adjustment for unamortized premium or discount.
2
U.S. Census Bureau, 1970, 1980, 1990, 2000 and 2010 Decennial Censuses, 2001 to 2025 estimates and forecasts, Fairfax County Department
of Neighborhood and Community Services.
3
Source: Bureau of Economic Analysis (BEA), U.S. Department of Commerce, 2002-2008 and Fairfax County Department of Management and
Budget 2009-2013.
Debt Service Requirements as a
Percentage of General Fund Disbursements (in 000s)
Fiscal Year
Ended
June 30
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
_______________________
Debt
Service
Requirements1
General Fund
Disbursements
Percentage
$213,027
224,544
239,326
253,433
267,624
$2,594,726
2,799,800
3,033,283
3,224,338
3,320,397
8.21%
8.02
7.89
7.86
8.06
276,105
277,370
285,551
288,302
289,714
3,354,860
3,309,905
3,343,689
3,419,953
3,533,098
8.23
8.38
8.54
8.43
8.20
Source: Fairfax County Comprehensive Annual Financial Report FY 2013
1
The Debt Service Requirements include total principal and interest payments on the County’s outstanding tax supported debt obligations,
including all debt listed under the heading “Other Tax Supported Debt Obligations.”
38
Underlying Bonded Indebtedness
The following table shows the underlying bonded indebtedness of towns within the boundaries of
Fairfax County as of June 30, 2013:
Town of Vienna
Storm Drainage/Street Improvement/Water
and Sewer/Public Buildings
Town of Herndon
Recreational Complex/Water and
Sewer/Recreational Facilities
Total Underlying Indebtedness
$16,638,379
15,459,658
$32,098,037
_______________
Source: Fairfax County Comprehensive Annual Financial Report 2013, Town of Vienna, Town of Herndon
These underlying general obligation bonds are obligations of the respective towns only and are
not obligations of Fairfax County.
The bonds, notes and other obligations of Fairfax Water, the Fairfax County Park Authority, the
Fairfax County Industrial Development Authority, the Fairfax County Economic Development Authority,
the Fairfax County Redevelopment and Housing Authority, the Northern Virginia Health Center
Commission, the Northern Virginia Transportation Commission, and the Mosaic District Community
Development Authority are not obligations of the County.
TAX BASE DATA
Fairfax County annually reassesses approximately 359,034 parcels of real property employing a
computer assisted mass reassessment program for both residential and non-residential properties. The
County uses a statistic called the coefficient of dispersion (the “Coefficient of Dispersion”) which
measures the uniformity of assessment to sale ratios among properties. The lower the coefficient of
dispersion, the more uniform the assessment. The overall Coefficient of Dispersion in Fairfax County for
tax year 2012 (FY 2013) was 4.0%, and the assessment to sales price ratio was 0.93. A Coefficient of
Dispersion of 15% is considered good by professional assessing standards. The County falls into the
excellent category, indicating a high degree of assessment uniformity and equity.
The assessed value for FY 2015 of the real estate tax base, as reported for calendar year 2014
assessments in the main tax book for Fairfax County, increased by 5.4% in value from the prior year.
The data in the following five tables are presented to illustrate trends and characteristics of the
assessed value of real and personal property which are major sources of County-derived revenue:
39
Assessed Value of All Taxable Property1
Fiscal Year
2004
2005
2006
2007
2008
Real Property
$129,215,116,649
144,643,064,429
177,877,141,169
217,461,663,192
226,344,848,687
Personal Property
$14,005,217,597
13,618,244,620
14,310,177,208
14,885,684,962
14,968,086,737
Total
$143,220,334,246
158,261,309,049
192,187,318,377
232,347,348,154
241,312,935,424
2009
2010
2011
2012
2013
226,983,531,614
204,047,166,164
185,755,271,151
192,062,068,734
198,178,754,789
15,516,080,309
14,502,191,112
14,767,968,334
15,265,499,862
16,053,881,534
242,499,611,923
218,549,357,276
200,523,239,485
207,327,568,596
214,232,636,323
2014
20152
205,045,008,994
216,866,568,287
16,420,356,751
16,489,443,036
221,465,365,745
233,356,011,323
___________________________
Source: Fairfax County Department of Tax Administration. All years included figures for the Public Service Corporation. All Public Service
Corporation real property assessments are required under Virginia law to be made at 100% of estimated market value annually by the State
Corporation Commission.
1
Figures are net of exonerated assessments and tax relief for the elderly and disabled.
2
FY Adopted Budget Plan estimate per Fairfax County Department of Management and Budget.
Tax Rates per $100 Assessed Value
(Fiscal Year)
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Real Estate – Regular and
Public Service ....................... $1.00
$.89
$.89 $ .92 $1.04 $1.09 $1.07 $1.075 $1.085 $1.09
Personal Property – Regular . 4.57
4.57
4.57
4.57
4.57
4.57
4.57
4.57 4.57 4.57
Personal Property –
Public Service ....................... 1.00
.89
.89
.92
1.04
1.09
1.07 1.075 1.085 1.085
Personal Property –
Machinery and Tools ............ 4.57
4.57
4.57
4.57
4.57
4.57
4.57
4.57 4.57 4.57
Personal Property –
Development ........................ 4.57
4.57
4.57
4.57
4.57
4.57
4.57
4.57 4.57 4.57
Personal Property –
Mobile Homes ...................... 1.00
.89
.89
.92
1.04
1.09
1.07 1.075 1.085 1.09
Personal Property – Special1.
.01
.01
.01
.01
.01
.01
.01
.01
.01
.01
____________________________________________________________________________________
Source: Fairfax County Adopted Budgets, FY 2005-FY 2015
1
Includes vehicles specially equipped for the handicapped, privately owned vans used for van pools, vehicles belonging to volunteer fire and
rescue squad members, vehicles owned by auxiliary police and reserve deputy sheriffs, certain property of homeowners associations, antique cars,
aircraft, including flight simulators, and motor vehicles owned by qualified elderly or disabled individuals, and boats.
40
Commercial-Industrial Percentage of the
Total Assessed Value of Real Property1
Fiscal Year2 Percent (%)3
2006
17.36
2007
17.22
2008
19.23
2009
21.06
2010
22.67
2011
2012
2013
2014
2015
19.70
19.64
20.77
19.96
19.01
____________________
Source: Fairfax County Department of Tax Administration
Assessed values are reported by State of Virginia Land Use Codes. Vacant land is defined according to zoning classification.
2
Fiscal year property taxes are levied on prior year assessments.
3
Includes the Towns of Vienna, Herndon and Clifton.
1
The following data show the assessed value of real property of the 25 largest holders of real
property in the County (as of January 1, 2014).
[Remainder of Page Left Intentionally Blank]
41
Top 25
Holders of Real Property in Fairfax County
As of January 1, 2014
RankProperty Owner
Property Type
Tysons
Corner
Property
Holdings
LLC
Tysons Corner Regional Shopping Mall
1
Fair Oaks Mall
2 Fairfax Company Of Virginia LLC
Commercial & Industrial
3 Cesc Skyline LLC
Apartments
4 Camden Summit Partnership LP
5 Federal Home Loan Mortgage Corp. Office and Residential
Public Utility
6 Washington Gas Light Co
Commercial & Industrial
7 Sri Seven Fair Lakes LLC
Commercial & Retail
8 Reston Town Center Property LLC
Ps
Business
Parks
LP
Industrial Parks
9
Apartments
10 Patriot Village Owner
Commercial & Industrial
11 Homart Newco One Inc
Office
12 South Office Market LLC
Office, Apartments, Industrial, and Shopping Centers
13 Writ LP
Apartments
14 Aimco Riverside Park LLC
15 Home Properties Mount Vernon LLC Apartments and Office
Office
16 Capital One Bank
Mobil
Fairfax
Inc
HQ Office and Various Commercial
17
Office
18 Mitre Corporation
Office
19 Gannett Co Inc
Apartments and Office
20 Eqr-Skyline Towers LLC
Office
21 Fairfax Owner LLC
Office
22 Metropark 2345 LLC
Office
23 Franconia Two LP
24 Brandywine Acquisition Partners LP Office
Office
25 Springfield Station LLC
Total
Total Assessment1
$1,295,238,660
403,630,310
343,114,760
336,172,190
331,851,560
302,803,787
252,124,340
249,389,560
248,863,520
241,747,820
235,017,410
222,125,960
218,227,900
215,936,300
213,670,510
196,585,130
192,964,470
189,845,830
184,413,120
179,418,760
173,018,150
172,652,220
165,990,870
165,235,820
160,187,230
$6,890,226,187
___________________
Source: Fairfax County Department of Tax Administration, January 1, 2014, tax rolls
1
As of January 1, 2014, the assessed value of the real property of the 25 largest holders of real property in the County represented 3.39% of the
total assessed value of all real property in Fairfax County, excluding tax-exempt properties. January 1, 2014, assessments generate tax revenue in
FY 2014.
42
Real and Personal Property
Tax Levies and Tax Collections
Fiscal
Year
2006
2007
2008
2009
2010
Total Levy1
$2,270,001,560
2,445,217,224
2,526,532,291
2,616,413,372
2,617,630,834
2011
2,529,322,489
2012
2,578,579,112
2013
2,685,186,192
2014
2,789,010,004
2015
2,934,520,721
__________________
Current
Collections2
$2,253,875,705
2,436,800,582
2,517,345,644
2,597,768,048
2,611,825,961
% of
Total Levy
Collected3
99.29%
99.66%
99.64%
99.29%
99.78%
Collection of
Delinquent
Taxes
$27,523,583
25,358,430
22,348,830
23,406,200
21,900,682
2,519,767,097
2,563,131,721
2,679,668,935
2,776,199,493
2,919,651,406
99.62%
99.40%
99.79%
99.54%
99.49%
22,696,208
22,034,282
18,659,978
21,735,390
19,221,607
% of Total
Levy &
Total Current & Delinquent
Taxes
Delinquent Taxes
$2,281,399,288
100.50%
2,462,159,012
100.69%
2,539,694,474
100.52%
2,621,174,248
100.18%
2,633,726,643
100.61%
2,542,463,305
2,585,166,003
2,698,328,913
2,797,934,883
2,938,873,013 4
100.52%
100.26%
100.49%
100.32%
100.15%
Sources: Fairfax County Department of Management and Budget and Department of Tax Administration
1
The total levy is the levy for General Fund real and personal property taxes and does not include the property tax levy for Special Revenue
Funds, e.g. for refuse collection and community centers.
2
Current collections do not include tax collections for the Special Revenue Funds or payments in lieu of taxes. As a result of revised accounting
procedures, the collection of penalty and interest payments for late payments of current taxes is included in the collection of current taxes rather
than under the collection of back taxes.
3
The percentage of levy is not the collection rate since current collections also include penalty and interest payments for late payments of current
taxes.
4
FY 2015 Adopted Budget per Fairfax County Department of Management and Budget and Department of Tax Administration.
Section 58.1-3916 of the Code of Virginia authorizes Fairfax County, pursuant to Section 4-10-1
of the County Code, to impose a penalty of 10% for failure to pay taxes when due, with interest to be due
on such taxes and penalty following the day such taxes are due at the rate of 10% per annum the first year
and at the greater of 10% per annum and the rate established pursuant to Section 6621 of the Internal
Revenue Code for the second and subsequent years of delinquency.
FINANCIAL INFORMATION
Five Year Summary of Revenues, Expenditures and Fund Balances for General, Special Revenue
and Debt Service Funds
The financial data shown in the following table represent a summary for the five fiscal years
ended June 30, 2013, of the revenues, expenditures, and fund balances accounted for in the County’s
General Fund, Special Revenue Funds, and Debt Service Funds, and, in accordance with Statement No.
14 of the Governmental Accounting Standards Board, in the comparable, primary governmentappropriated funds of the discretely reported component units. The summaries for the five fiscal years
ended June 30, 2013, have been compiled from the financial statements of the County for the respective
years and should be read in conjunction with the related financial statements and notes thereto.
43
2009
Revenues:
$2,843,368,005
Taxes1 ...............................................
Permits, privilege fees, and
regulatory licenses ................................
41,148,793
Fines and forfeitures .........................
16,507,756
Revenue from the use of money and
property ................................................
61,527,372
Charges for services and recovered costs
485,293,893
Intergovernmental ............................
1,014,053,353
Miscellaneous...................................
12,010,402
Total revenues ..................................
$4,473,909,574
Expenditures and transfers:
General governmental administration
$ 147,666,875
Judicial administration .....................
43,241,720
Public safety .....................................
581,163,408
Public works .....................................
199,877,925
Health and welfare ...........................
488,089,767
Parks, recreation and cultural ...........
110,841,317
Community development .................
197,475,489
2,263,603,776
Education2 ........................................
Debt service......................................
301,160,663
Net transfers to other funds3 .............
(2,863,061)
Total expenditures and transfers .......
$4,330,257,879
Excess (deficiency) of revenues
over expenditures and transfers ............
$143,651,695
Other Financing Sources:
Revenue bonds issued
Fund balance, beginning of year 4 .........
719,469,009
Adjustment of fund balance, beginning of
year.......................................................
Increase (decrease) in reserve for
inventories of supplies..........................
97,313
Fund balance, end of year.....................
$ 863,218,017
2010
Fiscal Years Ended June 30,
2011
2012
2013
$2,889,531,062
$2,848,580,425
$2,898,255,803
$3,026,313,822
47,681,442
15,065,700
55,402,463
16,645,115
59,935,796
17,230,369
62,411,104
16,842,952
38,959,091
37,124,786
35,234,063
36,081,802
411,214,184
1,042,227,100
11,687,915
$4,456,366,494
428,046,963
1,106,149,358
11,248,827
$4,503,197,937
441,423,501
1,113,147,729
13,780,036
$4,579,007,297
449,653,765
1,226,117,736
12,797,703
$4,830,218,884
$ 141,269,734
37,838,681
575,374,119
203,795,365
487,497,996
98,359,159
210,638,852
2,196,207,759
301,280,384
22,318,350
$4,274,580,399
$ 165,348,601
49,781,817
573,438,199
205,652,599
540,186,138
80,116,456
364,724,482
2,213,823,884
320,697,058
23,347,426
$4,537,116,660
$ 178,269,343
49,461,933
595,235,346
210,031,358
555,316,485
84,076,869
408,614,331
2,324,927,087
330,670,748
69,324,474
$4,805,927,974
$ 179,785,573
45,919,569
642,126,633
214,679,613
540,103,616
83,966,114
365,399,785
2,497,492,021
343,425,315
39,320,313
$4,952,218,552
$181,786,095
($33,918,723)
(226,920,677)
(121,999,668)
863,218,017
266,704,702
1,016,824,844
107,645,374
1,257,018,819
48,709,053
1,167,930,245
10,538,045
37,439,914
30,031,918
$1,287,050,737
154,811
$1,167,930,245
(1,277,399)
$1,043,726,713
(95,516)
$1,094,544,114
_____________________
Source: Fairfax County Comprehensive Annual Financial Reports for the fiscal years ended June 30, 2009-2013.
1
Taxes include real estate, personal property, sales, recordation, business, professional, and other licenses and miscellaneous other taxes.
2
Teachers’ salaries accounted for in the School Operating Fund are paid by contract over a twelve-month period ending in August.
Consequently, in order to reflect the total teachers’ salaries in the fiscal year the services are rendered, an accrual is made at the end of each fiscal
year for the payroll liability arising from those teachers’ salaries to be paid in the first two months of the succeeding fiscal year.
3
The inter-fund transfers among the funds presented have been eliminated.
4
Fund balance includes amounts reserved for inventories of supplies. Beginning in FY 2011, inventories of supplies were reported as an increase
or decrease in fund balance only if the inventories deemed significant in relation to the total fund balance.
Financial Policies
The Board of Supervisors has been guided by long-standing financial policies and guidelines in
the conduct of financial management. The governing statement of financial policy is contained within the
Ten Principles of Sound Financial Management (“Ten Principles”). Adopted by the Board of Supervisors
in 1975 and amended as needed to address changing economic conditions and management practices, the
Ten Principles have been reaffirmed and have guided each succeeding Board of Supervisors to establish
strong fiscal management tools and practices. The Ten Principles provide for the integration of land use
planning with capital and operating budgets; establish guidelines for the development of annual balanced
budgets; stress the importance of maintaining positive cash balances; establish firm not to exceed limits to
debt ratios; provide guidance on cash management, internal controls, and performance measurement;
provide guidelines restricting the proliferation of underlying debt and use of moral obligation financing;
and encourage the development of a diversified economy within the County.
44
Other policies and tools that have been designed to enhance the impact of the Ten Principles
include annual adoption of budgetary guidelines, formal establishment of various expenditure, revenue,
and special purpose reserves, capital improvement planning guidelines, policies for risk management,
guidelines for acceptance of grant awards, and planning for information technology. Various tools in
active use by the County include the annual budget, the Capital Improvement Program, revenue and
financial forecasts, and management initiatives such as a performance measurement program, a pay-forperformance management system, workforce planning, and various information technology initiatives.
Certain Financial Procedures
Description of Funds
The County’s annual audited financial statements include the funds administered by the Board of
Supervisors and the School Board. The accounts of the County are organized on the basis of funds, each
of which is considered to be a separate accounting entity. The transactions in each fund are accounted for
by providing a separate set of self-balancing accounts which comprise its assets, liabilities, fund balance,
revenues, and expenditures.
Annual Financial Statements
The County has no legal authority to borrow in anticipation of future years’ revenues, except by
the issuance of bonds or bond anticipation notes.
Prior to the beginning of each fiscal year, the Board of Supervisors adopts a budget plan
consisting of contemplated expenditures and estimated revenues for such fiscal year. On the basis of the
adopted budget plan, the Board of Supervisors appropriates funds for the expenditures, and establishes tax
rates sufficient to produce the revenues, contemplated in the budget plan.
The annual budgeting process for a fiscal year begins in the first quarter of the previous fiscal
year with the submission by agency directors of budget requests to the Department of Management and
Budget. During the second quarter, budget requests are reviewed and meetings between the County
Executive, Deputy County Executives, and agency directors are held to discuss agency requests. Upon
receipt of the preliminary budget of the School Board in the third quarter, the County Executive prepares
an initial budget for submission to the Board of Supervisors and proposes tax rates sufficient to produce
revenues needed to meet expenditures contemplated in the initial budget. After work sessions with the
Board of Supervisors and public hearings on the proposed budget, changes are made and the final budget
is adopted. Tax rates are established prior to the beginning of the fiscal year for which the budget is
prepared.
During the fiscal year, quarterly reviews of revenue and expenditures are undertaken by the
County Department of Management and Budget. On the basis of these reviews, the Board of Supervisors
revises appropriations as needed or desired.
In 1982, the Board of Supervisors adopted a financial policy requiring maintenance of a
“managed reserve” in the General Fund beginning on July 1, 1982, at a level not less than 2% of General
Fund disbursements. This reserve has been incorporated in the budget each fiscal year. This reserve was
implemented to provide for temporary financing of unforeseen needs of an emergency nature and to
permit orderly adjustment to changes resulting from termination of revenue sources through actions of
other governmental bodies. In 1985, the Board of Supervisors adopted a policy on appropriations during
quarterly budget reviews, which provides that non-recurring revenues should be used for either capital
expenditures or other non-recurring expenditures and that quarterly review adjustments are not to exceed
45
2% of the General Fund disbursements. In addition, on September 13, 1999, the Board of Supervisors
established a Revenue Stabilization Fund with a goal of reaching 3% of General Fund disbursements. As
of the FY 2006 Third Quarter Review, the Revenue Stabilization Fund was fully funded at 3% of General
Fund disbursements. This reserve continues to be fully funded and currently totals $102.8 million. This
reserve is designed to address ongoing requirements in years of significant economic downturn. Criteria
for withdrawals from the Revenue Stabilization Fund include (1) projected revenues must reflect a
decrease of greater than 1.5% from the current fiscal year estimate, (2) withdrawals must not exceed onehalf of the fund balance in any fiscal year, and (3) withdrawals must be used in combination with
spending cuts or other measures.
Investment Management Policy
The County’s Division of Investments and Cash Management operates under the direction of the
Investment Committee comprised of the Chief Financial Officer/Director of the Department of
Management and Budget, the Director of the Department of Finance, the Director of the Department of
Tax Administration, and the Deputy Director of the Department of Finance. Guided by a formal
investment policy, the Committee continually reviews the County’s investment policies and strategies and
monitors daily investment activity.
During FY 2013, the County’s average portfolio size (which includes investments in the General
Fund, Special Revenue Funds, and Enterprise Funds) was approximately $2.85 billion. The funds are
invested in U.S. Treasury obligations, obligations of the Federal Home Loan Mortgage Corporation,
Federal Home Loan Banks, Federal Farm Credit Bank, and Fannie Mae, bankers’ acceptances,
commercial paper (rated A1/P1 or higher), negotiable and non-negotiable and insured certificates of
deposit, money market mutual funds limited to government obligations, corporate notes, bank notes, and
other investments permitted under Virginia law for these purposes.
The County’s investment policy, which governs the pooled cash, and general obligation bond
proceeds, portfolios prohibits investment in instruments generally referred to as derivatives, and the
County does not employ leverage in its investments.
The Association of Public Treasurers of the United States and Canada has awarded the County a
certification for its investment policy each year since 1998. To achieve certification, an investment policy
must establish standards recognized in the profession as fostering prudent management of public funds.
General Fund Revenues, Expenditures, Transfers and Beginning Fund Balance
The General Fund is maintained by the County to account for revenue derived from Countywide
ad valorem taxes, other local taxes, licenses, fees, permits, charges for services, certain revenue from
federal and State governments, and interest earned on invested cash balances of the General Fund and
Capital Project Funds. General Fund expenditures and transfers include the costs of general County
government, transfers to the School Operating Fund to pay the local share of operating Fairfax County
public schools, and transfers to the Debt Service and Capital Projects Funds to pay debt service on
County general obligation bonds and for certain capital improvement projects.
General Fund Summary
Shown below are the County’s revenues, expenditures, transfers, and beginning fund balance of
the General Fund for FY 2009 through FY 2013.
46
General Fund Revenues, Transfers, and Beginning Fund Balance
(in thousands)
Fiscal Year Ended June 30
2009
$2,364,260
460,417
2010
$2,412,143
460,147
2011
$2,321,809
505,518
2012
$2,364,202
517,376
2013
$2,477,040
530,960
24,494
28,666
34,267
36,844
38,201
16,477
14,943
16,563
17,147
16,792
42,554
22,641
19,988
19,624
18,555
70,237
68,916
64,103
66,804
76,242
Intergovernmental .........................................
Miscellaneous ...............................................
Transfers In and Beginning Fund
Balance ......................................................
355,798
826
343,997
673
348,640
13,932
347,751
13,497
339,758
1,305
297,758
306,064
396,482
388,970
363,702
Total ................................................
$3,632,821
$3,658,190
$3,721,302
$3,772,215
$3,862,555
General Property Taxes ................................
Other Local Taxes ........................................
Permits, Privilege Fees, and Regulatory
Licenses .....................................................
Fines and Forfeitures ....................................
Revenue from the Use of Money and
Property .....................................................
Charges for Services and Recovered
Costs ..........................................................
_____________
Source: Fairfax County Comprehensive Annual Financial Reports for FY 2009-FY 2013
General Fund Expenditures and Transfers
(in thousands)
Fiscal Year Ended June 30
2009
2010
2011
2012
2013
$1,626,601
1,354,845
267,801
21,907
$1,626,601
1,304,385
274,700
20,895
$1,611,590
1,372,007
281,869
15,908
$1,610,835
1,444,498
276,520
19,627
$1,683,322
1,474,374
281,610
17,055
Other Transfers .................................................
7,510
74,974
7,410
58,744
7,410
56,119
11,298
55,766
11,298
65,628
Total .................................................................
$3,353,638
$3,292,735
$3,344,903
$3,418,544
$3,533,287
Transfer to School Operating Fund...................
Costs of General County Government ..............
Transfer to Debt Service Funds ........................
Transfer to Capital Project Funds .....................
Transfer to Metro Construction and
Operations Fund ............................................
____________
Source: Fairfax County Comprehensive Annual Financial Reports for FY 2009-FY 2013
Revenues
The following is a discussion of the General Fund revenue structure.
General Property Taxes – An annual ad valorem tax is levied by the County on the assessed
value of real and tangible personal property located within the County as of January 1 preceding the fiscal
year in which such tax is due. The personal property tax on motor vehicles that acquire situs within the
County or have title transferred on or after January 2 is prorated on a monthly basis. Real property and
personal property are assessed at 100% of fair market value. Real property taxes are due on July 28 and
December 5 of the fiscal year in which they are levied. The payment date for personal property taxes is
October 5. The penalty for late payment is 10% of the amount due, and interest on delinquent taxes and
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penalties accrues at a rate of 1% per annum for real estate taxes and 5% per annum for personal property
taxes. In cases of property on which delinquent taxes are not paid within three years, the County may sell
the property at public auction to pay the amounts due. There is no legal limit at the present time on the
property tax rates that may be established by the County. Property taxes (including delinquent payments,
penalties, and interest) accounted for 70.8% of total General Fund revenues in FY 2013. However, this
percentage does not include the reimbursement from the Commonwealth of Virginia for a portion of the
personal property tax. Including the reimbursement reflected in Intergovernmental revenue, the
percentage of revenue from property taxes in FY 2013 79.5%. A discussion concerning the
Commonwealth’s plan to reduce personal property taxes follows.
During its 1998 Special Session, the General Assembly of Virginia enacted legislation to reduce
personal property taxes applicable to individually owned motor vehicles. The reduction, which applies to
the first $20,000 in assessed value, was scheduled to be phased in over a five year period. The legislation
states that the Commonwealth will reimburse local governments for the revenue lost from the reduction in
personal property tax collections. In fiscal years subsequent to the legislation personal property taxes
paid by citizens steadily reduced until such reduction equaled 70% in 2002. Due to Commonwealth
budget constraints, the 2003 Virginia General Assembly temporarily froze the tax reduction at 70%. The
2005 General Assembly revised this measure further to limit its tax relief payments to all localities to a
total of $950 million per tax year beginning with 2006 (fiscal year 2007). The County’s fixed share of the
$950 million is $211,313,944, as determined by its share of the total payments made to all localities by
the Commonwealth during calendar years 2004 and 2005 for tax year 2004 (fiscal year 2005). The
County’s total personal property tax collections for FY 2013 were $564.9 million, comprised of $353.6
million paid by taxpayers and $211.3 million reimbursed by the Commonwealth of Virginia.
Other Local Taxes – The County levies various other local taxes, including a 1% local sales tax
(collected by the Commonwealth and remitted to the County), a tax on consumer utility bills based on
consumption for gas and electric services and a 5% communications sales tax which is imposed on the
charge for or sale of communications services. Also included in this category is a cigarette tax of $0.30
per pack, property recordation taxes, an automobile license tax, and various businesses, professional, and
occupational licenses taxes. These taxes accounted for 15.2% of total General Fund revenues in FY 2013.
Permits, Privilege Fees, and Regulatory Licenses – The County requires that licenses or permits
be obtained in order to perform certain activities in the County and that fees be paid for services provided
by certain County departments. These revenues represented 1.1% of total General Fund revenues for FY
2013.
Fines and Forfeitures – The sources of revenue in this category include court fines and penalties
from the Circuit Court and the General District Court and court fines, costs from the Juvenile and
Domestic Relations District Court and fines for traffic violations, misdemeanors, and felonies. In
addition, the County receives revenues from parking violations as authorized under the County Code.
Revenues in this category represented 0.5% of General Fund revenues in FY 2013.
Revenue from the Use of Money and Property – The principal sources of revenue to the General
Fund from the use of money and property are interest on General Fund and Capital Project Fund
investments and minor amounts of revenue from the sale and lease of County equipment and property.
These revenues represented 0.5% of General Fund revenues in FY 2013.
Charges for Services and Recovered Costs – The principal sources of revenue to the General
Fund from charges for services are County Clerk fees, school age child care fees, recreation fees,
publication sales and various other services for which the County charges a fee. Revenues in this
category represented 2.2% of General Fund revenues in FY 2013.
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Intergovernmental Revenue – Intergovernmental revenue is comprised of revenue from the
Commonwealth and revenue from the federal government. Revenues in this category represented 10.3%
of General Fund revenues in FY 2013. This percentage includes the revenue that the County receives
from the Commonwealth as reimbursement for the County’s personal property tax. Each revenue source
within intergovernmental revenue is discussed below.
Revenue from the Commonwealth – The County is reimbursed by the Commonwealth of Virginia
for a portion of shared expenses, including certain expenditures for social services, the sheriff’s office,
courts, the Office of the Commonwealth Attorney, and other constitutional offices. Additionally, the
County receives a share of the net profits from the State Alcoholic Beverage Control Board’s liquor sales
and state contributions to assist in meeting law enforcement expenditures. As mentioned in the section
concerning General Property Taxes, the Commonwealth also reimburses the County for a portion of its
personal property tax on vehicles. Including the reimbursement for the County’s personal property tax,
revenues from this category represented 9.7% of total General Fund revenues in the fiscal year ended
June 30, 2013. Excluding this reimbursement, revenue from this category represented 3.6% of General
Fund revenue in FY 2013. The County receives a significant amount of additional State aid in support of
public school operations. These revenues are credited directly to the School Operating and School Lunch
Funds, however, and are not reflected in the General Fund.
Revenue from the Federal Government – The principal sources of categorical federal aid to the
General Fund are federal grant money supporting human service programs such as supplemental nutrition,
temporary assistance for needy families, foster care, adoption assistance, and medical assistance for
clients of the Department of Family Services. This revenue category represented 0.9% of General Fund
revenues in FY 2013.
Miscellaneous Revenues – The sources of revenue in this category include the sale of land and
buildings, contract rebates, and other miscellaneous sources. These revenue sources accounted for less
than 0.1% of General Fund revenue in FY 2013.
Expenditures and Transfers
The following is a discussion of the major classifications of General Fund expenditures and
transfers.
Transfer to School Operating Fund – The County transfers money from the General Fund to the
School Operating Fund to pay the County’s share of the costs of operating public schools in Fairfax
County. This transfer represented approximately 47.6% of total disbursements from the General Fund in
the fiscal year ended June 30, 2013. The transfer to the School Operating Fund was approximately 71.9%
of total receipts of the School Operating Fund. Other revenues credited directly to the School Operating
and School Lunch Funds include revenue from the Federal Government, the Commonwealth of Virginia,
the City of Fairfax (representing tuition of students residing in the City of Fairfax who attend Fairfax
County schools), and other revenue derived locally from sale of textbooks, school lunches, etc.
Costs of General County Government – The County pays the costs of general County government
from the General Fund. These costs include expenditures for general government administration, judicial
administration, public safety, public works, health and welfare, parks, recreational and cultural programs,
and community development. This classification was approximately 41.7% of total General Fund
disbursements in FY 2013.
Transfer to Debt Service Fund – The County transfers from the General Fund to the Debt Service
Fund amounts sufficient to pay principal and interest on outstanding County and School debt including
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general obligation bonds and EDA and FCRHA revenue bonds. Transfers to the Debt Service Fund
represented 8.0% of total General Fund disbursements in FY 2013. Effective FY 2006, Fairfax County
Public Schools (FCPS) transfers from its operating fund to the County’s Debt Service Fund an amount
sufficient to pay principal and interest on the outstanding School Board Building Bonds and the
applicable portion of the 2014A County Facilities Projects Bonds.
Transfer to Capital Project Funds – The County transfers money from the General Fund to the
Capital Project Funds to pay the cost of certain capital improvements. The General Fund transfer to the
Capital Project Funds (except for the General Fund transfer for Fairfax County’s obligations to WMATA,
which is discussed below) represented 0.5% of total General Fund disbursements in FY 2013.
Transfer to Metro Construction and Operations Fund – The County is a member jurisdiction of
WMATA and as such has agreed to make certain capital contributions in support of the construction by
WMATA of a rail transit system to serve the Washington metropolitan area (which includes the County)
and to pay a portion of the deficit incurred by WMATA in the operation of its bus system and rail system.
The County generally has used bond proceeds to fund its capital contributions to WMATA and has
transferred money from the General Fund to pay its share of the bus and rail operating subsidies. The
General Fund transfer to the Metro Construction and Operations Fund to pay the County’s share of the
system’s operating subsidies represented 0.3% of total General Fund disbursements in FY 2013. See the
subsection herein entitled “GOVERNMENT SERVICES – Transportation” for a more complete
discussion of the County’s obligations with respect to WMATA.
Other Funds – The County transfers money from the General Fund to other funds for a variety of
purposes. The General Fund transfer to other funds includes transfers to the County Transit Systems,
Information Technology, Aging Grants and Programs, Community-Based Funding Pool, Housing
Programs for the Elderly, Health Benefits Trust, and Equipment Management and Transportation Agency.
Transfers to other funds were 1.9% of total General Fund disbursements in FY 2013.
Transfer to Revenue Stabilization Fund – Beginning in FY 2000, the County began setting aside
money in the General Fund for a Revenue Stabilization Fund to address significant revenue reductions
during severe, prolonged economic downturns. The Revenue Stabilization Fund represented 32.7% of the
total fund balance in the General Fund as of June 30, 2013.
FY 2014 Budget Preliminary Results
After the FY 2014 Carryover Review, approved by the Board of Supervisors on September 9,
2014, General Fund Disbursements totaled $3.64 billion, $63.16 million (1.7%) below the FY 2014
Revised Budget Plan. General Fund Revenues and Transfers In were $3.79 billion, an increase of $8.28
million (0.2%) over the FY 2014 Revised Budget Plan. Further financial information for FY 2014 will be
available upon publication of the County’s comprehensive annual financial report in December 2014.
FY 2015 Budget
On April 29, 2014, the Fairfax County Board of Supervisors approved the Fiscal Year 2015
Adopted Budget. The FY 2015 budget is based on General Fund Revenue increase of 4.2% over the FY
2014 Adopted Budget Plan. General Fund Disbursements total $3.72 billion, an increase of $129.9
million or 3.62% from the FY 2014 Adopted Budget Plan. The budget includes a real estate tax rate of
$1.09 per $100 of assessed value, which is a half cent increase from the rate of $1.085 per $100 of
assessed value as part of the FY 2014 Adopted Budget Plan. The total County transfer to support School
Operating and Debt Service is $1.95 billion or 52.4% of total County disbursements. Updated projections
in September 2014 provide for the FY 2015 budget to remain in balance.
50
FY 2016 Budget
As of September 2014, the County projects a $71.4 million shortfall in FY 2016, or
approximately 2% of the FY 2015 Adopted Budget Plan. The FY 2016 Budget projection contemplates
expenses for additional compensation adjustments of County employees and takes into consideration
updated revenue data received to date. The FY 2016 Budget also assumes no change from the FY 2015
Adopted Budget Plan’s real estate tax rate of $1.09 per $100 of assessed value, a 3% increase in the
transfer to schools, and an increase in the Pension Corridor Funding from 93% to 95%. The County
Executive’s budget is expected to be presented to the Board of Supervisors in February 2015.
CAPITAL IMPROVEMENT PROGRAM
In connection with the County’s adopted comprehensive land use plan, the Fairfax County
Planning Commission annually prepares and submits to the Board of Supervisors a capital improvement
program (“CIP”) for the ensuing five-year period. The CIP is designed to balance the need for public
facilities as expressed by the County’s land use plan with the fiscal capability of the County to provide for
those needs.
The CIP is an integral element of the County’s budgeting process. The five-year document serves
as a general planning guide for the construction of general purpose, school and public utility projects in
the County. The CIP is updated and approved by the Board of Supervisors each year. This annual review
process prompts careful attention to the development of reliable capital expenditure and revenue estimates
and the timely scheduling of bond referenda.
In connection with the CIP process, the Board of Supervisors has adopted certain policy
guidelines for the development and financing of the CIP. These guidelines include self-imposed
restrictions on the issuance of general obligation bonds designed to keep General Fund supported debt
service expenditures less than 10% of total Combined General Fund disbursements, and to maintain the
ratio of bonded indebtedness to the market value of taxable property in the County at a level less than
3.0%.
The Board of Supervisors continues to review the County’s debt program in light of current fiscal
conditions and capital needs. Currently, general obligation bond sales for new money projects are limited
to an average of $275 million per year with a maximum limit of $300 million in a single year. The CIP
for fiscal years 2015-2019 (along with estimates for fiscal years 2020 to 2034) was approved by the
Board of Supervisors on April 30, 2013. The County program includes new construction, renovation and
renewal of school facilities, parks, housing development, revitalization, storm water management, public
safety and courts, libraries, human services, solid waste, sewers, and transportation. Significant capital
construction activity from FY 2015-2024 totaling $7.89 billion is anticipated for the County, in addition
to $1.0 billion in regional parks, and water supply projects which are undertaken within the County to
benefit County residents, but is not managed or funded directly by the County. The total capital
construction activity to be financed by the County totals $8.89 billion from FY 2015-2024.
RETIREMENT SYSTEMS
Fairfax County administers four separate public employee retirement systems that provide
pension benefits for various classes of County employees: Fairfax County Employees’ Retirement System
(ERS), Fairfax County Police Officers Retirement System (PORS), Fairfax County Uniformed
Retirement System (URS), and the Educational Employees’ Supplemental Retirement System of Fairfax
County (ERFC). In addition, professional employees of the Fairfax County Public Schools participate in
a plan sponsored and administered by the Virginia Retirement System.
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The Fairfax County retirement systems investments are managed by independent professional
investment managers. Investments in derivatives are not made for speculative purposes but may be used
by investment managers to gain access to markets, to reduce risk, or to reduce transaction costs.
As of July 1, 2012 (December 31, 2012, for the Educational Employees’ Supplemental
Retirement System), the date of the latest actuarial valuations, membership in the reporting entity’s plans
consisted of the following:
Description
Primary Government
ERS
PORS
URS
Retirees and beneficiaries receiving
benefits
6,888
Terminated employees entitled to,
but not yet receiving, benefits
1,542
DROP participants
629
Active employees
14,107
Total number of plan members
23,166
Component Unit –
Public Schools
ERFC
876
1,109
9,788
33
44
3,099
73
119
n/a
1,276
1,870
21,519
2,258
3,142
34,406
Source: Fairfax County Comprehensive Annual Financial Report for FY 2013
Fairfax County Employees’ Retirement System (ERS)
Plan Description
The Fairfax County Employees’ Retirement System (ERS) is a cost-sharing multiple-employer
defined benefit pension plan. The plan covers full-time and certain part-time employees of the reporting
entity who are not covered by other plans of the reporting entity or the Virginia Retirement System
(VRS).
Benefit provisions are established and may be amended by County ordinances. All benefits vest
at five years of creditable service. To be eligible for normal retirement, an individual must meet the
following criteria: (a) attain the age of 65 with five years of creditable service, or (b) attain the age of 50
with age plus years of creditable service being greater than or equal to 80. The normal retirement benefit
is calculated using average final compensation (i.e., the highest 78 consecutive two week pay periods or
the highest 36 consecutive monthly pay periods) and years (or partial years) of creditable service at date
of termination. In addition, if normal retirement occurs before Social Security benefits are scheduled to
begin, an additional monthly benefit is paid to retirees. The plan provides that unused sick leave credit
may be used in the calculation of average final compensation by projecting the final salary during the
unused sick leave period. The benefit for early retirement is actuarially reduced and payable at early
termination.
Funding Policy
The contribution requirements of ERS members are established and may be amended by County
ordinances. Members may elect to join Plan A or Plan B. Plan A requires member contributions of 4.0%
of compensation up to the Social Security wage base and 5.33% of compensation in excess of the wage
base. Plan B requires member contributions of 5.33% of compensation.
The County is required to contribute at an actuarially determined rate; the rate for the year ended
June 30, 2013, was 18.49% of annual covered payroll. The Board of Supervisors decided to commit
52
additional funding and adopted a rate of 19.05% for fiscal year 2013. In the event the ERS’s funded ratio
(the ratio of the actuarial value of assets to the actuarial accrued liability) exceeds 120% or falls below
90%, the contribution rate will be adjusted to bring the funded ratio back within these parameters.
Schedule of Fund Progress
Actuarial
Valuation
Date
Actuarial
Value of
Assets
(000) ( a )
Actuarial
Accrued
Liability
(AAL) –
Entry Age
(000) ( b )
Unfunded
AAL
(UAAL)
(Funding
Excess)
(000) ( b-a )
Funded
Ratio
( a/b )
Covered
Payroll (000)
(c)
UAAL (Funding
Excess) as a
Percentage of
Covered Payroll
( ( b-a ) / c )
7/1/2010
$2,636,052
$3,771,060
$1,135,008
69.90%
629,249
180.38%
7/1/2011
2,841,466
4,018,924
1,177,458
70.70
642,073
183.38
7/1/2012
3,053,412
4,264,175
1,210,763
71.61
642,639
188.40
Source: Fairfax County Comprehensive Annual Financial Report for FY 2013
Administration
There are ten members of the ERS Board of Trustees. Four members are appointed by the Board
of Supervisors. Three members are elected representing the following groups: County employees,
Schools employees, and retired employees. The Fairfax County Director of Human Resources and the
Director of Finance serve as ex-officio members of the board, along with an appointee from the Schools.
Professional Services
An independent auditor and actuary are hired to provide service to the fund.
Fairfax County Police Officers Retirement Systems (PORS)
Plan Description
The Fairfax County Police Officers Retirement System (PORS) is a legally separate singleemployer defined benefit pension plan established under the Code of Virginia. The plan covers County
police officers who are not covered by other plans of the reporting entity or the VRS and former Park
Police officers who elected to transfer to the PORS from the Uniformed Retirement System effective
January 22, 1983.
Benefit provisions are established and may be amended by County ordinances. All benefits vest
at five years of creditable service. To be eligible for normal retirement, an individual must meet the
following criteria: (a) if employed before July 1, 1981, attain the age of 55 or have completed 20 years of
creditable service, or (b) if employed on or after July 1, 1981, attain the age of 55 or have completed 25
years of creditable service. The normal retirement benefit is calculated using average final compensation
and years (or partial years) of creditable service at date of termination. The plan provides that unused sick
leave credit may be used in the calculation of average final compensation by projecting the final salary
during the unused sick leave period. To be eligible for early retirement, the employee must have 20 years
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of creditable service (does not apply if hired before July 1, 1981). The benefit for early retirement is
actuarially reduced and payable at early termination.
Funding Policy
The contribution requirements of PORS members are established and may be amended by County
ordinances. Member contributions are based on 10.0% of compensation. The County contributes at a
fixed rate as determined by an annual actuarial valuation, unless the PORS’s funding ratio falls outside of
a pre-determined range. Once outside the range, the rate is either increased or decreased to accelerate or
decelerate the funding until the ratio falls back within the range. The range for the PORS is a minimum
funding ratio of 90% and a maximum funding ratio of 120%. The actuarial rate for the year ended June
30, 2013, was 32.04% of annual covered payroll. The Board of Supervisors decided to commit additional
funding and adopted a rate of 33.15% for fiscal year 2013.
Schedule of Fund Progress
Actuarial
Valuation Date
Actuarial
Value of
Assets
(000) ( a )
Actuarial
Accrued
Liability
(AAL) –
Entry Age
(000) ( b )
Unfunded
AAL
(UAAL)
(Funding
Excess)
(000) ( b-a )
Funded
Ratio
( a/b )
Covered
Payroll
(000)
(c)
UAAL (Funding
Excess) as a
Percentage of
Covered Payroll
( ( b-a ) / c )
7/1/2010
$899,543
$1,135,015
$235,472
79.25%
100,500
234.30%
7/1/2011
982,154
1,219,609
237,455
80.53
99,070
239.68
7/1/2012
1,035,444
1,286,841
251,397
80.46
101,121
248.61
Source: Fairfax County Comprehensive Annual Financial Report for FY 2013
Administration
There are seven members of the PORS Board of Trustees. Three members are appointed by the
Board of Supervisors. Two members are active employee elected representatives, and one member is a
retiree elected representative. The Fairfax County Director of Finance serves as an ex-officio member of
the board.
Professional Services
Independent auditor, actuary and investment consultants are hired to provide service to the fund.
Fairfax County Uniformed Retirement System (URS)
Plan Description
The Fairfax County Uniformed Retirement System (URS) is a single-employer defined benefit
pension plan. The plan covers uniformed employees including non-clerical employees of the Fire and
Rescue Department and Office of Sheriff, Park Police, Helicopter Pilots, Animal Wardens and Game
Wardens who are not covered by other plans of the reporting entity or the VRS.
54
Benefit provisions are established and may be amended by County ordinances. All benefits vest
at five years of creditable service. To be eligible for normal retirement an individual must meet the
following criteria: (a) attain the age of 55 with six years of creditable service, or (b) complete 25 years of
creditable service. The normal retirement benefit is calculated using average final compensation and
years (or partial years) of creditable service at date of termination. Annual cost-of-living adjustments are
provided to retirees and beneficiaries equal to the lesser of 4.0% and the percentage increase in the
Consumer Price Index for the Washington-Baltimore Metropolitan Statistical Area. The plan provides
that unused sick leave credit may be used in the calculation of average final compensation by projecting
the final salary during the unused sick leave period. To be eligible for early retirement, employees must
have 20 years of creditable service. The benefit for early retirement is actuarially reduced and payable at
early termination.
Funding Policy
The contribution requirements of URS members are established and may be amended by County
ordinances. Plan A members were given the opportunity to enroll in Plan B as of July 1, 1981 and to
enroll in Plan C as of April 1, 1997. From July 1, 1981 through March 31, 1997, all new hires were
enrolled in Plan B. Plan B members were given the opportunity to enroll in Plan D as of April 1, 1997.
From April 1, 1997 forward all new hires are enrolled in Plan D. Plan A requires member contributions
of 4.0% of compensation up to the Social Security wage base and 5.75% of compensation in excess of the
wage base. Plan B requires member contributions of 7.08% of compensation up to the Social Security
wage base and 8.83% of compensation in excess of the wage base. Plan C requires member contributions
of 4.0% of compensation. Plan D requires contributions of 7.08% of compensation.
The County contributes at a fixed rate as determined by an annual actuarial valuation, unless the
URS’s funding ratio falls outside of a pre-determined range. Once outside the range, the rate is either
increased or decreased to accelerate or decelerate the funding until the ratio falls back within the range.
The range for the URS is a minimum funding ratio of 90% and a maximum funding ratio of 120%. The
County is required to contribute at an actuarially determined rate; the rate for the year ended June 30,
2013, was determined actuarially to be 34.04% of annual covered payroll. The Board of Supervisors
decided to commit additional funding and adopted a rate of 35.00% for fiscal year 2013.
55
Schedule of Fund Progress
Actuarial
Valuation
Date
Actuarial
Value of
Assets
(000) ( a )
Actuarial
Accrued
Liability
(AAL) –
Entry Age
(000) ( b )
Unfunded
AAL
(UAAL)
(Funding
Excess)
(000) ( b-a )
Funded
Ratio
( a/b )
Covered
Payroll (000)
(c)
UAAL (Funding
Excess) as a
Percentage of
Covered Payroll
( ( b-a ) / c )
7/1/2010
$1,095,080
$1,427,617
$332,537
76.71%
146,777
226.56%
7/1/2011
1,185,594
1,526,218
340,624
77.68
147,326
231.20
7/1/2012
1,247,526
1,613,654
366,128
77.31
148,236
246.99
Source: Fairfax County Comprehensive Annual Financial Report for FY 2013
Administration
There are eight members of the URS Board of Trustees. Three members are appointed by the
Board of Supervisors. Three members are employee elected representatives comprised of two members
from the Fire and Rescue Department, and one member from the Sheriff’s Department. The Fairfax
County Director of Finance and Director of Human Resources serve as ex-officio members of the board.
Professional Services
An independent auditor and actuary are hired to provide service to the fund.
Educational Employees’ Supplementary Retirement System of Fairfax County (ERFC)
Plan Description
The Educational Employees’ Supplementary Retirement System of Fairfax County (ERFC) is a
legally separate single-employer retirement system established under the Code of Virginia. The ERFC
covers all full-time educational and civil service employees who are employed by the Fairfax County
Public Schools and who are not covered by other plans of the reporting entity. The ERFC contains two
plans, ERFC and ERFC 2001. ERFC is the original defined benefit plan effective July 1, 1973, and
remains in effect, although closed to new members. Effective July 1, 2001, all new-hire fulltime
educational and civil service employees are enrolled in the ERFC 2001 plan.
The ERFC and ERFC 2001 plans provide retirement, disability, and death benefits to plan
members and their beneficiaries. Annual post-retirement increases of 3.0% are effective each March 31.
All benefits vest after five years of creditable service. Benefit provisions are established and may be
amended by the School Board. The ERFC plan supplements the Virginia Retirement System plan. The
benefit structure is designed to provide a level retirement benefit through a combined ERFC/VRS benefit
structure. The ERFC 2001 plan has a stand-alone structure. Member contributions for the ERFC and
ERFC 2001 plans are made through an arrangement which results in a deferral of taxes on the
contributions.
The ERFC and ERFC 2001 plans provide for a variety of benefit payment types. Minimum
eligibility conditions for receipt of full benefits for ERFC members are either attaining the age of 55 with
56
25 years of creditable service or completing five years of creditable service at age 65. Minimum
eligibility conditions for receipt of full benefits for ERFC 2001 members are either completing five years
of creditable service prior to age 60 or any age with 30 years of creditable service.
Funding Policy
The contribution requirements for ERFC and ERFC 2001 members are established and may be
amended by the ERFC Board of Trustees with the approval of the School Board. All members are
required to contribute 4.0% of their covered salaries. The employer is required to contribute at an
actuarially determined rate. For fiscal year 2013, the School Board was required to contribute 5.34% of
annual covered payroll for educational employees and civil service employees.
Schedule of Fund Progress
Actuarial
Valuation
Date
Actuarial
Value of
Assets
(000) ( a )
Actuarial
Accrued
Liability
(AAL) –
Entry Age
(000) ( b )
Unfunded
AAL
(UAAL)
(Funding
Excess)
(000) ( b-a )
Funded
Ratio
( a/b )
Covered
Payroll (000)
(c)
UAAL
(Funding
Excess) as a
Percentage of
Covered Payroll
( ( b-a ) / c )
12/31/2010
$1,822,603
$2,384,061
$561,458
76.45
$1,191,290
47.13%
12/31/2011
1,866,952
2,470,964
604,012
75.56
1,246,973
48.44
12/31/2012
1,935,292
2,566,128
630,836
75.42
1,297,537
48.62
Source: Fairfax County Comprehensive Annual Financial Report for FY 2013
Administration
The Board is composed of seven members: three are appointed by the School Board, and three
are elected by active ERFC members. The six combined Board members recommend someone who is not
affiliated with FCPS for the seventh position, which is subject to approval by the School Board.
Virginia Retirement Systems (VRS)
Plan Description
Fairfax County Public Schools contributes to the Virginia Retirement System (VRS) on behalf of
covered professional FCPS employees. VRS is a cost-sharing multiple-employer public employee defined
benefit pension plan administered by the Commonwealth of Virginia for its political subdivisions. All
full-time, salaried, permanent employees of participating employers must participate in the VRS. In
accordance with the requirements established by State statute, the VRS provides retirement and disability
benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries.
Funding Policy
Plan members are required by State statute to contribute 5.0% of their annual covered salary to
the VRS. If a plan member leaves covered employment, the accumulated contributions plus interest
earned may be refunded. In accordance with State statute, FCPS is required to contribute at an actuarially
determined rate or a rate approved by the General Assembly. In fiscal year 2013, the General Assembly
57
adopted a higher VRS employer contribution rate of 11.66% compared to the prior year rate of 6.33%. In
fiscal years 2011 and 2012, the General Assembly approved significantly lower VRS rates in order to
mitigate state budget cuts to localities. By doing so, Virginia school districts are essentially deferring a
portion of the recommended employer contributions in those years. FCPS will have to repay these
deferred contributions beginning in fiscal year 2013. The School Board committed $16.9 million of June
30, 2013, fund balance toward this purpose. In addition, the General Assembly approved an employer rate
increase from 0.6% in fiscal year 2012 to 1.11% in fiscal year 2013 for the VRS Retiree Health Insurance
Credit. State statute may be amended only by the Commonwealth of Virginia Legislature. FCPS
employer and member contributions to VRS, including the Retiree Health Insurance Credit, for the years
ended June 30, 2013, 2012, and 2011, were $242,343,488, $146,454,888, and $112,157,560 respectively,
equal to the required contributions for each year.
VRS issues publicly available annual reports and financial statements that can be obtained
through their website or writing directly to the agency.
Fairfax County Retirement Systems – Plan Revisions from the Board of Supervisors
As directed by the Board of Supervisors, the Fairfax County Department of Human Resources
contracted with a benefits consultant to conduct a comprehensive retirement study. Based on the results of
this study, the Board of Supervisors, as part of their mark up of the FY 2013 Adopted Budget Plan on
April 24, 2012, reaffirmed the County’s commitment to a defined benefit plan model for current
employees and for new hires. The Board also directed staff to prepare revisions to the Fairfax County
Code to incorporate several modifications to the retirement systems, to apply only to new employees who
are hired after January 1, 2013. These changes included increasing the minimum retirement age from 50
to 55 in the Employees’ system, increasing the rule of 80 to the rule of 85 in the Employees’ system,
removing the pre Social Security Supplement from DROP accounts in the Employees’ system and the
Uniformed system, and placing a cap on the use of sick leave for retirement purposes at 2,080 hours for
all three retirement systems.
Other Post-Employment Benefits (OPEB)
In fiscal year 2008, the County and FCPS implemented the Governmental Accounting Standards
Board Statement No. 45, Accounting and Financial Reporting by Employers for Benefits
Postemployment Benefits Other Than Pensions. The County provides health care and life insurance
benefits to eligible retirees and their spouses. Fairfax County is one of the founding participants in the
Virginia Pooled OPEB Trust Fund sponsored by the Virginia Municipal League and the Virginia
Association of Counties (VML/VACo). The Virginia Pooled OPEB Trust Fund was established as an
investment vehicle for participating employers to accumulate assets to fund Other Public Employment
Benefits (OPEB).
At June 30, 2013, the County had actuarial plan assets of $103.3 million and reported a net OPEB
asset of $1.5 million, representing that the annual required contributions (ARC) were slightly in excess of
actual contributions. As of the July 1, 2012, actuarial valuation, the County had an actuarial accrued
liability of $503.8 million and an ARC of $38.9 million.
FCPS also provides health insurance benefits to eligible retirees and their spouses and is a
participant in the Virginia Pooled OPEB Trust Fund. At June 30, 2013, FCPS had actuarial plan assets of
$53.4 million in the pooled trust fund and reported a net OPEB asset of $13.4 million. As of the July 1,
2012, actuarial valuation, FCPS had an actuarial accrued liability of $448.8 million and an ARC of $31.1
million.
58
CONTINGENT LIABILITIES AND CLAIMS
The County is contingently liable with respect to lawsuits and other claims that arise in the
ordinary course of its operations. See Note L in the County’s Financial Statements in Appendix IV to this
Official Statement for details as of the end of Fiscal Year 2013.
APPROVAL OF LEGAL PROCEEDINGS
Legal matters incident to the authorization and issuance of the Bonds are subject to the approval
of Sidley Austin LLP, Washington, D.C., Bond Counsel, the proposed form of whose opinion is included
herein as Appendix VI.
TAX MATTERS
Opinion of Bond Counsel
In the opinion of Sidley Austin LLP, Bond Counsel, except as provided in the following sentence,
interest on the Bonds will not be includable in the gross income of the owners of the Bonds for federal
income tax purposes under existing law. Interest on the Bonds will be includable in the gross income of
the owners thereof retroactive to the date of issue of the Bonds in the event of a failure by the County or
the School Board to comply with applicable requirements of the Internal Revenue Code of 1986, as
amended (the “Code”), and their respective covenants regarding the use, expenditure, and investment of
the proceeds of the Bonds and the timely payment of certain investment earnings to the United States
Treasury; and no opinion is rendered by Bond Counsel as to the effect on the exclusion from gross
income of the interest on the Bonds for federal income tax purposes of any action taken or not taken
without the approval of Bond Counsel or upon the advice or approval of counsel other than Bond
Counsel.
Interest on the Bonds will not be an item of tax preference for purposes of the federal individual
or corporate alternative minimum tax under the Code. Interest on the Bonds will, however, be included in
the calculation of alternative minimum tax liability imposed on corporations under the Code. The Code
contains other provisions (some of which are noted below) that could result in tax consequences, as to
which no opinion will be rendered by Bond Counsel, as a result of (i) ownership of the Bonds or (ii)
inclusion in certain computations of interest that is excluded from gross income.
Original Issue Discount
The excess, if any, of the amount payable at maturity of any maturity of the Bonds purchased as
part of the initial public offering over the issue price thereof constitutes original issue discount. The
amount of original issue discount that has accrued and is properly allocable to an owner of any maturity
of the Bonds with original issue discount (a “Discount Bond”) will be excluded from gross income for
federal income tax purposes to the same extent as interest on the Bonds. In general, the issue price of a
maturity of the Bonds is the first price at which a substantial amount of Bonds of that maturity was sold
(excluding sales to bond houses, brokers, or similar persons or organizations acting in the capacity of
underwriters, placement agents, or wholesalers) and the amount of original issue discount accrues in
accordance with a constant yield method based on the compounding of interest. A purchaser’s adjusted
basis in a Discount Bond is to be increased by the amount of such accruing discount for purposes of
determining taxable gain or loss on the sale or other disposition of such Discount Bonds for federal
income tax purposes.
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A portion of the original issue discount that accrues in each year to an owner of a Discount Bond
which is a corporation will be included in the calculation of the corporation’s federal alternative minimum
tax liability. In addition, original issue discount that accrues in each year to an owner of a Discount Bond
is included in the calculation of the distribution requirements of certain regulated investment companies
and may result in some of the collateral federal income tax consequences discussed herein.
Consequently, an owner of a Discount Bond should be aware that the accrual of original issue discount in
each year may result in an alternative minimum tax liability, additional distribution requirements or other
collateral federal income tax consequences although the owner of such Discount Bond has not received
cash attributable to such original issue discount in such year.
The accrual of original issue discount and its effect on the redemption, sale, or other disposition
of a Discount Bond that is not purchased in the initial offering at the first price at which a substantial
amount of such Bonds is sold to the public may be determined according to rules that differ from those
described above. Owners of a Discount Bond should consult their tax advisors with respect to the
determination for federal income tax purposes of the amount of original issue discount with respect to
such Discount Bond and with respect to state and local tax consequences of owning and disposing of such
Discount Bond.
Bond Premium
The excess, if any, of the tax basis of Bonds purchased as part of the initial public offering to a
purchaser (other than a purchaser who holds such Bonds as inventory, stock in trade, or for sale to
customers in the ordinary course of business) over the amount payable at maturity is “Bond Premium.”
Bond Premium is amortized over the term of such Bonds for federal income tax purposes (or, in the case
of a bond with bond premium callable prior to its stated maturity, the amortization period and yield may
be required to be determined on the basis of an earlier call date that results in the lowest yield on such
bond). Owners of such Bonds are required to decrease their adjusted basis in such Bonds by the amount
of amortizable Bond Premium attributable to each taxable year such Bonds are held. The amortizable
Bond Premium on such Bonds attributable to a taxable year is not deductible for federal income tax
purposes; however Bond Premium on such Bonds is treated as an offset to qualified stated interest
received on such Bonds. Owners of such Bonds should consult their tax advisors with respect to the
determination for federal income tax purposes of the treatment of Bond Premium upon sale, redemption
or other disposition of such Bonds and with respect to state and local income tax consequences of owning
and disposing of such Bonds.
Backup Withholding
Interest paid on the Bonds is subject to information reporting in a manner similar to interest paid
on taxable obligations. While this reporting requirement does not, by itself, affect the excludability of
interest on the Bonds from gross income for federal income tax purposes, the reporting requirement
causes the payment of interest on the Bonds to be subject to backup withholding if such interest is paid to
beneficial owners who (i) are not “exempt recipients,” and (ii) either fail to provide certain identifying
information (such as the beneficial owner’s taxpayer identification number) in the required manner or
have been identified by the Internal Revenue Service as having failed to report all interest and dividends
required to be shown on their income tax returns. Generally, individuals are not exempt recipients,
whereas corporations and certain other entities generally are exempt recipients. Amounts withheld under
the backup withholding rules from a payment to a beneficial owner would be allowed as a refund or a
credit against such beneficial owner’s federal income tax liability provided the required information is
furnished to the Internal Revenue Service.
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Other Tax Consequences
Under existing law, the interest on the Bonds is excluded from Virginia taxable income for
purposes of the individual income tax and the income taxation of corporations by the Commonwealth of
Virginia under Sections 58.1-322 and 58.1-402 of the Code of Virginia of 1950, as amended (the
“Virginia Code”), to the extent that such interest is excludable from gross income for federal income tax
purposes.
The Code and the Virginia Code contain other provisions (some of which are noted below) that
could result in tax consequences, upon which Bond Counsel expresses no opinion, as a result of
ownership of the Bonds or the inclusion in certain computations of interest on the Bonds that is excluded
from gross income for purposes of federal income taxation.
PROSPECTIVE PURCHASERS OF THE BONDS SHOULD CONSULT THEIR TAX
ADVISORS AS TO THE APPLICABILITY AND IMPACT OF ANY SUCH COLLATERAL TAX
CONSEQUENCES.
Ownership of tax-exempt obligations may result in collateral federal income tax consequences to
certain taxpayers, including, without limitation, financial institutions, property and casualty insurance
companies, certain foreign corporations doing business in the United States, certain S Corporations with
excess passive income, individual recipients of Social Security or Railroad Retirement benefits, taxpayers
who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt
obligations and taxpayers who may be eligible for the earned income tax credit.
Future Tax Developments
Future or pending legislative proposals, if enacted, regulations, rulings or court decisions may
cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation or to State or
local income taxation, or may otherwise prevent beneficial owners from realizing the full current benefit
of the tax status of such interest. Legislation or regulatory actions and future or pending proposals may
also affect the economic value of the federal or state tax exemption or the market value of the Bonds.
Prospective purchasers of the Bonds should consult their tax advisors regarding any future, pending or
proposed federal or State tax legislation, regulations, rulings or litigation as to which Bond Counsel
expresses no opinion.
For example, various proposals have been made in Congress and by the President (the “Proposed
Legislation”) which, if enacted, would subject interest on bonds that is otherwise excludable from gross
income for federal income tax purposes, including interest on the Bonds, to a tax payable by certain
bondholders that are individuals, estates or trusts with adjusted gross income in excess of thresholds
specified in the Proposed Legislation. It is unclear if the Proposed Legislation will be enacted, whether in
its current or an amended form, or if other legislation that would subject interest on the Bonds to a tax or
cause interest on the Bonds to be included in the computation of a tax, will be introduced or enacted.
Prospective purchasers should consult their tax advisors as to the effect of the Proposed Legislation, if
enacted, in its current form or as it may be amended, or such other legislation on their individual
situations.
FINANCIAL ADVISOR
The County has retained Public Financial Management, Inc., Arlington, Virginia, as financial
advisor (the “Financial Advisor”) in connection with the issuance of the Bonds. Although the Financial
Advisor assisted in the preparation and review of this Official Statement, the Financial Advisor is not
61
obligated to undertake, and has not undertaken to make, an independent verification or to assume
responsibility for the accuracy, completeness, or fairness of the information contained in this Official
Statement. The Financial Advisor is a financial advisory, investment management, and consulting
organization and is not engaged in the business of underwriting municipal securities.
VERIFICATION OF CERTAIN FINANCIAL COMPUTATIONS
The accuracy of (i) the arithmetical computations of the maturing principal and interest earned on
the federal securities in the escrow account established in the escrow agreement relating to the Refunded
Bonds to pay when due or at their respective redemption dates, the principal of, premium, if any, and
interest on the Refunded Bonds and (ii) the mathematical computations supporting the conclusion that the
Bonds are not “arbitrage bonds,” within the meaning of Section 148 of the Code, have been verified by
Robert Thomas CPA, LLC, Shawnee Mission, Kansas. Such verification has been based upon
information supplied by the Financial Advisor.
RATINGS
The Bonds have been rated “AAA” (stable outlook) by Fitch Ratings (“Fitch”), “Aaa” (negative
outlook) by Moody’s Investors Service, Inc. (“Moody’s”), and “AAA” (stable outlook) by Standard &
Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. (“Standard & Poor’s”). The
County requested that the Bonds be rated and furnished certain information to Fitch, Moody’s, and
Standard & Poor’s, including certain information that is not included in this Official Statement.
These ratings are not a recommendation to buy, sell, or hold the Bonds. Generally, rating
agencies base their ratings on such materials and information provided by the County, as well as
investigations, studies, and assumptions of the rating agencies. Such ratings may be changed at any time
and no assurance can be given that they will not be revised downward or withdrawn entirely by any or all
of such rating agencies, if, in the judgment of any or all, circumstances so warrant. Such circumstances
may include, without limitation, change in or unavailability of information relating to the County. Any
such downward revision or withdrawal of any of such ratings may have an adverse effect on the market
price of the Bonds.
SALE AT COMPETITIVE BIDDING
The Bonds will be offered for sale at competitive bidding on a date determined pursuant to the
provisions of the Notice of Sale relating to the Bonds (See Appendix VIII). After the Bonds have been
awarded, the County will issue an Official Statement in final form to be dated the date of the award. The
County will deem the Official Statement in final form as of its date, and the Official Statement in final
form will be a “Final Official Statement” within the meaning of Rule 15c2-12 under the Securities
Exchange Act of 1934, as amended. The Official Statement in final form will include, among other
matters, the identity of the winning bidder (the “Underwriter”), the expected selling compensation to the
Underwriter and other information on the interest rates and offering prices or yields of the Bonds, all as
supplied by the Underwriter.
CERTIFICATE CONCERNING OFFICIAL STATEMENT
Concurrently with the delivery of the Bonds, the Chairman of the Board of Supervisors and the
County Executive of the County will certify that, to the best of their knowledge, the Official Statement
did not as of its date, and does not as of the date of delivery of the Bonds, contain any untrue statement of
a material fact or omit to state a material fact that should be included therein for the purpose for which the
Official Statement is to be used, or that is necessary in order to make the statements contained therein, in
62
the light of the circumstances under which they were made, not misleading. Such certificate will also
state, however, that the Chairman of the Board of Supervisors and the County Executive of the County
did not independently verify the information indicated in this Official Statement as having been obtained
or derived from sources other than the County and its officers but that they have no reason to believe that
such information is not accurate.
MISCELLANEOUS
Any statements in this Official Statement involving matters of opinion or estimates, whether or
not expressly so stated, are intended as such and not as representations of fact. No representation is made
that any of the estimates will be realized.
FUTURE FINANCIAL INFORMATION
The Securities and Exchange Commission has adopted Rule 15c2-12 under the Securities
Exchange Act of 1934, as amended (the “Rule”). In general, the Rule prohibits an underwriter from
purchasing or selling municipal securities such as the Bonds, unless it has determined that the issuer of
such securities and/or other persons deemed to be material “obligated persons” have committed to provide
to The Electronic Municipal Market Access (“EMMA”) system administered by the Municipal Securities
Rulemaking Board (i) on an annual basis, certain financial information and operating data (“Annual
Reports”), and, if available, audited financial statements, and (ii) notice of various events described in the
Rule, if material (“Event Notices”).
The County will covenant in the Continuing Disclosure Agreement (the form of which appears in
Appendix VII), to be dated the date of delivery of the Bonds, for the benefit of the holders of the Bonds,
to provide to EMMA, annually, not later than March 31 of each year, commencing March 31, 2015,
Annual Reports with respect to itself, as issuer. Similarly, the County will provide Event Notices with
respect to the Bonds to EMMA.
In accordance with continuing disclosure undertakings (the “Sewer Undertakings”) relating to the
County’s sewer revenue bonds, the County agreed to provide and file certain annual financial and
statistical information (“Sewer System Annual Disclosure Reports”) relating to the County’s sanitary
sewer system (the “System”) as well as the County’s audited financial statements for the System (“Sewer
System Annual Financial Statements”). For the Fiscal Years ended June 30, 2009 and June 30, 2010, the
County prepared and filed the Sewer System Annual Disclosure Reports for each year. Such filings,
however, inadvertently did not include the prepared Sewer System Annual Financial Statements (the
“2009 and 2010 Sewer System Annual Financial Statements”) required to be included in such filings
pursuant to the terms of the Continuing Disclosure Undertakings, although the 2009 and 2010 Sewer
System Annual Financial Statements were timely posted to the County’s website. As of June 5, 2014, the
County has filed the 2009 and 2010 Sewer System Annual Financial Statements. In addition, as a
condition to the issuance of various series of revenue bonds (“UOSA Bonds”) issued by the Upper
Occoquan Service Authority for the benefit of the County and other jurisdictions, the County has agreed
pursuant to continuing disclosure undertakings (the “UOSA Undertakings”) to provide and file the Sewer
System Annual Disclosure Reports and Sewer System Annual Financial Statements. The 2009 and 2010
Sewer System Annual Financial Statements were filed pursuant to the UOSA Undertakings but not in a
timely manner and other filings were complete and timely but were not correctly cross-referenced to the
UOSA Bonds. The County has implemented procedures to ensure the inclusion of necessary information
in a timely manner in future filings required by the Sewer Undertakings and the UOSA Undertakings.
Pursuant to several continuing disclosure undertakings entered into relating to the Fairfax County
Economic Development Authority’s Transportation Contract Revenue Bonds (Route 28 Project), the
63
County provided all required information, except that it inadvertently did not include in its annual
information required under such undertakings a description of the twenty largest owners of real property
by assessed value in the State Route 28 Highway Transportation Improvement District. The County has
implemented procedures to ensure the inclusion of such information in future filings.
It should be noted, however, that while the County has timely filed each annual financial report
required by its continuing disclosure undertakings (except as described under this caption), the filings
with respect to certain bond issues were not cross-referenced to such bonds. Although such crossreferences are not specifically required by the undertakings, the County has implemented procedures to
ensure such cross-references in future filings.
Except as described under this caption, the County is currently in compliance with all of its
previous undertakings with regard to Rule 15c2-12.
PRELIMINARY OFFICIAL STATEMENT DEEMED FINAL
The distribution of this Preliminary Official Statement has been duly authorized by the Board of
Supervisors of the County. The County deems this Preliminary Official Statement final as of its date
within the meaning of Rule 15c2-12 of the Securities and Exchange Commission except for the omission
of certain pricing and other information permitted to be omitted by Rule 15c2-12.
BOARD OF SUPERVISORS OF FAIRFAX
COUNTY, VIRGINIA
_____________________________
By:
, Chairman
64
I-1
McLean
Community Center
Reston
Community Center
Fairfax-Falls Church
Community Services Board
Board of Zoning Appeals
Department of Community
and Recreation Services
Department of
Family Services
Health
Department
Juvenile & Domestic
Relations District Court
Fairfax-Falls Church
Community Services Board
Department of Housing and
Community Development
Office of Human Rights
Department of Systems
Management for Human Services
Deputy County Executive*
Civil Service
Commission
Fairfax County
Public Library Board
Clerk of the Circuit Court
Office of the Commonwealth’s Attorney
Office of the Sheriff
Department of Administration
for Human Services
Human Rights
Commission
Redevelopment and
Housing Authority
Office of Elections
Circuit Court and Records
General District Court
Juvenile & Domestic Relations District Court
Language Access Coordinator
Economic Development
Authority
Department of Purchasing
and Supply Management
Department of
Human Resources
Facilities Management
Department
Environmental
Coordinator
Office of Emergency
Management
Department of
Transportation
Department of Public Works
and Environmental Services
Department of
Finance
Department of
Tax Administration
Fire and Rescue
Department
REPORTING RELATIONSHIPS.
- Economic Development Authority
- Fairfax County Library Board
Deputy County Executive has liaison with:
- Fairfax-Falls Church Community Services Board
- Redevelopment and Housing Authority
- McLean Community Center Governing Board
- Reston Community Center Governing Board
- Commission for Women
Deputy County Executive has liaison with:
For Development and Revitalization
- Housing and Community Development:
Management
- Health: For Environmental and Emergency
- Park Authority
- Water Authority
- Economic Development Authority
**** Deputy County Executive has liaison with:
(Retirement Board)
- Retirement Administration Agency
- Civil Service Commission
*** Deputy County Executive has liaison with:
**
*
DOTTED LINES INDICATE MULTIPLE
Fairfax County
Public Schools
Animal
Shelter
Police
Department
Department of Public Safety
Communications
Department of
Planning and Zoning
Deputy County Executive****
Fairfax County
Park Authority
Fairfax County
Water Authority
Superintendent
Department of
Management and Budget
Deputy County Executive***
Government Relations
Office of Partnerships
Office of Equity Programs
Office of the Internal Auditor
Retirement
Administration Agency
Fairfax County
School Board
Department of
Vehicle Services
Department of
Cable Communications
and Consumer Protection
Department of
Information Technology
Deputy County Executive**
Office of Community
Revitalization and
Reinvestment
Gang Prevention Coordinator
Fairfax County
Public Library
HIPAA
Coordinator
County Executive
Office of Public Affairs
Planning
Commission
Office of the
County Attorney
Office of the Financial
and Program Auditor
Clerk to the
Board of Supervisors
Board of Supervisors
CITIZENS
ORGANIZATION OF FAIRFAX COUNTY GOVERNMENT
Appendix I
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Appendix IV
KPMG LLP
Suite 12000
1801 K Street, NW
Washington, DC 20006
Independent Auditors’ Report
The Board of Supervisors
County of Fairfax, Virginia:
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business-type
activities, the aggregate discretely presented component units, each major fund, and the aggregate
remaining fund information of the County of Fairfax, Virginia, (the County), as of and for the year ended
June 30, 2013, and the related notes to the financial statements, which collectively comprise the County’s
basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with U.S. generally accepted accounting principles; this includes the design, implementation,
and maintenance of internal control relevant to the preparation and fair presentation of financial statements
that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We did not audit
the financial statements of the Fairfax County Redevelopment and Housing Authority (FCRHA), a
discretely presented component unit of the County, which represent 7%, 4%, and 4%, respectively, of total
assets, net assets, and revenues of the aggregate discretely presented component units. Those financial
statements were audited by other auditors whose report thereon has been furnished to us, and our opinion
on the County’s aggregate discretely presented component units financial statements, insofar as it relates to
the amounts included for the FCRHA, is based solely on the report of the other auditors.
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States; and the Specifications for Audits of Counties,
Cities and Towns, issued by the Auditor of Public Accounts of the Commonwealth of Virginia
(Specifications). Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditors’ judgment, including the assessment
of the risks of material misstatement of the financial statements, whether due to fraud or error. In making
those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair
presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal
control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of significant accounting estimates made by management,
as well as evaluating the overall presentation of the financial statements.
KPMG LLP is a Delaware limited liability partnership,
the U.S. member firm of KPMG International Cooperative
(“KPMG International”), a Swiss entity.
The Fairfax County Board of Supervisors
November 22, 2013
Page 2 of 2
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, the business-type activities, the aggregate
discretely presented component units, each major fund, and the aggregate remaining fund information of
the County, as of June 30, 2013, and the respective changes in financial position, and where applicable,
cash flows thereof for the year then ended in accordance with U.S. generally accepted accounting
principles.
Other Matters
Required Supplementary Information
U.S. generally accepted accounting principles require that the management’s discussion and analysis on
pages 3 through 16 and the required supplementary information and the notes to the required supplemental
information on pages 105 through 111 be presented to supplement the basic financial statements. Such
information, although not a part of the basic financial statements, is required by the Governmental
Accounting Standards Board who considers it to be an essential part of financial reporting for placing the
basic financial statements in an appropriate operational, economic, or historical context. We have applied
certain limited procedures to the required supplementary information in accordance with auditing standards
generally accepted in the United States of America, which consisted of inquiries of management about the
methods of preparing the information and comparing the information for consistency with management’s
responses to our inquiries, the basic financial statements, and other knowledge we obtained during our
audit of the basic financial statements. We do not express an opinion or provide any assurance on the
information because the limited procedures do not provide us with sufficient evidence to express an
opinion or provide any assurance.
Accounting Change
As discussed in Note N to the basic financial statements, the County implemented Governmental
Accounting Standards Board (GASB) Statement number 63, Financial Reporting of Deferred Outflows of
Resources, Deferred Inflows of Resources, and Net Position and except for the County Retirement System
early implemented GASB Statement number 65, Items Previously Reported As Assets and Liabilities. The
County has reclassified the deferred amount on refunding previously reported as assets and liabilities as
deferred outflows of resources and deferred inflows of resources, respectively. As a result of this
implementation, the County adjusted the 2013 opening balance for net position in order to expense bond
issuance costs in the period in which they were incurred.
November 22, 2013
Management’s
Discussion and Analysis
T
he Management’s Discussion and Analysis
subsection provides a narrative introduction
to and overview and analysis of the basic financial
statements. It includes a description of the
government-wide and fund financial statements,
as well as an analysis of the County of Fairfax’s
overall financial position and results of operations.
Management’s Discussion and Analysis (Unaudited)
This section of the County of Fairfax, Virginia’s (the County) Comprehensive Annual Financial Report
(CAFR) presents our discussion and analysis of the County’s financial performance during the fiscal year that
ended on June 30, 2013. We encourage readers to consider the information presented here in conjunction with
additional information that we have furnished in our Letter of Transmittal, located in the Introductory Section
of the CAFR.
Financial Highlights
Highlights for Government-wide Financial Statements
The government-wide financial statements report information about the County as a whole using the
economic resources measurement focus and accrual basis of accounting, net of special items.
•
The County’s assets and deferred outflow of resources exceeded liabilities and deferred inflow of
resources by $1,264.5 million on a government-wide basis at June 30, 2013.
•
For the fiscal year, taxes and other revenues of the County’s governmental activities amounted to
$4,044.2 million. Expenses amounted to $4,093.9 million.
•
For the fiscal year, revenues of the County’s business-type activities were $202.5 million, and
expenses were $169.2 million.
Highlights for Fund Financial Statements
The fund financial statements provide detailed information about the County’s most significant funds using
the current financial resources measurement focus and modified accrual basis of accounting.
•
The County’s governmental funds reported a decrease in fund balance of $79.4 million for fiscal year
2013, compared to a decrease of $29.0 million for fiscal year 2012.
•
The County’s General Fund reported a fund balance of $329.3 million, a decrease of $24.4 million, or
6.9 percent, from June 30, 2012.
General Financial Highlights
•
In September 2012, the Economic Development Authority issued $42.4 million of revenue bonds
(Silver Line Phase 1 Project) Series 2012 to finance a portion of the costs of the construction of the
first phase of an extension of the Washington Metropolitan Area Transit Authority’s mass transit
system in Fairfax County.
•
In January 2013, the County issued $206.3 million of Series 2013A General Obligation Public
Improvement to finance school, park, road, and other general County improvements. The County
also issued $128.0 million of Series 2013B general obligation refunding bonds to advance refund for
multiple outstanding Series bonds in order to save $14.0 million in future debt service payments, with
a $12.2 million net present value.
•
In February 2013, the Fairfax County Redevelopment and Housing Authority issued $24.7 million
of bond anticipation notes to current refund the outstanding Series 2011A bond anticipation notes
previously issued to refinance a portion of the purchase price of a multi-family rental housing facility.
Financial Section
3
Management’s Discussion and Analysis (unaudited)
Overview of the Financial Statements
The financial section of this annual report consists of four parts: (1) management’s discussion and analysis
(presented here), (2) basic financial statements, (3) required supplementary information, and (4) other
supplementary information.
Components of the Financial Section
The County’s basic financial statements
consist of two kinds of statements, each
with a different view of the County’s
Management’s
Required
Other
Basic
Discussion and
finances. The government-wide financial
Supplementary
Supplementary
Financial
Analysis
Information
Information
Statements
statements provide both long- and shortterm information about the County’s
overall financial status. The fund financial
statements focus on major aspects of
Notes to the
Fund
Government-wide
Financial
Financial
Financial
the County’s operations, reporting
Statements
Statements
Statements
those operations in more detail than the
government-wide statements. The basic
financial statements also include notes to explain information in the financial statements and provide more
detailed data.
The statements and notes are followed by required supplementary information that contains the budgetary
comparison schedule for the General Fund and trend data pertaining to the retirement systems. In addition to
these required elements, the County includes other supplementary information with combining and individual
fund statements to provide details about the governmental, internal service, and fiduciary funds; capital assets;
and component units.
Government-wide Financial Statements
The government-wide financial statements report information about the County as a whole using accounting
methods similar to those used by private-sector businesses. In addition, they report the County’s net position
and how they have changed during the fiscal year.
The first government-wide statement—the statement of net position—presents information on all of the
County’s assets and deferred outflow of resources less liabilities, and deferred inflow of resources, resulting in
the net position. Over time, increases or decreases in net position may serve as a useful indicator of whether
the financial health of the County is improving or deteriorating. Additionally, non-financial factors, such as a
change in the County’s property tax base or the condition of County facilities, should be considered to assess
the overall health of the County.
The second statement—the statement of activities—presents information showing how the County’s net
position changed during the fiscal year. All of the current year’s revenues and expenses are accounted for in
the statement of activities, regardless of when cash is received or paid.
The government-wide financial statements are divided into three categories:
Governmental Activities – Most of the County’s basic services are reported here, including public
safety; public works; judicial administration; health and welfare services; community development;
parks, recreation, and cultural programs; education; and general administration. These activities are
financed primarily by property taxes, other local taxes, and federal and state grants. Included in the
governmental activities are the governmental funds and internal service funds.
Business-type Activities – The County’s only business-type activity, the Integrated Sewer System
(Sewer System), is reported here.
4
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Management’s Discussion and Analysis
Discretely Presented Component Units – The County includes four other entities in its annual
financial report: Fairfax County Public Schools (Public Schools), Fairfax County Redevelopment and
Housing Authority (FCRHA), Fairfax County Park Authority (Park Authority), and Fairfax County
Economic Development Authority (EDA). Although legally separate, these component units are
included because the County is financially accountable for them.
The County’s governmental and business-type activities are collectively referred to as the primary
government. Together, the primary government and its discretely presented component units are referred to as
the reporting entity.
Fund Financial Statements
The fund financial statements provide detailed information about the County’s most significant funds. Funds
are accounting devices that the County uses to keep track of specific sources of funding and spending for
particular purposes. The County uses fund accounting to ensure and demonstrate compliance with financerelated legal requirements. The County has the following three types of funds:
Governmental Funds – Most of the County’s basic services are included in governmental funds,
which focus on (1) how cash and other financial assets that can readily be converted to cash flow in
and out and (2) the balances remaining at year-end that are available for spending. The governmental
funds financial statements provide a detailed short-term view that helps the reader determine
whether there are more or fewer financial resources that can be spent in the near future to finance the
County’s programs. Because this information does not encompass the additional long-term focus
of the governmental activities in the government-wide financial statements, additional information
is provided to explain the relationship (or differences). The General Fund accounts for the main
operating activities of the County; it is the largest of the governmental funds. All other governmental
funds, that is, include special revenue funds, debt service funds, and capital projects funds, are
collectively referred to as nonmajor governmental funds.
Proprietary Funds – Proprietary funds, which consist of enterprise funds and internal service funds,
are used to account for operations that are financed and operated in a manner similar to private
business enterprises in which costs are recovered primarily through user charges. Proprietary fund
financial statements, like the government-wide financial statements, provide both long- and shortterm financial information. The County’s only enterprise fund, the Sewer System, is reported as the
County’s business-type activity in the government-wide statements. The fund financial statements
provide additional information, such as cash flows, for the Sewer System. The internal service funds
are used to account for the provision of general liability, malpractice, and workers’ compensation
insurance; health benefits for employees and retirees; vehicle services; document services; and
technology infrastructure support to County departments on a cost reimbursement basis.
Fiduciary Funds – Fiduciary funds are used to account for resources held for the benefit of parties
outside the government. Fiduciary funds are not reflected in the government-wide financial
statements because the resources of those funds are not available to support the County’s programs.
The County’s fiduciary funds consist of pension trust funds, an OPEB trust fund and agency
funds. The pension trust funds are used to account for the assets held in trust by the County for the
employees and beneficiaries of its defined benefit pension plans—the Employees’ Retirement System,
the Police Officers Retirement System, and the Uniformed Retirement System. The OPEB trust fund
is used to account for the assets held in trust by the County for other post employment benefits. The
agency funds are used to account for monies received, held, and disbursed on behalf of developers,
welfare recipients, the Commonwealth of Virginia, the recipients of certain bond proceeds, and
certain other local governments.
Financial Section
5
Management’s Discussion and Analysis (unaudited)
Financial Analysis of the County as a Whole
Statement of Net Position
The following tables present a summary of the Statements of Net Position for the reporting entity as of June
30, 2013 and 2012:
Summary of Net Position
As of June 30
($ in millions)
Governmental
Activities
2013
Assets:
C urrent and other assets
$
C apital assets (net)
Total assets
Deferred outflow of resources:
Business-type
Activities
2012*
2013
$
Total
Primary Government
2012*
2013
$
2012*
4,329.4
4,288.5
291.1
210.9
4,620.5
4,499.4
2,397.2
2,290.8
1,350.9
1,303.5
3,748.1
3,594.3
6,726.6
6,579.3
1,642.0
1,514.4
8,368.6
8,093.7
45.3
45.9
18.0
6.1
63.3
52.0
Liabilities:
C urrent liabilities
641.7
318.7
42.4
36.7
684.1
355.4
3,088.3
3,323.5
645.6
544.9
3,733.9
3,868.4
Total liabilities
3,730.0
3,642.2
688.0
581.6
4,418.0
4,223.8
Deferred inflow of resources:
2,747.5
2,643.1
1.9
2.1
2,749.4
2,645.2
1,736.9
1,695.1
778.8
769.1
2,515.7
2,464.2
215.0
226.4
44.1
51.0
259.1
147.2
116.7
970.1
936.8
Long-term liabilities
Net position:
Net investment in
capital assets
Restricted
Unrestricted (deficit)
(1,657.5)
Net position
$
(1,581.6)
294.4
339.9
$
$
277.4
(1,510.3)
(1,464.9)
1,264.5
1,276.7
Summary of Net Position- continued
As of June 30
($ in millions)
Total
Primary Government
2013
Assets:
C urrent and other assets
C apital assets (net)
Total assets
Deferred outflow of resources:
Component
Units
2012*
2013
$
Reclassifications**
2012*
2013
$
2012
Total
Reporting Entity
2013
2012*
$ 5,382.0
$ 4,620.5
4,499.4
723.2
882.6
-
-
$ 5,343.7
3,748.1
3,594.3
2,831.0
2,809.7
-
-
6,579.1
6,404.0
8,368.6
8,093.7
3,554.2
3,692.3
-
-
11,922.8
11,786.0
63.3
52.0
0.5
-
-
63.8
52.0
-
Liabilities:
C urrent liabilities
684.1
355.4
194.7
259.6
-
-
878.8
615.0
3,733.9
3,868.4
218.0
296.8
-
-
3,951.9
4,165.2
Total liabilities
4,418.0
4,223.8
412.7
556.4
-
-
4,830.7
4,780.2
Deferred inflow of resources:
2,749.4
2,645.2
-
-
2,749.4
2,645.2
2,515.7
2,464.2
2,657.1
2,631.3
(1,463.4)
(1,341.4)
3,709.4
3,754.1
259.1
277.4
164.2
31.6
(133.0)
(112.0)
290.3
197.0
320.7
473.0
$ 3,142.0
3,135.9
Long-term liabilities
-
-
Net position:
Net investment in
capital assets
Restricted
Unrestricted (deficit)
Net position
(1,510.3)
$ 1,264.5
(1,464.9)
1,276.7
1,596.40
$
-
1,453.4
-
406.8
461.5
$ 4,406.5
4,412.6
*Fiscal Year 2012 amounts restated due to the implementation of GASB statement 65. See Note N on p. 103 for more information.
**Reclassifciation represents C ounty issued debt for Schools and Parks facilities. See Note A - 12 on p. 51 for more information.
6
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Management’s Discussion and Analysis
The Commonwealth of Virginia requires that counties, as well as their financially dependent component
units, be financed under a single taxing structure. This results in counties issuing general obligation debt
to finance capital assets, such as public schools, for their component units. The component units are then
responsible to account for and maintain the assets purchased or constructed with the debt proceeds. While
Governmental Accounting Standards Board (GASB) No. 14, The Financial Reporting Entity, requires that the
primary government and its component units, which make up the total financial reporting entity, be accounted
for separately on the face of the basic financial statements, the net position of the total financial reporting
entity best represent the entity’s financial position. The reclassification column represents the matching of
the primary government’s outstanding debt to the component units’ related capital assets from a financial
reporting entity perspective.
As noted earlier, net position may serve over time as a useful indicator of a government’s financial position.
For the reporting entity, assets and deferred outflow of resources exceeded liabilities and deferred inflow of
resources by $4,406.5 million at the end of fiscal year 2013, representing a decrease of $6.1 million from the
net position at June 30, 2012, as shown below.
Composition of Net Position
of the Reporting Entity
As of June 30
$4,500.0
$4,000.0
$3,500.0
Amounts in
Millions
$3,000.0
Unrestrict ed
$2,500.0
Restrict ed
$2,000.0
$1,500.0
Net investment in capital ass ets
$1,000.0
$500.0
$0.0
2013
As shown to the right, the largest portion of net
position is the net investment in capital assets (e.g.,
land, buildings, infrastructure, and equipment, net of
depreciation and amortization), less the outstanding
debt that was used to acquire those assets. The
restricted net position portion represents resources
that are subject to external restrictions on how
they may be used. Net position of the reporting
entity are restricted for various uses, some of which
include grant programs ($43.0 million), community
centers ($17.3 million), sewer improvements ($29.1
million), and housing ($22.8 million). The balance
of net position that are neither related to capital
assets nor restricted for specific uses is represented
as unrestricted net position.
Financial Section
2012
Composition of Net Position
of the Reporting Entity
As of June 30, 2013
Restricted
9.2%
Unrestricted
6.6%
Net investment in
capital assets
84.2%
7
Management’s Discussion and Analysis (unaudited)
Statement of Activities
The following table summarizes the changes in Net Position for the primary government for the fiscal years
ended June 30, 2013 and 2012:
Summary of Changes in Net Position
For the Fiscal Years Ended June 30
($ in millions)
Governmental
Activities
2013
Total
Primary
Government
2013
2012
Business-type
Activities
2012
2013
2012
Revenues:
Program revenues:
Charges for services
$
Operating grants and contributions
Capital grants and contributions
527.9
432.9
$ 721.9
621.8
239.5
256.1
$
194.0
-
188.9
-
239.5
256.1
22.3
29.7
7.1
14.0
29.4
43.7
2,123.8
2,057.9
-
-
2,123.8
2,057.9
353.3
317.0
-
-
353.3
317.0
General revenues:
Real property tax
Personal property tax
Business licenses tax
158.8
155.5
-
-
158.8
155.5
Local sales and use tax
265.0
257.8
-
-
265.0
257.8
Consumers utility tax
73.5
65.3
-
-
73.5
65.3
Other taxes
61.0
59.6
-
-
61.0
59.6
209.3
218.3
-
-
209.3
218.3
Unrestricted grants and contributions
Revenue from the use of money
Total revenues
9.8
14.8
1.4
0.5
11.2
15.3
4,044.2
3,864.9
202.5
203.4
4,246.7
4,068.3
201.4
201.4
201.4
201.4
Expenses:
General government administration
Judicial administration
**
-
-
46.3
54.7
-
-
46.3
54.7
Public safety
658.2
621.9
-
-
658.2
621.9
Public works
185.3
176.7
354.5
340.6
169.2
163.9
**
Health and welfare
542.1
562.2
-
-
542.1
562.2
Community development
387.6
393.5
-
-
387.6
393.5
Parks, recreation, and cultural
112.1
114.8
-
-
112.1
114.8
1,843.6
1,769.7
-
-
1,843.6
1,769.7
117.3
112.6
-
-
117.3
112.6
4,093.9
4,007.5
4,263.1
4,171.4
Education
Interest on long-term debt *
Total expenses
Increase (decrease) in net position before special item
(49.7)
(142.6)
169.2
163.9
33.3
39.5
(16.4)
(103.1)
33.3
39.5
4.2
(12.2)
3.5
(99.6)
936.8
897.3
1,276.7
1,376.3
970.1
936.8
** $ 1,264.5
1,276.7
**
**
Special items:
INOVA - Health
Increase (decrease) in net position
4.2
(45.5)
Beginning net position
Ending net position
$
3.5
(139.1)
339.9
479.0
294.4
339.9
** $
* For business-type activities, interest on long-term debt is included in the functional expense category.
**Fiscal Year 2012 expense amounts restated due to the implementation of GASB statement 65. See Note N on p. 103 for more information.
8
County of Fairfax, Virginia  Comprehensive Annual Financial Report
**
Management’s Discussion and Analysis
Governmental Activities
Revenues for the County’s governmental activities were $4,044.2 million for fiscal year 2013, representing
an increase of $179.3 million over fiscal year 2012. Sources of revenues for fiscal years 2013 and 2012 are
shown below:
Governmental Activities - Revenues by Source
For the Fiscal Years Ended June 30, 2013 and 2012
Sources of Revenues
Other
2012
2013
Local sales and use tax
Unrestricted grants and contributions
Charges for services
Program-specific grants and contributions
Personal property tax
Other taxes
Real property tax
$0.0
$400.0
$800.0
$1,200.0
$1,600.0
$2,000.0
$2,400.0
Amounts in Millions
Taxes constitute the largest source of County revenues, amounting to $3,035.4 million for fiscal year 2013,
an increase of $122.3 million over fiscal year 2012, primarily due to real property taxes. Real property taxes
($2,123.8 million) represent 70.0 percent of total taxes and over half of all revenues combined. Unrestricted
grants and contributions include $211.3 million in revenues from the Commonwealth of Virginia to reimburse
Fairfax County as part of the Personal Property Tax Relief Act (see Note C to the financial statements).
Governmental Activities - Expenses by Function
For the Fiscal Years Ended June 30, 2013 and 2012
Amounts in Millions
$2,100.0
$1,800.0
2013
2012
$1,500.0
$1,200.0
$900.0
$600.0
Financial Section
Judicial
administration
Interest on longterm debt
General government
administration
Functions
Parks, recreation,
and cultural
Public works
Community
development
Health and welfare
Public safety
$0.0
Education
$300.0
9
Management’s Discussion and Analysis (unaudited)
Total cost of all of the County’s governmental activities for fiscal year 2013 was $4,093.9 million,
representing an increase of $86.4 million over fiscal year 2012. As the chart below indicates, education
continues to be the County’s largest program. Education expenses totaled about $1.84 billion in fiscal year
2013, supporting school operations and to service debt for bond-funded projects to build new schools and
renew older facilities. Public safety expenses represent the second largest expense category, totaling $658.2
million in fiscal year 2013. Public safety expenses increased $36.3 million compared with $3.1 million in
fiscal year 2012, primarily due market rate adjustments, 2.5 percent performance-based scale and salary
increase for non-uniformed merit
Net Cost of County's Governmental Activities
employees, and the reinstatement
For the Fiscal Years Ended June 30
of merit and longevity increases
($ in millions)
for uniformed employees.
The table on the right shows the
total cost of each of the County’s
six largest programs—education,
public safety, health and welfare,
community development, public
works, and general government
administration—and the net
cost of each program (total
cost less fees generated by the
programs and program-specific
intergovernmental aid).
Total
Cost of Services
Functions/Programs
Education
2013
2012
Net
Cost of Services
2013
2012
$ 1,843.6
1,769.7
$ 1,843.6
Public safety
658.2
621.9
542.1
1,769.7
504.0
Health and welfare
542.1
562.2
338.6
349.4
216.3
C ommunity development
387.6
393.5
131.6
Public works
185.3
176.7
50.3
44.8
General government administration
201.4
201.4
161.8
137.7
Other
275.7
282.1
236.1
247.7
Total
$ 4,093.9
4,007.5
$ 3,304.1
3,269.6
Some of the cost of governmental
activities was paid by those who directly benefited from the programs, which was $527.9 million. Other
governments and organizations that subsidized certain programs with grants and contributions was $261.8
million. Of the $3,304.1 million net cost of services, the amount that taxpayers paid for these programs
through County taxes was $3,035.4 million.
Business-type Activities
The Sewer System recovers its costs primarily through user service charges and availability fees. For
fiscal year 2013, the Sewer System reported an increase in net position of $33.3 million. Total revenues of
the Sewer System decreased $0.9 million over fiscal year 2012. This decrease was primarily the result of
decreases in availability charges and contributions from the Commonwealth of Virginia not fully covered by
increases in service charges.
Total expenses of the Sewer System for fiscal year 2013 were $169.2 million, increasing by $5.3 million over
fiscal year 2012. This increase resulted primarily from increases in the cost for bond interest and personnel
services.
Financial Analysis of the County’s Funds
As noted earlier, the County uses fund accounting to ensure and demonstrate compliance with finance-related
legal requirements. The focus of the County’s governmental funds is to provide information on near-term
inflows, outflows, and balances of spendable resources. Such information is useful in assessing the County’s
financing requirements. Fund balance classifications are reported by purpose within these classifications;
nonspendable, restricted, committed, assigned, and unassigned as defined by GASB 54.
As of June 30, 2013, the County’s governmental funds had a combined fund balance of $1,045.1 million,
compared with $1,124.5 million at June 30, 2012. Of the fiscal year 2013 fund balance, $34.8 million is
assigned in the General Fund, indicating that it is not available for new spending because it has already
been committed for items such as existing purchase orders, construction contracts and loan repayments.
Approximately 23.3 percent ($76.8 million) of the total 2013 General fund balance is unassigned,
10
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Management’s Discussion and Analysis
representing resources not associated with a specified purpose. Of the total nonmajor fund balance, 69.7
percent ($728.2 million) has been restricted or committed in the special revenue, capital projects, and debt
service funds to meet the program needs. Nonspendable prepaid expenditures are 0.1 percent ($1.5 million)
of the total fund balance. At June 30, 2013, $179.4 million of the General Fund’s committed fund balance
of $216.9 million is designated for the managed reserve and revenue stabilization fund based on Fiscal Year
2014 projections.
For the fiscal year ended June 30, 2013, fund balances for all governmental funds decreased by $79.4 million,
compared with the $29.0 million decrease for fiscal year ended June 30, 2012. Total revenues, other financing
sources, and special item were $5,099.7 million, total expenditures and other financing uses were $5,179.1
million, resulting in the decrease to the fund balances.
The General Fund is the main operating fund of the County. At the end of the current fiscal year, the
unassigned fund balance was $76.8 million, which represents approximately 2.5 percent of the General Fund’s
total expenditures. Revenues of $3,498.9 million, less expenditures of $3,048.1 million and other financing
uses of $475.2 million, resulted in a net decrease in fund balance of $24.4 million, primarily to support a 2.18
percent market rate adjustment, a 2.5 percent performance-based increase for non-uniformed employees,
and merit and longevity increases for uniformed employees. It should be noted that some utilization of fund
balance is generally expected each year as the County uses savings from prior years held in fund balance to
offset disbursement requirements.
The County’s enterprise fund provides the same type of information found in the government-wide financial
statements, as the basis of accounting is the same. Factors relating to the financial results of the Sewer
System have been addressed in the discussion of the County’s business-type activities.
General Fund Budgetary Highlights
The final amended budget appropriations, which include expenditures and transfers out, were more than the
original budget amounts by $54.8 million or 1.5 percent. This increase is due primarily to the carryover of
prior-year commitments. The final amended budget revenues and transfers was less than the original budget
by $8.0 million or 0.2 percent, primarily due to the decrease in the Child Care Assistance and Referral
Program for Intergovernmental Revenue.
Actual revenues exceeded final budget amounts by $31.9 million, while actual expenditures were $62.7
million less than final budget amounts. Highlights of the comparison of final budget to actual figures for the
fiscal year ended June 30, 2013, include the following:
•
Tax revenues exceeded budgeted amounts by $27.7 million. The increase is primarily due to the
result of increases in Real Estate Taxes, Personal Property Tax receipts, and Other Local taxes.
•
Permits, privilege fees, and regulatory licenses were $2.5 million more than budgeted amounts
primarily due to higher than projected receipts for Building and Inspection Fees.
•
Charges for services revenues were $1.7 million more than budgeted amounts primarily due to higher
than projected Emergency Medical Services (EMS) Transport and Clerk Fees.
•
General government administration expenditures were $8.8 million, or 8.2 percent, less than budgeted
amounts as a result of managing position vacancies, overtime and encumbrances carried forward to
the next fiscal year.
•
Public safety expenditures were $15.8 million, or 3.7 percent, less than budgeted amounts mainly
as a result of savings associated with managing position vacancies and overtime, personnel savings
resulting from no major emergencies, reducing the size and scope of training classes, as well as the
carryforward of encumbrances.
Financial Section
11
Management’s Discussion and Analysis (unaudited)
•
Health and welfare expenditures were $19.8 million, or 6.6 percent, less than budgeted amounts due
to lower than anticipated costs in the Comprehensive Services Act (CSA), a delay in one time funding
associated with the procurement of a new Electronic Health Record (EHR), which is needed to meet
federal health information technology requirements, and encumbered carryover.
•
Nondepartmental expenditures were $5.9 million, or 2.1 percent, less than budgeted amounts primarily
due to savings in group health insurance and contributions to the three County Retirement Systems.
Capital Assets and Long-term Debt
Capital Assets
The County’s investment in capital assets as of June 30, 2013, amounted to $3.7 billion (net of accumulated
depreciation and amortization), which represents an increase of $153.8 million, or 4.3 percent, over last year.
Capital assets as of June 30, 2013 and 2012, are summarized below:
Capital Assets
As of June 30
($ in millions)
Governmental
Activities
2013
Land
$
Easements
Buildings, improvements, and infrastructure
Software
Total
Primary
Government
Business-type
Activities
2012
418.4
417.8
3.6
2,064.3
2013
$
2012
2013
$
435.8
2012
17.4
17.4
3.6
0.4
0.4
4.0
435.2
4.0
2,012.7
1,134.8
1,109.7
3,199.1
3,122.4
86.8
70.6
-
-
86.8
70.6
Equipment and library collections
472.1
461.3
12.2
11.6
484.3
472.9
C onstruction in progress
309.9
208.1
115.1
85.7
425.0
293.8
12.7
21.3
-
-
12.7
21.3
3.9
4.4
-
-
3.9
4.4
-
-
Equipment under construction
Software in development
Purchased capacity
Total capital assets
3,371.7
3,199.8
869.0
823.6
869.0
823.6
2,148.9
2,048.4
5,520.6
5,248.2
(1,772.5)
(1,653.9)
Less: Accumulated depreciation and
amortization
Total capital assets, net
(974.5)
$
2,397.2
(909.1)
2,290.7
(798.0)
$ 1,350.9
(744.8)
1,303.6
$ 3,748.1
3,594.3
The major capital asset activities for fiscal year 2013 included the following:
•
The ongoing costs associated with the upgrade of County and Schools legacy mainframe systems were
$8.2 million during fiscal year 2013.
•
Fairfax County investment in the Metrorail extension with fiscal year 2013 expenditures of $30 million
for construction of the Wiehle Avenue Facility.
•
Developers’ contributions of sewer lines and manholes totaled $6.0 million.
•
Expenditures related to construction of the new stations supporting the Dulles Rail expansion were $48.4
million in fiscal year 2013.
12
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Management’s Discussion and Analysis
•
Improvements to citizen transportation, including bus and rail service, totaled $16.2 million.
•
The Sewer System’s share of the upgrade and operating costs of the Arlington County, City of Alexandria,
Upper Occoquan Service Authority, and the District of Columbia’s wastewater treatment facilities,
which provide service to certain County residents, was $3.1 million, $9.7 million, $4.9 million and $27.7
million, respectively.
Additional information related to the County’s capital assets can be found in Note F to the financial
statements on page 70.
Long-term Debt
There is no legal limit on the amount of long-term indebtedness that the County can at any time incur or have
outstanding. However, all general obligation bonded indebtedness must be approved by voter referendum
prior to issuance. The Board of Supervisors has established the following self-imposed limits with respect to
long-term debt:
•
A limit of $1.375 billion of general obligation bond sales over a five-year period, for an average
of $275 million annually, with a maximum of $300 million in any given year, excluding refunding
bonds;
•
A limitation that total long-term debt (excluding capital leases for equipment and sewer revenue
bonds) not exceed 3 percent of the total market value of taxable real and personal property in
the County and that annual debt service payments not exceed 10 percent of annual General Fund
expenditures and transfers out. For fiscal year 2013, these percentages were 1.19 percent and 8.20
percent, respectively.
In January 2013, the County issued $206.3 million of Series 2013A General Obligation Public Improvement
with a true interest cost of 2.52 percent and a premium of $43.7 million. Proceeds of $206.3 million are
being used to fund new facilities and improvements, as follows (in millions):
County facilities:
Transportation facilities......................... $ 7.6
​Public safety facilities........................... 15.2
Other purposes ..................................... 25.7
Park facilities................................................. 15.0
Transportation facilities................................. 15.0
Public Schools facilities................................ 127.8
Total bonds issued for new projects.............. $206.3
In January 2013, the County also issued $128.0 million of Series 2013B General Obligation Refunding Bonds
to advance refund for multiple outstanding Series bonds, thereby taking advantage of lower interest rates to
reduce the County’s debt service payments by $14.0 million over the next thirteen years and obtaining an
economic gain of $12.2 million.
In September 2012, the Economic Development Authority issued $42.4 million of revenue bonds (Silver
Line Phase 1 Project) Series 2012 to finance a portion of the costs of the construction of the first phase of an
extension of the Washington Metropolitan Area Transit Authority’s mass transit system in Fairfax County,
with a true interest cost of 3.62 percent and a premium of $6.3 million.
Financial Section
13
Management’s Discussion and Analysis (unaudited)
In February 2013, the Fairfax County Redevelopment and Housing Authority issued $24.7 million of bond
anticipation notes to current refund the outstanding Series 2011A bond anticipation notes previously issued to
refinance a portion of the purchase price of a multi-family rental housing facility, with a true interest cost of
0.80 percent.
The following is a summary of the County’s gross outstanding long-term debt as of June 30, 2013 and 2012:
Outstanding Long-term Debt
As of June 30
($ in millions)
Governmental
Activities
2013
Business-type
Activities
2012
2013
Total
Primary Government
2012
2013
2012
General obligation bonds issued for:
C ounty facilities
Public Schools facilities
Revenue bonds
Sewer revenue bonds
C apital leases and other
Total C ounty outstanding debt
$
737.4
731.4
1,311.5
734.4
-
$
-
-
1,286.0
-
716.7
-
-
34.2
43.4
$ 2,817.5
2,777.5
642.9
$
642.9
$
737.4
731.4
-
1,311.5
1,286.0
-
734.4
716.7
642.9
552.2
552.2
552.2
34.2
43.4
$ 3,460.4
3,329.7
Additional information related to the County’s long-term debt can be found in Note J to the financial
statements on page 88.
Economic Factors and Next Year’s Budget and Rates
The following economic factors are reflected in the General Fund budget for fiscal year 2014:
•
The assessed value of all real property increased by $6.8 billion, or 3.40 percent, over the fiscal year
2013 value. This resulted from a moderate increase in existing residential property values and new
construction in the County.
•
Equalized residential property assessments rose up to 3.50 percent and non-residential equalization
increased .14 percent for fiscal year 2014. Existing residential property values have increased in each
of the last three years indicating the continued stabilization of the residential housing market.
•
Personal property tax revenue is projected to increase 1.1 percent in fiscal year 2014. The total
vehicle volume is forecast to increase .7 percent in fiscal year 2014. There is no longer a lack of
vehicle supply and depreciation of vehicles has returned to more normal levels.
•
Revenue from investments is expected to increase 11.2 percent, a result of increasing the County’s
Core portfolio by $750 million which is anticipated to increase overall yield from 0.50 percent to 0.53
percent.
The fiscal year 2014 Adopted Budget includes revenues of $3.56 billion, or a 2.7 percent increase over the
fiscal year 2013 Revised Budget Plan. Real and personal property taxes represent the majority of budgeted
revenues, comprising approximately 77.4 percent of the fiscal year 2014 General Fund revenues. Revenue
from real property taxes alone makes up 62.0 percent of total revenues, as compared with approximately 60.9
percent in the fiscal year 2013 Adopted Budget.
Budgeted disbursements, which include expenditures and transfers out, are $3.59 billion, a 0.2 percent
decrease from the fiscal year 2013 Revised Budget Plan. County funding for Public Schools is $1.89 billion –
14
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Management’s Discussion and Analysis
approximately 52.7 percent of the County’s total General Fund budget. This funding supports operating costs,
school construction, and debt service. Total direct expenditure funding decreased by $22.7 million, or 1.7
percent, over fiscal year 2013.
The following tax rate and fee adjustments were approved for fiscal year 2014:
•
Real estate tax rate was increased from $1.075 to $1.085 per $100 of assessed value.
•
Commercial real estate tax rate for County transportation increased from $0.11 to $0.125 per $100 of
assessed value, levied on commercial and industrial properties.
•
Special real estate tax rate collected on all properties within Small District 1, Dranesville for the
McLean Community Center remains at $0.022 per $100 of assessed value. The rate collected on all
properties within Small District 5, Hunter Mill for the Reston Community Center remains at $0.047
per $100 of assessed value.
•
The sewer availability charge for new single-family homes remains at $7,750 per unit. Sewer service
rate remains at $6.55 per 1,000 gallons of water consumption.
•
Refuse collection rate for County collection sanitation districts remains at $345 per household and the
refuse disposal rate remains at $60 per ton.
•
The Stormwater Services rate remains at $0.02 per $100 of assessed value.
•
A special real estate tax rate collected on all properties within the Tysons Service District is instituted
at a rate of $0.04 per $100 of assessed value.
•
Special tax rate for the Dulles Rail Phase 1 Transportation Improvement District decreased from
$0.22 to $0.21 per $100 of assessed value, levied on commercial and industrial properties in the
district.
•
Special tax rate for the Dulles Rail Phase 2 Transportation Improvement District increased from $0.15
to $0.20 per $100 of assessed value, levied on commercial and industrial properties in the district.
The Board has maintained the dedication of one-half penny of the real estate tax rate for the preservation
of Affordable Housing. Funding adjustments and strategies have been incorporated in the fiscal year 2014
Adopted Budget Plan to continue to address the County’s commitment to achieving the strategic priorities
of a strong investment in education; public safety and gang prevention; affordable housing; environmental
protection; transportation improvements; and revenue diversification to reduce the burden on the homeowner.
Other potentially significant matters
Legislation passed by the VA General Assembly during the 2012 special session mandated that beginning July
1, 2012, newly hired employees that participate in the Virginia Retirement System (VRS) must fully pay the
employee retirement contribution of five percent. For existing employees, school divisions and localities were
able to choose to either shift the entire cost to employees beginning July 1, 2012, or phase in the shift over a
five year period. To help offset the financial impact of transitioning the cost to employees, the state required
employers to increase salaries for existing employees by the same percentage employees were required to
contribute effective July 1, 2012. Fairfax County Public Schools (FCPS), a discretely presented component
unit of Fairfax County, began implementation of the mandate with a two percent shift in fiscal year 2013.
Additional information regarding this or other matters that may impact FCPS may be found in the FCPS
Comprehensive Annual Financial Report. Information regarding the relationship of FCPS to the County and
how to request component unit reports may be found on page 36. Information regarding participation in VRS
may be found beginning on page 78.
Financial Section
15
Management’s Discussion and Analysis (unaudited)
Contacting the County’s Financial Management
This financial report is designed to provide our residents, taxpayers, customers, and investors and creditors
with a general overview of the County’s finances and to demonstrate the County’s accountability for the
money it receives. If you have questions about this report or need additional financial information, contact the
County of Fairfax, Virginia, Department of Finance, 12000 Government Center Parkway, Fairfax, Virginia,
22035. This report can also be found on the County’s web site at www.fairfaxcounty.gov.
16
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Basic Financial Statements
T
he Basic Financial Statements subsection
includes the government-wide statements,
which incorporate governmental and business-type
activities of the County of Fairfax and activities of
component units in order to provide an overview of
the financial position and results of operations for the
reporting entity. This subsection also includes the
fund financial statements of the County and the
accompanying notes to the financial statements.
Basic Financial Statements
Financial Section
17
Basic Financial Statements
County of Fairfax, Virginia
Statement of Net Position
June 30, 2013
Primary Government
Governmental
Activities
ASSETS
Equity in pooled cash and temporary investments
C ash in banks
Investments
Receivables (net of allowances):
Accounts
Accrued interest
Property taxes:
Delinquent
Not yet due
Business license taxes - delinquent
Loans
Notes
Due from intergovernmental units (net of allowances):
Property tax relief:
Property tax relief - not yet due
Other
Due from primary government
Due from component units
Loan to component unit
Lease to component unit
Interfund receivables
Inventories of supplies
Prepaid and other assets
Restricted assets:
Equity in pooled cash and temporary investments
C ash with fiscal agents
C ertificates of deposit - performance bonds
Investments
Unearned financing fees (net of amortization)
Net OPEB Asset
Land held for sale
C apital assets:
Non-depreciable/non-amortizable:
Land
Easements
C onstruction in progress
Equipment under construction
Software in development
Depreciable/amortizable:
Equipment
Software
Library collections
Purchased capacity
Buildings and improvements
Infrastructure
Accumulated depreciation
Accumulated amortization
Total assets
DEFERRED OUTFLOWS OF RESOURCES
Deferred loss on refunding of debt
Total deferred outflows of resources
See accompanying notes to the financial statements.
18
$
$
Total
Primary
Government
Business-type
Activities
1,257,178,997
-
113,392,387
-
1,370,571,384
-
27,196,677
4,006,412
208,793
2,774
27,405,470
4,009,186
20,372,875
2,434,206,366
3,150,507
57,572,425
-
-
20,372,875
2,434,206,366
3,150,507
57,572,425
-
211,313,944
75,114,036
363,342
12,832,200
51,480,000
270,125
2,131,637
1,463,140
45,520,211
(270,125)
402,306
-
211,313,944
120,634,247
363,342
12,832,200
51,480,000
2,533,943
1,463,140
40,009,597
129,105,144
34,428
1,515,610
-
94,875,160
15,035,893
21,920,400
-
134,884,757
144,141,037
34,428
21,920,400
1,515,610
-
418,402,250
3,555,058
309,940,835
12,655,371
3,917,834
17,407,323
406,829
115,149,188
-
435,809,573
3,961,887
425,090,023
12,655,371
3,917,834
384,571,807
86,797,615
87,485,754
1,341,750,545
722,637,965
(967,406,773)
(7,072,956)
6,726,552,767
12,179,421
869,047,701
88,398,832
1,046,377,246
(540,574,645)
(257,456,512)
1,642,023,182
45,313,702
45,313,702
18,000,552
18,000,552
396,751,228
86,797,615
87,485,754
869,047,701
1,430,149,377
1,769,015,211
(1,507,981,418)
(264,529,468)
8,368,575,949
63,314,254
63,314,254
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Basic Financial Statements
Exhibit A
Total
C omponent
Units
Total
Reporting
Entity
Reclassifications
(See Note A-12)
429,394,826
12,691,060
3,685,186
-
5,037,697
560,958
-
26,463,220
-
63,467,012
2,547,390
2,734,210
4,839,497
-
134,932,122
17,121,396
2,195,032
2,021,115
1,108,177
13,392,985
1,026,747
-
433,926,474
17,016,009
208,617,693
6,265,521
-
283,414,586
4,865,424
34,769,180
3,620,005,573
(1,775,385,238)
(2,474,501)
3,554,239,351
545,888
545,888
-
-
ASSETS
1,799,966,210 Equity in pooled cash and temporary investments
12,691,060 C ash in banks
3,685,186 Investments
Receivables (net of allowances):
Accounts
32,443,167
Accrued interest
4,570,144
Property taxes:
Delinquent
20,372,875
Not yet due
2,434,206,366
Business license taxes - delinquent
3,150,507
57,572,425
Loans
Notes
26,463,220
Due from intergovernmental units (net of allowances):
Property tax relief:
211,313,944
Property tax relief - not yet due
184,101,259
Other
2,547,390 Due from primary government
363,342 Due from component units
12,832,200 Loan to component unit
51,480,000 Lease to component unit
- Interfund receivables
5,268,153 Inventories of supplies
6,302,637 Prepaid and other assets
Restricted assets:
Equity in pooled cash and temporary investments
269,816,879
C ash with fiscal agents
161,262,433
C ertificates of deposit - performance bonds
2,229,460
Investments
23,941,515
1,108,177 Unearned financing fees (net of amortization)
14,908,595 Net OPEB Asset
1,026,747 Land held for sale
C apital assets:
Non-depreciable/non-amortizable:
Land
869,736,047
Easements
20,977,896
C onstruction in progress
633,707,716
12,655,371
Equipment under construction
10,183,355
Software in development
Depreciable/amortizable:
Equipment
680,165,814
91,663,039
Software
Library collections
122,254,934
869,047,701
Purchased capacity
Buildings and improvements
5,050,154,950
Infrastructure
1,769,015,211
Accumulated depreciation
(3,283,366,656)
(267,003,969)
Accumulated amortization
11,922,815,300
Total assets
63,860,142
63,860,142
DEFERRED OUTFLOWS OF RESOURCES
Deferred loss on refunding of debt
Total deferred outflows of resources
continued
Financial Section
19
Basic Financial Statements
County of Fairfax, Virginia
Statement of Net Position
June 30, 2013
Primary Government
Governmental
Business-type
Activities
Activities
LIABILITIES
Accounts payable and accrued liabilities
Accrued salaries and benefits
C ontract retainages
Accrued interest payable
Due to primary government
Due to component units
Unearned revenue
Performance and other deposits
Long-term liabilities:
Portion due or payable within one year:
General obligation bonds payable, net
Revenue bonds payable, net
Notes payable, net
C ompensated absences payable
Landfill closure and postclosure obligation
Obligations under capital leases and installment purchases
Insurance and benefit claims payable
Loan from primary government
Unearned Rent
Other
Portion due or payable after one year:
General obligation bonds payable, net
Revenue bonds payable, net
Notes payable, net
C ompensated absences payable
Landfill closure and postclosure obligation
Obligations under capital leases and installment purchases
Insurance and benefit claims payable
Net pension obligation
Loan from primary government
Unearned Rent
Other
Total liabilities
$
DEFERRED INFLOWS OF RESOURCES
Deferred tax revenue
Unavailable revenue
Deferred gain on refunding of debt
Total deferred inflows of resources
NET POSITION
Net investment in capital assets
Restricted for:
Grant programs
Sewer improvements
Repair and replacement
C ommunity centers
Housing
Transportation
C apital projects
Debt service
Unrestricted (deficit)
Net position
$
Total
Primary
Government
97,039,287
43,814,515
5,940,807
36,375,398
2,547,390
38,761,380
87,008,067
1,183,979
671,023
10,271,510
7,241,935
-
98,223,266
44,485,538
16,212,317
43,617,333
2,547,390
38,761,380
87,008,067
202,106,457
27,052,289
3,830,000
63,235,119
1,728,922
29,514,308
2,708,008
21,800,736
1,223,124
-
202,106,457
48,853,025
3,830,000
64,458,243
1,728,922
29,514,308
2,708,008
2,024,778,529
742,609,603
28,882,500
44,473,603
68,181,679
1,749,072
29,165,535
119,219,051
29,206,712
3,729,928,231
644,676,583
964,124
688,033,014
2,024,778,529
1,387,286,186
28,882,500
45,437,727
68,181,679
1,749,072
29,165,535
119,219,051
29,206,712
4,417,961,245
2,743,662,768
3,707,409
134,536
2,747,504,713
1,931,477
1,931,477
2,743,662,768
3,707,409
2,066,013
2,749,436,190
1,736,906,426
778,825,722
2,515,732,148
42,950,228
17,256,610
154,743,247
(1,657,422,986)
294,433,525
29,078,061
15,035,893
147,119,567
970,059,243
42,950,228
29,078,061
17,256,610
154,743,247
15,035,893
(1,510,303,419)
1,264,492,768
See accompanying notes to the financial statements.
20
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Basic Financial Statements
Exhibit A
concluded
Total
C omponent
Units
Total
Reporting
Entity
Reclassifications
(See Note A-12)
44,086,390
36,804,338
7,447,673
5,461,893
363,342
22,147,125
3,878,439
-
142,309,656
81,289,876
23,659,990
49,079,226
363,342
2,547,390
60,908,505
90,886,506
756,121
7,158,762
27,339,593
14,056,827
24,807,564
243,700
101,339
-
-
202,106,457
49,609,146
10,988,762
91,797,836
15,785,749
54,321,872
243,700
101,339
2,708,008
30,745,820
60,454,884
13,084,099
70,891,107
28,377,756
12,588,500
1,853,665
412,648,937
-
2,024,778,529
1,418,032,006
89,337,384
58,521,826
68,181,679
72,640,179
57,543,291
119,219,051
12,588,500
1,853,665
29,206,712
4,830,610,182
-
-
2,743,662,768
3,707,409
2,066,013
2,749,436,190
2,657,066,914
(1,463,376,942)
6,519,094
700,000
22,799,619
134,232,122
61,115
320,757,438
3,142,136,302
(132,956,341)
1,596,333,283
-
Financial Section
LIABILITIES
Accounts payable and accrued liabilities
Accrued salaries and benefits
C ontract retainages
Accrued interest payable
Due to primary government
Due to component units
Unearned revenue
Performance and other deposits
Long-term liabilities:
Portion due or payable within one year:
General obligation bonds payable, net
Revenue bonds payable, net
Notes payable, net
C ompensated absences payable
Landfill closure and postclosure obligation
Obligations under capital leases and installment purchases
Insurance and benefit claims payable
Loan from primary government
Unearned Rent
Other
Portion due or payable after one year:
General obligation bonds payable, net
Revenue bonds payable, net
Notes payable, net
C ompensated absences payable
Landfill closure and postclosure obligation
Obligations under capital leases and installment purchases
Insurance and benefit claims payable
Net pension obligation
Loan from primary government
Unearned Rent
Other
Total liabilities
DEFERRED INFLOWS OF RESOURCES
Deferred tax revenue
Unavailable revenue
Deferred gain on refunding
Total deferred inflow of resources
NET POSITION
3,709,422,120 Net investment in capital assets
Restricted for:
Grant programs
49,469,322
Sewer improvements
29,078,061
700,000
Repair and replacement
C ommunity centers
17,256,610
22,799,619
Housing
154,743,247
Transportation
1,275,781
C apital projects
15,097,008
Debt service
406,787,302 Unrestricted (deficit)
4,406,629,070 Net position
21
Basic Financial Statements
County of Fairfax, Virginia
Statement of Activities
For the fiscal year ended June 30, 2013
Program Revenues
Functions/Programs
Primary government:
Governmental activities:
General government administration
Judicial administration
Public safety
Public works
Health and welfare
C ommunity development
Parks, recreation, and cultural
Education - for Public Schools
Interest on long-term debt
Total governmental activities
Business-type activities:
Public works - Sewer
Total business-type activities
Total primary government
Component units:
Public Schools
Redevelopment and Housing Authority
Park Authority
Economic Development Authority
Total component units
Expenses
$
C harges
for
Services
Operating
Grants and
C ontributions
C apital
Grants and
C ontributions
201,445,282
46,336,343
658,186,021
185,250,816
542,052,102
387,551,012
112,057,718
1,843,611,090
117,251,705
4,093,742,089
21,358,761
15,991,980
58,883,550
117,037,898
64,938,672
235,619,344
14,043,089
527,873,294
14,001,774
7,375,561
56,916,116
508,644
138,503,508
20,101,901
2,129,388
239,536,892
4,290,115
296,805
17,443,759
14,796
266,789
22,312,264
169,212,487
169,212,487
4,262,954,576
194,030,949
194,030,949
721,904,243
239,536,892
7,062,744
7,062,744
29,375,008
2,627,541,127
107,581,009
89,797,211
9,324,466
$ 2,834,243,813
106,547,191
41,038,920
43,477,706
191,063,817
253,060,520
60,756,011
313,816,531
167,136,265
489,767
13,504,787
181,130,819
General revenues:
Taxes:
Real property
Personal property
Business licenses
Local sales and use
C onsumers utility
Recordation
Occupancy, tobacco, and other
Grants and contributions not restricted
to specific programs
Revenue from the use of money and property
Revenue from primary government
Other
Special items:
INOVA Health
Total general revenues
C hange in net position
Net position, July 1, 2012
Net position, June 30, 2013
See accompanying notes to the financial statements.
22
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Basic Financial Statements
Exhibit A-1
Net (Expense) Revenue and Changes in Net Position
Primary Government
Governmental
Activities
Business-type
Activities
(161,794,632)
(22,968,802)
(542,089,550)
(50,260,515)
(338,595,126)
(131,562,978)
(95,885,241)
(1,843,611,090)
(117,251,705)
(3,304,019,639)
-
(161,794,632)
(22,968,802)
(542,089,550)
(50,260,515)
(338,595,126)
(131,562,978)
(95,885,241)
(1,843,611,090)
(117,251,705)
(3,304,019,639)
-
(3,304,019,639)
31,881,206
31,881,206
31,881,206
31,881,206
31,881,206
(3,272,138,433)
-
-
$
Total
C omponent
Units
Total Primary
Government
-
-
Component units:
Public Schools
(2,100,797,151)
Redevelopment and Housing Authority
(5,296,311)
(32,814,718)
Park Authority
Economic Development Authority
(9,324,466)
(2,148,232,646) Total component units
2,123,759,406
353,275,799
158,768,484
265,029,666
73,450,331
28,281,179
32,694,178
-
2,123,759,406
353,275,799
158,768,484
265,029,666
73,450,331
28,281,179
32,694,178
-
209,291,717
9,836,372
-
1,409,377
-
209,291,717
11,245,749
-
420,471,861
415,858
1,732,130,960
1,667,408
4,200,000
3,259,996,509
(12,141,924)
1,276,634,692
1,264,492,768
2,154,686,087
6,453,441
3,135,682,861
3,142,136,302
4,200,000
3,258,587,132
(45,432,507)
339,866,032
294,433,525
Financial Section
1,409,377
33,290,583
936,768,660
970,059,243
Functions/Programs
Primary government:
Governmental activities:
General government administration
Judicial administration
Public safety
Public works
Health and welfare
C ommunity development
Parks, recreation, and cultural
Education - for Public Schools
Interest on long-term debt
Total governmental activities
Business-type activities:
Public works - Sewer
Total business-type activities
Total primary government
General revenues:
Taxes:
Real property
Personal property
Business licenses
Local sales and use
C onsumers utility
Recordation
Occupancy, tobacco, and other
Grants and contributions not restricted
to specific programs
Revenue from the use of money and property
Revenue from primary government
Other
Special items:
INOVA Health
Total general revenues
C hange in net position
Net position, July 1, 2012
Net position, June 30, 2013
23
Basic Financial Statements
Exhibit A-2
County of Fairfax, Virginia
Balance Sheet
Governmental Funds
June 30, 2013
Nonmajor
Governmental
Funds
General Fund
ASSETS
Equity in pooled cash and temporary investments
Receivables (net of allowances):
Accounts
Accrued interest
Property taxes:
Delinquent
Not yet due
Business license taxes - delinquent
Loans
Due from intergovernmental units (net of allowances):
Property tax relief - not yet due
Other
Due from component units
Loan to component unit
Lease to component unit
Interfund receivables
Prepaid and other assets
Restricted assets:
Equity in pooled cash and temporary investments
C ash with fiscal agents
C ertificates of deposit - performance bonds
Total assets
$
532,913,123
554,429,328
1,087,342,451
12,187,011
49,340
14,955,534
3,955,545
27,142,545
4,004,885
20,372,875
2,434,206,366
3,150,507
-
57,572,425
20,372,875
2,434,206,366
3,150,507
57,572,425
211,313,944
48,050,022
363,342
5,450,834
1,061,713
26,337,656
12,832,200
51,480,000
1,827,249
401,427
211,313,944
74,387,678
363,342
12,832,200
51,480,000
7,278,083
1,463,140
633,354
34,428
3,269,786,859
40,009,597
128,284,790
892,085,751
40,009,597
128,918,144
34,428
4,161,872,610
-
-
-
$ 3,269,786,859
892,085,751
4,161,872,610
$
46,668,656
35,043,657
2,179,627
24,546,530
67,726,750
176,165,220
40,573,974
7,620,779
5,940,807
1,026,351
367,763
7,837,249
87,176,913
19,281,317
169,825,153
87,242,630
42,664,436
5,940,807
1,026,351
2,547,390
7,837,249
111,723,443
87,008,067
345,990,373
2,743,662,768
20,690,622
2,764,353,390
6,456,398
6,456,398
2,743,662,768
27,147,020
2,770,809,788
$ 2,940,518,610
176,281,551
3,116,800,161
DEFERRED OUTFLOWS OF RESOURCES
Total deferred outflows of resources
Total assets and deferred outflows of resources
LIABILITIES
Accounts payable and accrued liabilities
Accrued salaries and benefits
C ontract retainages
Accrued interest payable
Due to component units
Interfund payables
Unearned revenue
Performance and other deposits
Total liabilities
DEFERRED INFLOWS OF RESOURCES
Deferred tax revenue
Unavailable revenue
Total deferred inflows of resources
Total liabilities and deferred inflows of resources
24
Total
Governmental
Funds
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Basic Financial Statements
Exhibit A-2
Nonmajor
Governmental
Funds
General Fund
FUND BALANCES
Nonspendable:
Prepaid amounts
Total Nonspendable
Restricted for:
Public safety, courts, and judicial
General public works
Stormwater management
Transportation
Social services, health and welfare
Housing and community development
Parks, recreation, and cultural
Debt service
C apital projects
Other purposes
Total Restricted
C ommitted to:
Revenue stabilization
Managed reserves
Public safety, courts, and judicial
Transportation
Social services, health and welfare
Housing and community development
Parks, recreation, and cultural
Debt service
C apital projects
Other purposes
Total C ommitted
Assigned to:
Public safety, courts, and judicial
General public works
Social services, health and welfare
Housing and community development
Parks, recreation, and cultural
Other purposes
Total Assigned
Unassigned:
Total fund balances
Total liabilities, deferred inflows of resources, and fund balances
See accompanying notes to the financial statements.
Financial Section
$
Total
Governmental
Funds
727,441
727,441
748,799
748,799
1,476,240
1,476,240
-
25,515,102
110,183,236
29,559,119
154,932,897
9,467,562
29,833,883
30,992,500
25,515,102
110,183,236
29,559,119
154,932,897
9,467,562
29,833,883
30,992,500
-
13,144,740
156,996,862
5,189,055
565,814,956
13,144,740
156,996,862
5,189,055
565,814,956
107,624,846
71,727,394
1,035,646
1,376,443
25,486
1,623,461
33,465,985
216,879,261
4,415,916
46,451,053
8,409,806
14,355,653
19,655,744
69,060,578
162,348,750
107,624,846
71,727,394
5,451,562
46,451,053
9,786,249
14,381,139
1,623,461
19,655,744
69,060,578
33,465,985
379,228,011
6,013,982
5,537,668
13,324,618
966,157
2,979,001
6,020,490
34,841,916
76,819,631
329,268,249
$ 3,269,786,859
(13,108,305)
715,804,200
892,085,751
6,013,982
5,537,668
13,324,618
966,157
2,979,001
6,020,490
34,841,916
63,711,326
1,045,072,449
4,161,872,610
continued
25
Basic Financial Statements
County of Fairfax, Virginia
Exhibit A-2
concluded
Reconciliation of the Balance Sheet to the Statement of Net Position
Governmental Funds
June 30, 2013
Fund balances - Total governmental funds
$ 1,045,072,449
Amounts reported for governmental activities in the statement of net position (Exhibit A) are different because:
C apital assets used in governmental fund activities are not financial resources
and, therefore, are not reported in the funds:
Non-depreciable/non-amortizable assets:
Land
Easements
C onstruction in progress
Equipment under construction
Software in development
Depreciable/amortizable assets:
Equipment
Software
Library collections
Buildings and improvements
Infrastructure
Total capital assets
Less accumulated depreciation/amortization
$
416,463,562
3,555,058
309,940,835
6,794,058
3,743,594
257,547,685
84,771,268
87,485,754
1,320,117,282
719,811,145
3,210,230,241
(883,511,575)
2,326,718,666
Some of the C ounty's receivables will not be collected soon enough to pay for
the current period's expenditures and, therefore, are reported as unearned
revenue in the funds:
Delinquent taxes (net of allowances):
Property
Business license
Other charges for services
Lease to component unit
$
17,686,390
3,150,507
645,166
51,480,000
72,962,063
When an asset is recorded in governmental fund financial statements, but the revenue is not
available, it is reported as deferred inflow of resources in the funds:
Sales and use and other taxes
EMS transport and other charges for services
$
21,033,470
2,406,141
23,439,611
For debt refundings resulting in defeasance of debt, the difference between the reacquisition
price and the net carrying amount of the old debt should be reported as a
deferred outflow of resources or a deferred inflow of resources:
Deferred loss on refunding of debt
45,313,702
Deferred gain on refunding of debt
(134,536)
C ertain other receivables are accrued only in the government-wide statements
726,358
OPEB costs are recognized as expenditures in the fund statements,
but are deferred in the government-wide statements.
1,515,610
Internal service funds are used by management to provide certain goods and
services to governmental funds. The assets and liabilities of the internal service
funds are included in governmental activities in the statement of net position.
Assets:
C urrent assets
C apital assets
Less accumulated depreciation/amortization
Liabilities
$
173,040,133
161,484,793
(90,968,154)
(74,843,673)
168,713,099
Long-term liabilities related to governmental fund activities are not due and payable
in the current period and, therefore, are not reported in the funds:
General obligation bonds payable, net
Revenue bonds payable, net
Notes payable
C ompensated absences payable
Landfill closure and postclosure obligation
Obligations under capital leases and installment purchases
Net pension obligation
Other long-term liabilities
Accrued interest on long-term debt
Net position of governmental activities
26
$ (2,226,884,986)
(769,661,892)
(32,712,500)
(104,560,696)
(68,181,679)
(1,408,926)
(119,219,051)
(31,914,720)
(35,349,047)
(3,389,893,497)
$
294,433,525
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Basic Financial Statements
Financial Section
27
Basic Financial Statements
Exhibit A-3
County of Fairfax, Virginia
Statement of Revenues, Expenditures, and Changes in Fund Balances
Governmental Funds
For the fiscal year ended June 30, 2013
REVENUES
Taxes
Permits, privilege fees, and regulatory licenses
Intergovernmental
C harges for services
Fines and forfeitures
Developers' contributions
Revenue from the use of money and property
Recovered costs
Gifts, donations, and contributions
Total revenues
EXPENDITURES
C urrent:
General government administration
Judicial administration
Public safety
Public works
Health and welfare
C ommunity development
Parks, recreation, and cultural
Intergovernmental:
C ommunity development
Parks, recreation, and cultural
Education - for Public Schools
C apital outlay:
General government administration
Judicial administration
Public safety
Public works
Health and welfare
C ommunity development
Parks, recreation, and cultural
Debt service:
Principal retirement
Interest and other charges
Total expenditures
Excess (deficiency) of revenues over (under) expenditures
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
General obligation bonds issued
Premium on general obligation bonds issued
Revenue bonds issued
Premium on revenue bonds issued
General obligation refunding bonds issued
Premium on general obligation refunding bonds issued
General obligation payments to refunded bonds escrow agent
Refunding bonds issued
Total other financing sources (uses)
SPECIAL ITEM
INOVA Health
Net change in fund balances
Fund balances, July 1, 2012
Fund balances, June 30, 2013
See accompanying notes to the financial statements.
28
General Fund
Nonmajor
Governmental
Funds
Total
Governmental
Funds
$ 3,008,000,381
38,201,352
339,758,071
68,546,107
16,792,348
10,473
18,554,603
7,695,967
1,294,507
3,498,853,809
28,288,441
24,209,752
215,128,856
269,113,954
50,604
164,869
15,684,810
6,380,632
867,187
559,889,105
3,036,288,822
62,411,104
554,886,927
337,660,061
16,842,952
175,342
34,239,413
14,076,599
2,161,694
4,058,742,914
165,846,296
44,865,364
581,786,118
79,745,099
349,735,140
49,760,626
37,985,735
7,101,565
886,509
57,869,065
118,458,871
193,079,230
142,239,643
16,284,698
172,947,861
45,751,873
639,655,183
198,203,970
542,814,370
192,000,269
54,270,433
9,989,987
29,591,048
1,683,462,921
168,034,179
22,903,477
160,148,169
178,024,166
52,494,525
1,843,611,090
9,623,346
167,696
297,806
614,691
628,993
19,684
3,564,993
960,739
2,326,961
61,449,220
16,504,913
76,256,601
1,143,197
10,584,085
167,696
2,624,767
62,063,911
17,133,906
76,276,285
4,708,190
347,692
52,732
3,048,085,967
450,767,842
234,267,724
127,301,038
1,407,215,799
(847,326,694)
234,615,416
127,353,770
4,455,301,766
(396,558,852)
(475,170,759)
515,305,142
(51,152,920)
206,335,000
43,732,464
42,390,000
6,319,053
128,000,000
18,501,301
(145,945,515)
24,650,000
788,134,525
525,335,599
(536,354,136)
206,335,000
43,732,464
42,390,000
6,319,053
128,000,000
18,501,301
(145,945,515)
24,650,000
312,963,766
(24,402,917)
353,671,166
329,268,249
4,200,000
(54,992,169)
770,796,369
715,804,200
4,200,000
(79,395,086)
1,124,467,535
1,045,072,449
continued
10,030,457
(485,201,216)
-
$
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Basic Financial Statements
County of Fairfax, Virginia
Exhibit A-3
concluded
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances
to the Statement of Activities
Governmental Funds
For the fiscal year ended June 30, 2013
Net change in fund balances - Total governmental funds
$
(79,395,086)
Amounts reported for governmental activities in the statement of activities (Exhibit A-1) are different because:
Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost
of capital assets is allocated over their estimated useful lives and reported as depreciation/amortization expense.
C apital outlays
Less depreciation/amortization expense
$
173,558,840
(76,437,540)
97,121,300
In the statement of activities, the gain or loss on the disposition of capital assets is reported. However, in the
governmental funds, only the proceeds from sales are reported, which increase fund balance. Thus, the
difference is the net book value (i.e., depreciated cost) of the capital asset dispositions.
(11,544,639)
Donations of capital assets increase net position in the statement of activities, but do not appear
in the governmental funds because they are not financial resources.
18,245,917
Build America Bonds interest subsidy accrual is not recognized as revenue in the fund statements
(69,219)
Some of the C ounty's receivables will not be collected soon enough to pay for the current period's expenditures
and, therefore, are reported as unearned revenue in the funds:
Delinquent property taxes
Delinquent business license taxes
Other charges for services
$
(4,762)
(548,550)
71,606
(481,706)
Some revenues will not be collected for several months after the fiscal year ends, hence, they are not considered "available"
revenues and are deferred inflow of resources in the governmental funds:
Sales and use and other taxes
EMS transport and other charges for services
$
(476,467)
1,078,185
601,718
The receipt of principal payments for the lease to the component unit does not result
in a revenue in the statement of activities.
(1,360,000)
The issuance of long-term debt, including premiums, is reported as other financing sources in the governmental funds and
thus, increases fund balance. In the government-wide statements, however, issuing debt increases long-term liabilities
in the statement of net position and does not affect the statement of activities. The following were issued:
Series 2013A General Obligation Bonds
$ (250,067,464)
Series 2013B General Obligation Refunding Bonds
(146,501,301)
EDA Series 2012 Transportation Distrisct Improvement Revenue Bonds (48,709,053)
FC RHA Bond Anticpation Notes 2013A
(24,650,000)
(469,927,818)
OPEB costs are recognized as expenditures in the fund statements, but are deferred and amortized
in the government-wide statements, resulting in a net difference.
(526,000)
C ertain other long-term liabilities are recognized only in the government-wide statements,
resulting in a net difference.
835,264
The repayment of the principal amounts of long-term debt is reported as an expenditure or as an other financing use when
debt is refunded in governmental funds and thus, reduces fund balance. However, the principal payments reduce the
liabilities in the statement of net position and do not result in an expense in the statement of activities.
Principal repayments of matured bonds, notes, and loans
Payment to escrow agent to refund bonds
Principal payments of capital leases and installment purchases
$
227,067,783
145,945,515
7,547,634
380,560,932
Interest on long-term debt is reported as an expenditure in the governmental funds when it is due.
In the statement of activities, however, interest expense is affected as this interest accrues and
as bond-related items are amortized. This difference in interest reporting is as follows:
Accrued interest on bonds, loans, and capital leases
Amortization of bond premiums and discounts
Amortization of deferred gains on bond refundings
Amortization of deferred losses on bond refundings
$
(3,292,264)
25,778,754
517,274
(12,821,995)
10,181,769
Under the modified accrual basis of accounting used in the governmental funds, expenditures
for the following are not recognized until they mature. In the statement of activities, however,
they are reported as expenses and liabilities as they accrue. The timing differences are as follows:
Landfill closure and postclosure costs
C ompensated absences
Net pension obligation
Other
$
(3,832,009)
(1,747,414)
(16,034,820)
6,772,500
(14,841,743)
Internal service funds are used by management to provide certain goods and services to
governmental funds. The change in net position is reported with governmental activities.
C hange in net position of governmental activities
Financial Section
25,166,804
$
(45,432,507)
29
Basic Financial Statements
County of Fairfax, Virginia
Statement of Net Position
Proprietary Funds
June 30, 2013
Business-type
Activities Enterprise Fund
Integrated Sewer
System
ASSETS
C urrent assets:
Equity in pooled cash and temporary investments
Accounts receivable
Accrued interest receivable
Due from intergovernmental units (net of allowance)
Interfund receivables
Inventories of supplies
Total unrestricted current assets
Restricted assets:
Equity in pooled cash and temporary investments
C ash with fiscal agents
Investments
Total restricted current assets
Total current assets
Long-term assets:
C apital assets:
Non-depreciable/non-amortizable:
Land
Easements
C onstruction in progress
Equipment under construction
Software in development
Depreciable/amortizable:
Equipment
Software
Purchased capacity
Buildings and improvements
Infrastructure
Accumulated depreciation
Accumulated amortization
Total capital assets, net
Total long-term assets
Total assets
DEFERRED OUTFLOWS OF RESOURCES
Deferred loss on refunding of debt
Total deferred outflows of resources
See accompanying notes to the financial statements.
30
$
113,392,387
208,793
2,774
45,520,211
402,306
159,526,471
169,836,546
54,132
1,527
829,291
2,131,637
172,853,133
94,875,160
15,035,893
21,920,400
131,831,453
291,357,924
187,000
187,000
173,040,133
17,407,323
406,829
115,149,188
-
1,938,688
5,861,313
174,240
12,179,421
869,047,701
88,398,832
1,046,377,246
(540,574,645)
(257,456,512)
1,350,935,383
1,350,935,383
1,642,293,307
$
Governmental
Activities Internal Service
Funds
18,000,552
18,000,552
127,024,122
2,026,347
21,633,263
2,826,820
(90,084,810)
(883,344)
70,516,639
70,516,639
243,556,772
-
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Basic Financial Statements
Exhibit A-4
Business-type
Activities Enterprise Fund
Integrated Sewer
System
LIABILITIES
C urrent liabilities:
Accounts payable and accrued liabilities
Accrued salaries and benefits
C ontract retainages
Interfund payables
Accrued interest payable
Revenue bonds payable, net
C ompensated absences payable
Obligations under capital leases
Insurance and benefit claims payable
Total current liabilities
Long-term liabilities:
Revenue bonds payable, net
C ompensated absences payable
Obligations under capital leases
Insurance and benefit claims payable
Total long-term liabilities
Total liabilities
DEFERRED INFLOWS OF RESOURCES
Deferred gain on refunding of debt
Total deferred inflow of resources
NET POSITION
Net investment in capital assets
Restricted for:
Sewer improvements
Debt service
Unrestricted
Net position
Financial Section
$
$
Governmental
Activities Internal Service
Funds
1,183,979
671,023
10,271,510
270,125
7,241,935
21,800,736
1,223,124
42,662,432
9,796,657
1,150,079
1,715,258
1,335,470
29,514,308
43,511,772
644,676,583
964,124
645,640,707
688,303,139
1,432,768
733,598
29,165,535
31,331,901
74,843,673
1,931,477
1,931,477
-
778,825,722
68,447,572
29,078,061
15,035,893
147,119,567
970,059,243
100,265,527
168,713,099
31
Basic Financial Statements
Exhibit A-5
County of Fairfax, Virginia
Statement of Revenues, Expenses, and Changes in Net Position
Proprietary Funds
For the fiscal year ended June 30, 2013
Business-type
Activities Enterprise Fund
Integrated Sewer
System
OPERATING REVENUES:
Sales of services
C harges for services
Intergovernmental
Other
Total operating revenues
OPERATING EXPENSES:
Personnel services
Materials and supplies
Equipment operation and maintenance
Risk financing and benefit payments
Depreciation and amortization
Professional consultant and contractual services
Other
Total operating expenses
Operating gain
NONOPERATING REVENUES (EXPENSES):
Availability fees
Insurance recoveries
Interest revenue
Interest expense
Bond issuance costs
Amortization of deferred gain on bond refunding
Gain on disposal of capital assets
Total nonoperating revenues (expenses)
Gain before contributions, special item, and transfers
C apital contributions
Transfers in
C hange in net position
Net position, July 1, 2012
Net position, June 30, 2013
$
$
Governmental
Activities Internal Service
Funds
173,553,631
173,553,631
283,246,492
10,878
107,182
283,364,552
25,607,805
13,238,456
54,358,299
47,594,864
140,799,424
32,754,207
29,017,428
1,942,370
57,951,458
151,593,453
11,968,320
12,492,863
6,271,886
271,237,778
12,126,774
20,477,318
1,409,377
(28,052,165)
(699,561)
151,242
187,421
(6,526,368)
26,227,839
7,062,744
33,290,583
936,768,660
970,059,243
1,234,495
297,493
(79,704)
340,387
1,792,671
13,919,445
228,823
11,018,536
25,166,804
143,546,295
168,713,099
See accompanying notes to the financial statements.
32
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Basic Financial Statements
County of Fairfax, Virginia
Exhibit A-6
Statement of Cash Flows
Proprietary Funds
For the fiscal year ended June 30, 2013
Business-type
Activities Enterprise Fund
Integrated Sewer
System
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers and users
Receipts from interfund services provided
Payments to suppliers and contractors
Payments to employees
C laims and benefits paid
Payments for interfund services used
Intergovernmental revenue received
Net cash provided by operating activities
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Transfers from other funds
Net cash provided by noncapital financing activities
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Availability fees received
C apital grants received
Principal payments on sewer revenue bonds
Interest payments on sewer revenue bonds
Revenue bonds issued, including premium
Payment of bond issuance costs
Deposit with fiscal agent for legal reserve
Proceeds from sale of capital assets
Purchase of capital assets, other than purchased capacity
Acquisition of purchased capacity
Principal payments on obligations under capital leases
Interest payments on obligations under capital leases
Net cash provided (used) by capital and related financing activities
CASH FLOWS FROM INVESTING ACTIVITIES
Sales of restricted investments
Purchases of investments
Interest received
Net cash provided by investing activities
Net decrease in cash and cash equivalents
C ash and cash equivalents, July 1, 2012
C ash and cash equivalents, June 30, 2013
Reconciliation of operating income to net cash provided by operating activities:
Operating income
Adjustments to reconcile operating income to net cash provided by operating activities:
Depreciation and amortization
Insurance recoveries
C hange in assets and liabilities:
Decrease in accounts receivable
(Increase) decrease in intergovernmental receivables
(Increase) in interfund receivables
(Increase) decrease in inventories of supplies
(Increase) decrease in other assets
Increase (decrease) in accounts payable and accrued liabilities
Increase in accrued salaries and benefits
Increase (decrease) in interfund payables
Total adjustments to operating
Net cash provided by operating activities
Noncash investing, capital, and financing activities:
C apital contributions - sewer lines, manholes, and equipment
Initiation of an obligation under capital lease
Net increase in long-term debt resulting from the issuance of loans/revenue bonds by UOSA
Increase in fair value of investments not classified as cash and cash equivalents
$
173,657,339
(60,584,089)
(25,571,218)
87,502,032
-
Governmental
Activities Internal Service
Funds
283,711,591
(68,165,266)
(28,862,770)
(150,925,161)
(6,396,222)
10,878
29,373,050
11,018,536
11,018,536
20,477,318
1,107,952
(17,217,217)
(27,091,441)
105,867,439
(699,561)
(5,404,101)
187,421
(50,380,282)
(40,650,962)
(13,803,434)
459,218
(13,525,897)
(1,113,042)
(79,704)
(14,259,425)
$
18,170,534
(22,132,264)
1,412,216
(2,549,514)
71,149,084
137,118,463
208,267,547
299,781
299,781
26,431,942
143,591,604
170,023,546
$
32,754,207
12,126,774
54,358,299
-
11,968,320
1,234,495
103,708
24,638
(54,768)
279,361
21,644
14,943
54,747,825
87,502,032
399,461
(52,422)
(42,547)
10,878
3,573,688
450,843
(296,440)
17,246,276
29,373,050
$
$
5,954,792
4,785,859
89,561
228,823
904,893
-
See accompanying notes to the financial statements.
Financial Section
33
Basic Financial Statements
Exhibit A-7
County of Fairfax, Virginia
Statement of Fiduciary Net Position
June 30, 2013
Pension Trust
Funds
ASSETS
Equity in pooled cash and temporary investments
C ash collateral for securities lending
Accounts receivable
C ontributions receivable
Accrued interest and dividends receivable
Receivable from sale of investments
Equipment
Investments, at fair value:
U.S. Government and agency securities
Asset-backed securities
C orporate and other bonds
C ommon and preferred stock
Short-term investments
Investment in pooled funds
Total assets
$
DEFERRED OUTFLOWS OF RESOURCES
Total deferred outflows of resources
LIABILITIES
Accounts payable and accrued liabilities
Accrued salaries and benefits
Interfund payable
Payable for purchase of pension investments
Liabilities for collateral received under securities
lending agreements
Liabilities under reimbursement agreements
Total liabilities
DEFERRED INFLOWS OF RESOURCES
Total deferred inflows of resources
NET POSITION
Held in trust for pension/OPEB benefits
$
OPEB Trust
Fund
Agency
Funds
8,707,745
75,775,624
9,590,951
6,842,099
183,237,686
7,251
2,333,265
39,303
-
2,179,172
61,516
-
169,128,018
365,341,491
644,401,668
1,538,894,502
496,372,993
2,587,279,691
6,085,579,719
148,542,663
150,915,231
2,240,688
-
-
10,681,056
77,396
29,727
223,747,729
26,892
-
-
75,775,624
310,311,532
26,892
2,240,688
2,240,688
-
-
5,775,268,187
150,888,339
$
$
See accompanying notes to the financial statements.
34
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Basic Financial Statements
County of Fairfax, Virginia
Exhibit A-8
Statement of Changes in Plan Net Position
Trust Funds
For the fiscal year ended June 30, 2013
Pension Trust
Funds
ADDITIONS
C ontributions:
Employer
Plan members
Other
Total contributions
Investment income:
From investment activities:
Net appreciation in fair value of investments
Interest
Dividends
Total income from investment activities
Less investment activities expenses:
Management fees
Other
Total investment activities expenses
Net income from investment activities
From securities lending activities:
Securities lending income
Less securities lending expenses:
Management fees
Total securities lending activities expenses
Net income from securities lending activities
Net investment income
Total additions
DEDUCTIONS
Benefits
Refunds of contributions
Administrative expenses
Total deductions
Net increase
Net position, July 1, 2012
Net position, June 30, 2013
$
$
OPEB Trust
Fund
215,181,525
53,748,642
268,930,167
38,306,234
1,262,891
39,569,125
386,515,705
56,027,281
40,570,434
483,113,420
11,348,368
63,285
11,411,653
19,601,922
1,757,957
21,359,879
461,753,541
100,154
500
100,654
11,310,999
1,196,192
-
374,434
374,434
821,758
462,575,299
731,505,466
11,310,999
50,880,124
348,410,213
4,068,639
2,726,856
355,205,708
376,299,758
5,398,968,429
5,775,268,187
13,531,790
153,804
13,685,594
37,194,530
113,693,809
150,888,339
See accompanying notes to the financial statements.
Financial Section
35
Basic Financial Statements
County of Fairfax, Virginia
Combining Statement of Net Position
Component Units
June 30, 2013
Redevelopment
and Housing
Authority
Public
Schools
ASSETS
Equity in pooled cash and temporary investments
C ash in banks
Investments
Receivables (net of allowances):
Accounts
Accrued interest
Notes
Due from intergovernmental units
Due from primary government
Inventories of supplies
Prepaid and other assets
Restricted assets:
Equity in pooled cash and temporary investments
C ash with fiscal agents
C ertificates of deposit - performance bonds
Investments
Net OPEB Asset
Unearned financing fees (net of amortization)
Property held for sale
C apital assets:
Non-depreciable/non-amortizable:
Land
Easements
C onstruction in progress
Software in development
Depreciable/amortizable:
Equipment
Software
Library collections
Buildings and improvements
Accumulated depreciation
Accumulated amortization
Total assets
DEFERRED OUTFLOWS OF RESOURCES
Deferred amounts from the refunding debt
Total deferred outflows of resources
See accompanying notes to the financial statements.
36
$
359,416,873
-
29,286,410
12,691,060
3,685,186
4,097,440
172,210
63,362,895
279,978
2,734,210
285,276
935,582
326,480
26,463,220
4,554,221
125,378,229
13,392,985
-
17,121,396
2,195,032
1,960,000
1,108,177
1,026,747
44,869,395
193,374,318
6,265,521
42,096,776
1,833,004
-
267,744,446
4,865,424
34,769,180
3,035,603,055
(1,473,329,850)
(2,474,501)
2,680,807,084
$
-
1,943,111
218,097,802
(119,597,165)
245,727,039
-
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Basic Financial Statements
Exhibit A-9
Park
Authority
Economic
Development
Authority
40,691,543
-
-
4,675
62,268
104,117
1,783,018
-
484,394
-
9,553,893
61,115
-
-
346,960,303
17,016,009
13,410,371
-
-
13,688,182
365,536,755
(182,123,372)
626,748,877
545,888
545,888
38,847
767,961
(334,851)
956,351
-
Total
C omponent
Units
ASSETS
429,394,826 Equity in pooled cash and temporary investments
12,691,060 C ash in banks
3,685,186 Investments
Receivables (net of allowances):
Accounts
5,037,697
Accrued interest
560,958
Notes
26,463,220
63,467,012 Due from intergovernmental units
2,547,390 Due from primary government
2,734,210 Inventories of supplies
4,839,497 Prepaid and other assets
Restricted assets:
134,932,122
Equity in pooled cash and temporary investments
C ash with fiscal agents
17,121,396
C ertificates of deposit - performance bonds
2,195,032
Investments
2,021,115
13,392,985 Net OPEB Asset
1,108,177 Unearned financing fees (net of amortization)
1,026,747 Land held for sale
C apital assets:
Non-depreciable/non-amortizable:
Land
433,926,474
17,016,009
Easements
C onstruction in progress
208,617,693
6,265,521
Software in development
Depreciable/amortizable:
Equipment
283,414,586
4,865,424
Software
Library collections
34,769,180
Buildings and improvements
3,620,005,573
Accumulated depreciation
(1,775,385,238)
(2,474,501)
Accumulated amortization
Total assets
3,554,239,351
545,888
545,888
DEFERRED OUTFLOWS OF RESOURCES
Deferred amounts from the refunding debt
Total deferred outflows of resources
continued
Financial Section
37
Basic Financial Statements
County of Fairfax, Virginia
Combining Statement of Net Position
Component Units
June 30, 2013
Redevelopment
and Housing
Authority
Public
Schools
LIABILITIES
Accounts payable and accrued liabilities
Accrued salaries and benefits
C ontract retainages
Accrued interest payable
Due to primary government
Unearned revenue
Performance and other deposits
Long-term liabilities:
Portion due or payable within one year:
Revenue bonds payable, net
Notes payable
C ompensated absences payable
Obligations under capital leases and installment purchases
Insurance and benefit claims payable
Loan from primary government
Unearned rent
Portion due or payable after one year:
Revenue bonds payable, net
Notes payable
C ompensated absences payable
Obligations under capital leases and installment purchases
Insurance and benefit claims payable
Loan from primary government
Unearned rent
Total liabilities
DEFERRED INFLOWS OF RESOURCES
Total deferred inflow of resources
NET POSITION
Net investment in capital assets
Restricted for:
Grant and education programs
Repair and replacement
Housing
C apital projects
Debt service
Unrestricted (deficit)
Net position
$
34,287,206
33,900,268
7,209,628
895,326
14,889,057
781,524
7,343,718
437,863
4,548,934
128,676
1,931,413
2,328,621
24,029,318
14,056,827
24,807,564
-
697,786
7,158,762
571,569
-
10,298,278
70,891,107
28,377,756
965,703
265,389,562
25,302,420
60,454,884
648,700
111,553,346
-
-
2,026,739,054
73,094,587
6,519,094
125,378,229
256,781,145
$ 2,415,417,522
22,799,619
38,279,487
134,173,693
See accompanying notes to the financial statements.
38
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Basic Financial Statements
Exhibit A-9
concluded
Economic
Development
Authority
Park
Authority
Total
C omponent
Units
2,113,150
2,324,129
238,045
17,633
234,666
5,326,655
768,294
342,316
142,078
-
44,086,390
36,804,338
7,447,673
5,461,893
363,342
22,147,125
3,878,439
58,335
2,579,399
243,700
-
159,307
101,339
756,121
7,158,762
27,339,593
14,056,827
24,807,564
243,700
101,339
5,443,400
2,017,097
12,588,500
33,953,003
120,024
887,962
1,753,026
30,745,820
60,454,884
13,084,099
70,891,107
28,377,756
12,588,500
1,853,665
412,648,937
-
-
-
556,761,316
471,957
2,657,066,914
700,000
8,853,893
61,115
26,965,438
593,341,762
Financial Section
(1,268,632)
(796,675)
6,519,094
700,000
22,799,619
134,232,122
61,115
320,757,438
3,142,136,302
LIABILITIES
Accounts payable and accrued liabilities
Accrued salaries and benefits
C ontract retainages
Accrued interest payable
Due to primary government
Unearned revenue
Performance and other deposits
Long-term liabilities:
Portion due or payable within one year:
Revenue bonds payable, net
Notes payable
C ompensated absences payable
Obligations under capital leases and installment purchases
Insurance and benefit claims payable
Loan from primary government
Unearned rent
Portion due or payable after one year:
Revenue bonds payable, net
Notes payable
C ompensated absences payable
Obligations under capital leases and installment purchases
Insurance and benefit claims payable
Loan from primary government
Unearned rent
Total liabilities
DEFERRED INFLOWS OF RESOURCES
Total deferred inflow of resources
NET POSITION
Net investment in capital assets
Restricted for:
Grant and education programs
Repair and replacement
Housing
C apital projects
Debt service
Unrestricted (deficit)
Net position
39
Basic Financial Statements
County of Fairfax, Virginia
Combining Statement of Activities
Component Units
For the fiscal year ended June 30, 2013
Program Revenues
Functions/Programs
Public Schools:
Education
Redevelopment and Housing Authority:
C ommunity development
Park Authority:
Parks, recreation, and cultural
Economic Development Authority:
C ommunity development
Total component units
Expenses
C harges
for
Services
Operating
Grants and
C ontributions
C apital
Grants and
C ontributions
$ 2,627,541,127
106,547,191
253,060,520
167,136,265
107,581,009
41,038,920
60,756,011
489,767
89,797,211
43,477,706
-
13,504,787
9,324,466
$ 2,834,243,813
191,063,817
313,816,531
181,130,819
General revenues:
Grants and contributions not restricted to specific programs
Revenue from the use of money
Share of C ommonwealth's lottery proceeds
Revenue from primary government
Other
Total general revenues
C hange in net position
Net position, July 1, 2012
Net position, June 30, 2013
See accompanying notes to the financial statements.
40
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Basic Financial Statements
Exhibit A-10
Net (Expense) Revenue and Changes in Net Position
Redevelopment
and Housing
Authority
Public
Schools
(2,100,797,151)
(2,100,797,151)
433,102,170
73,812
1,683,322,285
1,667,408
2,118,165,675
17,368,524
2,398,048,998
$ 2,415,417,522
Financial Section
(5,296,311)
-
Economic
Development
Authority
Park
Authority
Total
C omponent
Units
-
-
(2,100,797,151)
-
-
(5,296,311)
-
(32,814,718)
(32,814,718)
(5,296,311)
(32,814,718)
(9,324,466)
(9,324,466)
(9,324,466)
(2,148,232,646)
222,454
222,454
(5,073,857)
139,247,550
134,173,693
(12,630,309)
119,592
39,498,643
26,987,926
(5,826,792)
599,168,554
593,341,762
9,310,032
420,471,861
415,858
1,732,130,960
1,667,408
2,154,686,087
6,453,441
3,135,682,861
3,142,136,302
9,310,032
(14,434)
(782,241)
(796,675)
41
Basic Financial Statements
42
County of Fairfax, Virginia  Comprehensive Annual Financial Report
County of Fairfax, Virginia
Notes to the Financial Statements
June 30, 2013
A.
Summary of Significant Accounting Policies
The County of Fairfax, Virginia, (the County) is organized under the Urban County Executive form of
government (as defined under Virginia law). The governing body of the County is the Board of Supervisors
(the Board), which makes policies for the administration of the County. The Board is comprised of ten
members: the Chairman, elected at large for a four-year term, and one member from each of nine supervisor
districts, elected for a four-year term by the voters of the district in which the member resides. The Board
appoints a County Executive to act as the administrative head of the County. The County Executive serves at
the pleasure of the Board, carries out the policies established by the Board, directs business and administrative
procedures, and recommends officers and personnel to be appointed by the Board.
The financial statements of the County have been prepared in conformity with generally accepted accounting
principles (GAAP) as applied to government units in the United States of America. The Governmental
Accounting Standards Board (GASB) is the accepted primary standard-setting body for establishing
governmental accounting and financial reporting principles. The County’s significant accounting policies are
described below.
1.
Reporting Entity
As required by GAAP, the accompanying financial statements present the financial data of the County
(the primary government) and its component units. The financial data of the component units are
included in the County’s basic financial statements because of the significance of their operational or
financial relationships with the County. The County and its component units are together referred to
herein as the reporting entity.
Blended Component Units
Blended component units are entities that are legally separate from the County but that are so closely
related to the County that they are, in essence, extensions of the County. The blended component
units that are reported as part of the primary government are:
Solid Waste Authority of Fairfax County (SWA) - The SWA is considered a blended
component unit because the Board of Supervisors comprises the Board of Directors of the
SWA and has the ability to impose its will on the SWA. The SWA is authorized under the
Virginia Water and Waste Authorities Act and was created by the Board of Supervisors on
June 29, 1987. The SWA has financed the construction of a solid waste to energy facility,
which is contractually owned and operated by a commercial entity in accordance with
agreements between the County, the SWA, and the commercial entity. The County has
assumed the responsibility for the management of the arrangement between the SWA and
the commercial entity and for providing sufficient solid waste to result in a financially
viable operation; this activity is reported in a special revenue fund of the County, the Energy
Resource Recovery Facility Fund. Separate financial statements are not prepared for the
SWA.
Small District One - The Board of Supervisors created Small District One, which is located
within the Dranesville Magisterial District, in 1970 to provide for the construction of a
community center and the operation of its social, cultural, educational, and recreational
facilities. This small district is reported as a separate special revenue fund of the County, the
Financial Section
43
Basic Financial Statements
McLean Community Center Fund, because it is governed by the Board, which has the ability
to impose its will on the small district. Separate financial statements are not prepared for
Small District One.
Small District Five - The Board of Supervisors created Small District Five, which was located
within the Sully, Dranesville and Hunter Mill Magisterial Districts, in 1975 to provide for
the construction of a community center and the operation of its social, cultural, educational,
and recreational facilities. In March 2006, the Board of Supervisors voted to change the
boundaries, placing all boarders within the Hunter Mill Magisterial District. This change
became effective January 1, 2007. This small district is reported as a separate special revenue
fund of the County, the Reston Community Center Fund, because it is governed by the Board,
which has the ability to impose its will on the small district. Separate financial statements are
not prepared for Small District Five.
Dulles Rail Phase I Transportation Improvement District - The Board of Supervisors created
the Dulles Rail Phase I Transportation Improvement District in 2004 to provide funds for the
construction of certain transportation improvements in the district. This district is reported
as a separate special revenue fund of the County. The District is governed by the members of
the Board of Supervisors representing the property owners within the district. The Board of
Supervisors, has the ability to impose its will on the district. Separate financial statements are
not prepared for the Dulles Rail Phase I Transportation Improvement District.
Dulles Rail Phase II Transportation Improvement District - The Board of Supervisors created
the Dulles Rail Phase II Transportation Improvement District in 2009 to provide funds for the
construction of certain transportation improvements in the district. This district is reported
as a separate special revenue fund of the County. The District is governed by the members of
the Board of Supervisors representing the property owners within the district. The Board of
Supervisors, has the ability to impose its will on the district. Separate financial statements are
not prepared for the Dulles Rail Phase II Transportation Improvement District.
Mosaic District Community Development Authority (CDA) - The CDA is an independent
authority legally authorized by an act of the Virginia General Assembly and was formally
created by the Board of Supervisors in April 2009. The CDA’s purpose is to assist in the
development of infrastructure improvements within the district. This authority presentation
consists of a special revenue, a debt service fund, and a capital projects fund. This authority
provides services that exclusively benefit the County and was established with a tax
increment financing agreement. Separate financial statements are not prepared for the CDA.
Discretely Presented Component Units
The columns for the component units in the financial statements include the financial data of the
County’s other component units. They are presented in separate columns to emphasize that they
are legally separate from the County. Separate financial statements of the component units can be
obtained by writing to the Financial Reporting Division, Department of Finance, 12000 Government
Center Parkway, Suite 214, Fairfax, Virginia 22035. All of the component units have a fiscal year end
of June 30. The discretely presented component units are:
Fairfax County Public Schools (Public Schools) - Public Schools is responsible for
elementary and secondary education within the County. The School Board is elected by
County voters. Public School systems do not have taxing authority under Virginia Code;
Public Schools is fiscally dependent on the County. Public Schools operations are funded
primarily by the County’s General Fund, and the County issues general obligation debt for
Public Schools’ capital projects.
44
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Notes to the Financial Statements
Fairfax County Redevelopment and Housing Authority (FCRHA) - FCRHA plans,
coordinates, and directs the low income housing programs within the County under the
Virginia Housing Authorities Law. FCRHA was approved by a voter referendum in
November 1965 and was activated by the Board of Supervisors in February 1966. FCRHA is
a political subdivision of and reports to the Commonwealth of Virginia. The Board appoints
FCRHA’s Board of Commissioners, and the County provides certain managerial and related
financial assistance to FCRHA.
Fairfax County Park Authority (Park Authority) - The Park Authority was created by the
Board of Supervisors of the County on December 6, 1950, to maintain and operate the
public parks and recreational facilities located in the County. The Board appoints the Park
Authority’s governing board, and the County provides funding for the Park Authority’s
General Fund and one of its capital projects funds. A memorandum of understanding
currently in effect between the County and the Park Authority defines the roles of the County
and the Park Authority.
Fairfax County Economic Development Authority (EDA) - The EDA is an independent
authority legally authorized by an act of the Virginia General Assembly and was formally
created by resolutions of the Board of Supervisors. The EDA’s mission is to attract
businesses to Fairfax County and to work with the existing businesses to retain them as
they expand and create new jobs. The Board appoints the seven members of the EDA’s
commission which appoints the EDA’s executive director. The Board appropriates funds
annually to the EDA for operating expenditures incurred in carrying out its mission.
Related Organizations
The Board of Supervisors is also responsible for appointing the members of the boards of Fairfax
Water, and the Industrial Development Authority of Fairfax County (IDAFC). The IDAFC does
not have a significant operational or financial relationship with the County. Fairfax Water bills and
collects for the sales of sewer services on behalf of the County’s sewer system. During fiscal year
2013, Fairfax Water collected approximately $136.0 million on behalf of the County, and as of June
30, 2013, the County has receivables of approximately $32.1 million due from Fairfax Water.
Joint Ventures
The County is a participant in the Upper Occoquan Sewage Authority (UOSA). UOSA is a joint
venture created under the provisions of the Virginia Water and Waste Authorities Act to construct,
finance, and operate the regional sewage treatment facility in the upper portion of the Occoquan
Watershed. UOSA was formed on March 3, 1971, by a concurrent resolution of the governing
bodies of Fairfax and Prince William Counties and the Cities of Manassas and Manassas Park. The
governing body of UOSA is an eight-member board of directors consisting of two members from
each participating jurisdiction appointed to four-year terms. The UOSA Board of Directors adopts
an annual operating budget based on projected sewage flows. The County has no explicit and
measurable financial interest in UOSA but does have an ongoing financial responsibility for its share
of UOSA’s operating costs, construction costs and annual debt service. Complete financial statements
of UOSA can be obtained by writing to UOSA, 14631 Compton Road, Centreville, Virginia 20121.
The County is a participant in the Northern Virginia Regional Park Authority (NVRPA). NVRPA is a
joint venture created under the Virginia Park Authorities Act of 1959 to protect and preserve Northern
Virginia’s rich heritage of woods, meadows, lakes, and streams. The governing body of NVRPA
is comprised of two members from each of the 6 member jurisdictions: Fairfax, Arlington, and
Loudoun Counties, and the Cities of Alexandria, Falls Church, and Fairfax. Each member jurisdiction
provides contributions in direct proportion to its share of the region’s population. The County’s
contributions are accounted for in the County Construction capital projects fund. The County has no
Financial Section
45
Basic Financial Statements
explicit and measurable financial interest in NVRPA. Complete financial statements of NVRPA can
be obtained by writing to NVRPA, 5400 Ox Road, Fairfax Station, Virginia 22039.
Jointly Governed Organization
The State Route 28 Highway Transportation Improvement District (District) was created in 1987
under the provisions of the Transportation Improvements District Act by the County and Loudoun
County, Virginia, in conjunction with the Commonwealth of Virginia Transportation Board (CVTB),
for the purpose of undertaking various improvements to State Route 28. The District is governed by
a nine-member Commission comprised of four members from each of the Boards of Supervisors of
the County and Loudoun County and the Chairman of the CVTB or his designee. The County has no
financial interest in the District. See Note J-8 for additional information related to the District.
2.
Basis of Presentation
Government-wide Statements
The statement of net position and the statement of activities display information about the primary
government (the County) and its component units. These statements include the financial activities
of the overall government, except for fiduciary activities. Eliminations have been made to avoid
the double-counting of interfund activities. These statements distinguish between the governmental
and business-type activities of the County. Governmental activities generally are financed through
taxes, intergovernmental revenues, and other non-exchange transactions. Business-type activities
are financed primarily by fees charged to external parties. Likewise, the primary government is
reported separately from certain legally separate component units for which the primary government
is financially accountable.
The statement of activities presents a comparison between direct expenses and program revenues for
each activity of the County. Direct expenses are those that are specifically associated with a program
or function and, therefore, are clearly identifiable to a particular activity. Program revenues include:
(a) fees, fines, and charges paid by the recipients of goods or services offered by the programs and,
(b) grants and contributions that are restricted to meet the operations or capital requirements of a
particular program. Revenues that are not classified as program revenues, including all taxes, are
presented as general revenues.
Fund Financial Statements
The accounts of the reporting entity are organized on the basis of funds, each of which is considered
to be a separate accounting entity. The operations of each fund are accounted for in a separate set
of self-balancing accounts comprised of assets, liabilities, fund equity, revenues, and expenditures
or expenses, as appropriate. The fund financial statements provide information about the County’s
funds, including its fiduciary funds and blended component units. Separate statements for each fund
category—governmental, proprietary, and fiduciary—are presented. The emphasis of fund financial
statements is on major governmental and enterprise funds, with each displayed in a separate column.
All remaining governmental funds are aggregated and reported as nonmajor funds.
The County reports the following major fund types:
General Fund - The General Fund is the County’s primary operating fund, and it is used to
account for all revenue sources and expenditures which are not accounted for in other funds.
Enterprise Fund - The Fairfax County Integrated Sewer System (Sewer System) is the only
enterprise fund of the County. This fund is used to account for the financing, construction,
and operations of the countywide sewer system.
46
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Notes to the Financial Statements
The County reports the following nonmajor governmental fund types:
Special Revenue Funds - The special revenue funds are used to account for the proceeds of
specific revenue sources (other than debt service and major capital projects) that are legally
restricted or committed to expenditure for specified purposes.
Debt Service Fund - The debt service fund is used to account for the accumulation of
resources for, and the payment of, the general obligation debt service of the County and for
the debt service of the lease revenue bonds and special assessment debt. This includes the
general obligation debt the County has issued to fund Public Schools capital projects.
Capital Projects Funds - The capital projects funds are used to account for financial resources
used for all general construction projects other than enterprise fund construction.
The County reports the following additional fund types:
Internal Service Funds - These funds are proprietary funds used to account for the provision
of general liability, malpractice, and workers’ compensation insurance, health benefits for
employees and retirees, vehicle services, document services, and technology infrastructure
support that are provided to County departments on a cost reimbursement basis.
Pension and Other Post-Employment Benefits (OPEB) Trust funds – These are fiduciary
funds used to account for the assets held in trust by the County for the employees and
beneficiaries of its defined benefit pension and OPEB plans – the Employees’ Retirement
System, the Police Officers Retirement System, the Uniformed Retirement System, and the
Other Post-Employment Benefits (OPEB) Trust Fund.
Agency Funds - These are fiduciary funds used to account for monies received, held, and
disbursed on behalf of developers, welfare recipients, the Commonwealth of Virginia, the
recipients of certain bond proceeds, and certain other local governments.
3.
Measurement Focus and Basis of Accounting
Government-wide, Proprietary, and Fiduciary Fund Statements
The government-wide, proprietary, and trust fund financial statements are reported using the
economic resources measurement focus and the accrual basis of accounting. The agency funds also
use the accrual basis of accounting to recognize assets and liabilities. Revenues are recorded when
earned, and expenses are recorded at the time liabilities are incurred, regardless of when the related
cash flows take place. Non-exchange transactions, in which the County gives (or receives) value
without directly receiving (or giving) equal value in exchange, include property taxes, grants, and
entitlements. On an accrual basis, revenue from property taxes is recognized in the fiscal year for
which the taxes are levied. Revenue from grants and entitlements is recognized in the fiscal year
in which all eligibility requirements have been satisfied. For the trust funds, member and employer
contributions as applicable are recognized in the period in which the contributions are due. Benefits
and refunds are recognized when due and payable in accordance with the terms of each plan.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating
revenues and expenses generally result from providing services and producing and delivering goods
in connection with a proprietary fund’s principal ongoing operations. For the Sewer System, principal
operating revenues include sales to existing customers for continuing sewer service. Operating
expenses include the cost of sales and services, administrative expenses, and depreciation on capital
assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues
Financial Section
47
Basic Financial Statements
and expenses. Also, unbilled Sewer System receivables, net of an allowance for uncollectable
accounts, are recorded at year end to the extent they can be estimated.
As a general rule, the effect of interfund activity has been eliminated from the government-wide
financial statements. Exceptions to this general rule are charges between the government’s Sewer
System and various other functions of the government; elimination of these charges would distort the
direct costs and program revenues reported for the various functions concerned.
Governmental Fund Financial Statements
Governmental funds are reported using the current financial resources measurement focus and
the modified accrual basis of accounting. Under this method, revenues are recognized when
measurable and available. Revenue from the use of money and property and from intergovernmental
reimbursement grants is recorded as earned. Other revenues are considered available to be used
to pay liabilities of the current period if they are collectible within the current period or within 45
days thereafter. The primary revenues susceptible to accrual include property, business license, and
other local taxes and intergovernmental revenues. In applying the susceptible to accrual concept to
intergovernmental revenues, the legal and contractual requirements of the individual programs are
used as guidance. Expenditures are recorded when the related fund liability is incurred, except that
principal and interest on general long-term debt and certain other general long-term obligations,
such as compensated absences and landfill closure and postclosure care costs, are recognized only
to the extent they have matured. General capital asset acquisitions are reported as capital outlays in
governmental funds. The issuance of general long-term debt and acquisitions under capital leases are
reported as other financing sources. The effect of interfund activity has not been eliminated from the
governmental fund financial statements.
4.
Pooled Cash and Temporary Investments
The County maintains cash and temporary investments for all funds and component units in a
single pooled account, except for certain cash and investments required to be maintained with fiscal
agents or in separate pools or accounts in order to comply with the provisions of bond indentures.
As of June 30, 2013, the pooled cash
and temporary investments have been
allocated between the County and the
Primary Government
respective component units based upon
Nonmajor Governmental Funds
$
3,444,155
their respective ownership percentages.
Temporary investments consist of money
Internal Service Funds
178,524
market investments that have a remaining Total primary government
3,622,679
maturity at the time of purchase of one year
or less and are reported at amortized cost,
which approximates fair value. Interest
Component Units
earned, less an administrative charge, is
Public Schools
1,966,751
allocated generally to the respective funds
FC RHA
41,889
and component units based on each fund’s
Park Authority
16,183
or unit’s equity in the pooled account.
In accordance with the County’s legally
2,024,823
Total component units
adopted operating budget, interest earned
by certain funds is assigned directly to the
General Fund. For the year ended June 30, Total reporting entity
$
5,647,502
2013, interest earned by these funds and
assigned directly to the County’s General
Fund is as shown on the right.
48
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Notes to the Financial Statements
5.
Cash and Cash Equivalents
For purposes of the statements of cash flows, the amounts reported as cash and cash equivalents for
the proprietary fund types represent amounts maintained in the reporting entity’s investment pool, as
they are considered to be demand deposits for the purpose of complying with GASB Statement No.
9, “Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entities
that use Proprietary Fund Accounting.”
6.
Investments
Money market investments that have a remaining maturity at the time of purchase of one year or less
are reported at amortized cost, which approximates fair value. Other investments are reported at fair
value. Securities traded on a national or international exchange are valued at the last reported sales
price at current exchange rates. Asset-backed securities are valued on the basis of future principal and
interest payments and are discounted at prevailing interest rates for similar investments. Investment
ownership is recorded as of the trade date. Transactions are finalized and money movement occurs
on the settlement date. For the retirement system, cash received as collateral on securities lending
transactions and investments made with such cash are reported as assets and as related liabilities for
collateral received.
7.
Investments in Derivatives
The County Retirement Systems (the Systems), which include the Employees’ (ERS), Police Officers
(PORS), and Uniformed (URS) Retirement Systems, as well as the Educational Retirement System
(ERFC) of the Public Schools component unit, invest in derivatives as permitted by the Code of
Virginia and in accordance with policies set by their respective Board of Trustees. Derivative
instruments are financial contracts with valuations dependent on the values of one or more underlying
assets, reference rates or financial indices. Detailed information on derivative investments is found in
Note B.
8.
Inventories
The consumption method of accounting for inventories is used. Under this method, inventories are
expensed as they are consumed as operating supplies and spare parts in the period to which they
apply.
9.
Restricted Assets
Restricted assets are liquid assets which have third-party limitations on their use. When both
restricted and unrestricted resources are available for use, it is the government’s policy to use
restricted resources first, then unrestricted resources as they are needed.
Unspent amounts from the issuance of general obligation bonds are reported as restricted assets
in the County’s capital projects funds. The County also holds certificates of deposit purchased by
developers and cash deposits under the terms of performance agreements. The County may require a
developer to enter into these agreements in order to ensure that certain structures and improvements
are completed according to approved site plans. The certificates, issued by various financial
institutions, and cash deposits are released to the developer when the terms of the agreement have
been satisfied. If the terms of the agreement are not satisfied, the County uses the cash deposits and
proceeds from the certificates to correct or complete the project as necessary. The amount of the
certificates and cash deposits held is reported as restricted assets in the General Fund.
Financial Section
49
Basic Financial Statements
In accordance with the provisions of the 1985 General Bond Resolution as modified through July
2009, certain assets of the Sewer System are restricted for specific future uses, such as repayment
of debt obligations, payments on construction projects, and extensions and improvements. Certain
assets are restricted to fund the construction of nitrogen removal facilities. As of June 30, 2013, the
Sewer System has cash and investments that are restricted for the following uses:
Restricted Assets of the Sewer System
Extensions and improvements
$ 88,671,882
Nitrogen removal facilities
Long-term debt service requirements
28,123,678
C urrent debt service requirements
15,035,893
Total restricted assets
$ 131,831,453
In accordance with requirements of the U. S. Department of Housing and Urban Development and
the Virginia Housing Development Authority, the FCRHA is required to maintain certain restricted
deposits and funded reserves for repairs and replacements.
The Park Authority has restricted assets representing the amount of the debt service reserve
requirement pertaining to its outstanding revenue bonds and unspent amounts from general obligation
bonds issued by the County.
10.
Capital Assets
Capital assets, including land, permanent easements, buildings, improvements, equipment, library
collections, purchased capacity, and infrastructure, that individually cost $5,000 or more and
software with a cost of $100,000 or more, with useful lives greater than one year, are reported in the
proprietary funds and applicable governmental or business-type activities columns in the governmentwide financial statements. The County has capitalized general infrastructure assets, including
solid waste disposal facilities, storm water management facilities, public drainage systems, mass
transportation facilities, commercial revitalization improvements, and public trails and walkways that
were acquired or substantially improved subsequent to July 1, 1980. The County does not capitalize
roads and bridges as these belong to the Commonwealth of Virginia.
Purchased capacity consists of payments made by the Sewer System under intermunicipal agreements
with the District of Columbia Water and Sewer Authority (Blue Plains), UOSA, Alexandria Sanitation
Authority (ASA), Arlington County, Loudoun
Water, and Prince William County Service
Authority (PWSA) for the Sewer System’s
C apital Assets
Useful Lives
allocated share of improvements to certain
Infrastructure
10 - 50 years
specified treatment facilities owned and operated
Sewer
lines
50 years
by these jurisdictions.
Purchased capital assets are stated at historical
cost or estimated historical cost. Donated capital
assets are recorded at their estimated fair market
value as of the date of donation. Capital assets are
depreciated/amortized over their estimated useful
lives using the straight-line method. The estimated
useful lives are shown in the table on the right.
50
Buildings
20 - 50 years
Purchased capacity
30 - 99 years
Improvements
15 - 25 years
Equipment
Library collections
Software
5 - 20 years
5 years
5 - 20 years
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Notes to the Financial Statements
No depreciation is taken in the year of acquisition for library collections; depreciation/amortization on
other capital assets commences when the assets are purchased or are substantially complete and ready
for use. For constructed assets, all associated costs necessary to bring such assets to the condition
and location necessary for their intended use, including interest on related debt with respect to the
Sewer System, are initially capitalized as construction in progress and are transferred to buildings,
improvements, and equipment when the assets are substantially complete and ready for use.
11.
Compensated Absences
All reporting entity employees earn annual leave based on a prescribed formula which allows
employees with less than ten years of service to accumulate a maximum of 240 hours and employees
with ten years or more of service to accumulate a maximum of 320 hours of annual leave as of
the end of each year. In addition, employees, except for Public Schools employees, may accrue
compensatory leave for hours worked in excess of their scheduled hours. Compensatory leave in
excess of 240 hours at the end of the calendar year is forfeited.
The current pay rate, including certain additional employer-related fringe benefits, is used to calculate
compensated absences accruals at June 30. The entire liability for compensated absences is reported
in the government-wide and proprietary fund statements; whereas, only the matured portion resulting
from employee resignations and retirements is reported in the governmental fund statements.
12.
Net Position
Net position is comprised of three categories: Net investment in capital assets; Restricted net
position; and Unrestricted net position. The first category of net position consists of capital assets,
net of accumulated depreciation, reduced by the outstanding balances of bonds that are attributable
to these capital assets. Restricted net position is restricted assets reduced by liabilities and deferred
inflows of resources related to those assets. As of June 30, 2013, the primary government had $259.1
million restricted net position, of which $172.0 million was restricted by enabling legislation. Net
position which is neither restricted nor related to net investment in capital assets, is reported as
unrestricted net position.
The County issues debt to finance the construction of school facilities for the Public Schools and park
facilities for the Park Authority component units because Public Schools does not have borrowing or
taxing authority and the Park Authority does not have taxing authority. The County reports this debt,
whereas the Public Schools and Park Authority report the related capital assets and unspent bond
proceeds. As a result, in the Statement of Net Position (Exhibit A), the debt reduces unrestricted net
position for the primary government, while the capital assets are reported in net investment in capital
assets and the unspent bond proceeds are reported in restricted net position for Public Schools and the
Park Authority.
Because this debt is related to capital assets and restricted assets of the reporting entity as a whole,
the debt amount of $1,596.3 million is reclassified as shown below to present the total reporting entity
column of Exhibit A.
Primary
Government
Net Position (summarized)
C omponent
Units
Reclassification
of Debt Issued for:
Park
Total
Authority
Reclassifcation of
Facilities
Debt Issued
Public
Schools
Facilities
Total
Reporting
Entity
Net Investment in capital assets,
net of related debt
$
Restricted
Unrestricted
Net position
Financial Section
2,515,732,148
2,657,066,914
(1,292,610,815)
(170,766,127)
(1,463,376,942)
259,064,039
164,311,950
(125,610,375)
(7,345,966)
(132,956,341)
(1,510,303,419)
$
1,264,492,768
3,709,422,120
290,419,648
320,757,438
1,418,221,190
178,112,093
1,596,333,283
406,787,302
3,142,136,302
-
-
-
4,406,629,070
51
Basic Financial Statements
13.
Fund Balance Classification
The Board of Supervisors, as the highest level of authority within the County, establishes the
commitment of fund balance to purposes through the approval of the annual budget plan by
resolution, in conjunction with the resolutions associated with the establishment of fee and tax rates,
and acceptance or appropriation of funds. All subsequent changes to the budget plan to add, reduce,
or redirect resources to other purposes are also accomplished by board resolution. As a result, all
unrestricted amounts directed toward a purpose are shown as committed. Balances shown as assigned
in the general fund represent encumbrances which would otherwise be unassigned.
The County considers restricted balances to be expended first in cases where both restricted and
unrestricted amounts are available. When utilizing unrestricted balances, committed balances are
applied first, followed by assigned then unassigned balances.
14.
Encumbrances
The County uses encumbrance accounting, under which purchase orders, contracts, and other
commitments for the expenditure of funds are recorded to reserve that portion of the applicable
appropriation. Encumbrances represent the estimated amount of expenditures ultimately to result
if unperformed contracts and open purchase orders are completed. Encumbrances for the capital
projects funds do not lapse until the completion of the projects and are reported as reservations
of fund balance at year end. Funding for all other encumbrances lapses at year end and requires
reappropriation by the Board. Funds with significant encumbrance balances are as follows:
Encumbrance
Balance
Primary Government
General Fund
Public safety, courts, and judicial
$
General public works
6,013,982
5,537,668
Social services, health and welfare
13,324,618
Housing and community development
966,157
Parks, recreation, and cultural
2,979,001
Other purposes
14,981,485
Total General Fund
43,802,911
Capital Projects Funds
C apital Project
15.
$
61,246,415
Stabilization and Managed Reserve
In 1983, through resolution the Board of Supervisors established a policy to maintain a managed
reserve in the general fund at a level sufficient for temporary financing of unforeseen emergency
needs or to permit orderly adjustment to changes resulting from the termination of revenue sources
through actions of other governmental bodies. The reserve is maintained at a level of not less than 2.0
percent of total general fund disbursements. The balance is adjusted as a part of the quarterly budget
review process.
In 1999, the Board of Supervisors passed a resolution establishing the revenue stabilization fund.
The revenue stabilization fund is included in the general fund for reporting purposes. The purpose of
the revenue stabilization fund is to provide a mechanism for maintaining a balanced budget without
52
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Notes to the Financial Statements
resorting to tax increases and expenditure reductions that aggravate the stresses imposed by the
cyclical nature of the economy. Three specific criteria must be met to draw from this fund. Projected
revenues must reflect a decrease greater than 1.5% from the current year estimate, withdrawals
must not exceed one-half of the fund balance in any fiscal year, and withdrawals must be used in
conjunction with spending cuts or other measures.
16.
Recovered Costs
Reimbursements from another government, organization, or private company for utilities, tuition fees,
vehicle insurance, and services rendered or provided to citizens are recorded as recovered costs in the
fund financial statements.
17.
Intermunicipal Agreements
The Sewer System has entered into several intermunicipal agreements for the purpose of sharing
sewage flow and treatment facility costs (see Note K). The payments made to reimburse operating
costs and debt service requirements are recorded as expenses in the year due. Payments made to
fund the Sewer System’s portion of facility expansion and upgrade costs are capitalized as purchased
capacity (see Note F). The Sewer System amortizes these costs over the period in which benefits are
expected to be derived, which is generally 30 years.
The City of Fairfax (the City) makes payments to the County for the City’s share of certain
governmental services and debt service costs. Payments for governmental services such as court, jail,
custody, health, library, and County agent services are recorded as revenue in the General Fund. Debt
service payments represent the City’s share of principal and interest and are recorded as revenue in
the County Debt Service Fund. In addition, the City pays the County a share of the local portion of
all public assistance payments and services including related administrative costs, which is recorded
as revenue in the General Fund. The City of Falls Church makes payments to the County for the full
cost of the local portion of public assistance payments (including allocated administrative costs) and
for the use of special County health facilities by Falls Church residents. These payments are recorded
as revenue in the General Fund.
The County and the cities of Fairfax and Falls Church comprise the Fairfax-Falls Church Community
Services Board (CSB), established under State mandate in 1969, to provide mental health, intellectual
disability and drug and alcohol abuse treatment services to residents of the three jurisdictions. The
CSB uses the County as its fiscal agent. The operations of the CSB, including payments received
from these cities for services performed by the County, are reported in a special revenue fund.
18.
Deficit fund balance
The Capital Renewal Construction Fund had a deficit fund balance at June 30, 2013, of $7.3 million.
This fund is primarily funded from a transfer from the County General Fund, with additional revenue
from the Virginia Department of Transportation and Virginia State Police. The deficit fund balance
will be eliminated through a transfers from the County General Fund. Detailed information regarding
this fund may be found in Exhibits F and F-1.
19.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual
results could differ from those estimates.
Financial Section
53
Basic Financial Statements
B.
Deposits and Investments
1.
Deposit and Investment Policies
The reporting entity maintains an investment policy, the overall objectives of which are the
preservation of capital and the protection of investment principal; maintenance of sufficient liquidity
to meet operating requirements; conformance with federal, state, and other legal requirements;
diversification to avoid incurring unreasonable risks regarding specific security types or individual
financial institutions; and attainment of a market rate of return. Oversight of investment activity is
the responsibility of the Investment Committee, which is comprised of the chief financial officer and
certain key management and investment staff.
It is the reporting entity’s policy to pool for investing purposes all available funds of the County
and its component units that aren’t otherwise required to be kept separate. The investment policy,
therefore, applies to the activities of the reporting entity with regard to investing the financial assets of
its pooled investment funds.
The primary government’s pension trust funds have adopted investment policies to provide a wellmanaged investment program to meet the long-term goals of the pension trust funds, provide a high
degree of diversification, maintain appropriate asset coverage of fund liabilities, and also optimize
investment return without introducing higher volatility to contribution levels. Investment decisions
for the funds’ assets are made by the Boards of Trustees or investment managers selected by the
Boards of Trustees. While the pension trust funds are not subject to the provisions of the Employee
Retirement Income Security Act (ERISA), the Boards of Trustees endeavor to adhere to the spirit of
ERISA. The Boards of Trustees believe that risks can be managed, but not eliminated, by establishing
constraints on the investment portfolio and by properly monitoring the investment markets, the
pension trust funds’ asset allocation, and investment managers. Furthermore, investment portfolios
have specific benchmarks and investment guidelines.
The component unit’s pension trust fund’s investment decisions are made by its Board of Trustees
or the investment advisors selected by the Board of Trustees. The Board of Trustees manages the
fund’s investments under the umbrella of an approved set of investment objectives, guidelines,
and performance standards. The objectives are formulated in response to the fund’s anticipated
financial needs, risk tolerance, and the need to document and communicate objectives, guidelines,
and standards to the fund’s investment managers. The Board of Trustees may grant exceptions to the
investment guidelines based on written requests and appropriate justification. All exceptions that are
approved are included in an appendix to the written guidelines.
The primary government’s OPEB trust fund and its component unit’s OPEB trust fund are participants
in the Virginia Pooled OPEB Trust. Funds of participating jurisdictions are pooled and are invested
in the name of the Virginia Pooled OPEB Trust sponsored by the Virginia Municipal League and
the Virginia Association of Counties (VML/VACo). The primary government’s and component
unit’s respective shares in this pool are reported on the face of the corresponding OPEB trust fund
statements as found in the other supplementary information section of the CAFR. The Board of
Trustees of the Virginia Pooled OPEB Trust has adopted an investment policy to achieve a compound
annualized total rate of return over a market cycle, including current income and capital appreciation,
in excess of 5.0 percent after inflation, in a manner consistent with prudent risk-taking. Investment
decisions for the funds’ assets are made by the Board of Trustees. The Board of Trustees establishes
investment objectives, risk tolerance and asset allocation policies in light of the investment policy,
market and economic conditions, and generally prevailing prudent investment practices. The Board
of Trustees also monitors the investments to ensure adherence to the adopted policies and guidelines.
In addition, the Trustees review, monitor, and evaluate the performance of the investments and its
54
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Notes to the Financial Statements
investment advisors in light of available investment opportunities, market conditions, and publicly
available indices for the generally accepted evaluation and measurement of such performance.
Specific investment information for the Virginia Pooled OPEB Trust can be obtained by writing to
VML/VACo Finance Program, 919 East Main Street, Suite 1100, Richmond, Virginia 23219.
The Code of Virginia (Code) authorizes the reporting entity to purchase the following types of
investments:
•
Commercial paper
•
U.S. Treasury and agency securities
•
U.S. Treasury strips
•
Negotiable certificates of deposits and bank notes
•
Money market funds
•
Bankers acceptances
•
Repurchase agreements
•
Medium term corporate notes
•
Local government investment pool
•
Asset-backed securities
•
Hedged debt obligations of sovereign governments
•
Securities lending programs
•
Obligations of the Asian Development Bank
•
Obligations of the African Development Bank
•
Obligations of the International Bank for Reconstruction and Development
•
Obligations of the Commonwealth of Virginia and its instrumentalities
•
Obligations of counties, cities, towns, and other public bodies located within the
Commonwealth of Virginia
•
Obligations of state and local government units located within other states
•
Savings accounts or time deposits in any bank or savings institution within the
Commonwealth that complies with the Code
However, the investment policy precludes the investment of pooled funds in derivative securities,
reverse repurchase agreements, security lending programs, asset-backed securities, hedged debt,
obligations of sovereign governments, obligations of the Commonwealth of Virginia and its
instrumentalities, obligations of counties, cities, towns, and other public bodies located within the
Commonwealth of Virginia and obligations of state and local government units located within other
states.
The Code also authorizes the reporting entity to purchase other investments for its pension trust funds
and OPEB trust funds, including common and preferred stocks and corporate bonds that meet the
standard of judgment and care set forth in the Code. The pension trust funds’ Boards of Trustees’
Financial Section
55
Basic Financial Statements
investment policies permit these funds to lend their securities to broker-dealers and other entities
(borrowers) for collateral that will be returned for the same securities in the future.
2.
Interest Rate Risk
The reporting entity’s policy is to minimize the risk that the market value of securities in its portfolio
will fall due to changes in market interest rates. To achieve this minimization of risk, the reporting
entity structures the pooled investment portfolio so that sufficient securities mature to meet cash
requirements for ongoing operations, thereby avoiding the need to sell securities on the open market
prior to maturity. Pooled investments that are purchased to meet liquidity needs shall have a target
weighted average maturity of 90 days. All other pooled funds are invested primarily in shorter-term
securities, with a maximum maturity of one year. The reporting entity’s pooled investments as of
June 30, 2013, are summarized at fair value as shown below:
Investment Type
Fair Value
Weighted
Average
Maturity
(Days)
Primary Government - Pooled Investments:
Pooled Investments:
Agency discount notes
$
C ommercial paper
C orporate Notes
Money market funds
Negotiable certificates of deposit
Total fair value
98,357,944
2.28
532,336,514
54.82
3,903,449
0.08
74,036,743
0.01
596,280,851
21.12
$ 1,304,915,501
Portfolio weighted average maturity
78.31
Component Units - Pooled Investments:
Agency discount notes
$
C ommercial paper
C orporate Notes
Money market funds
Negotiable certificates of deposit
Total fair value
$
Portfolio weighted average maturity
35,742,056
2.28
193,444,486
54.82
1,418,465
0.08
26,904,034
0.01
216,681,064
21.12
474,190,105
78.31
The primary government’s pension trust funds manage interest rate risk for fixed income accounts
by limiting the credit quality of the securities held as well as the duration of the portfolio against
the duration of the benchmark. The component unit’s pension trust fund’s fixed income managers
utilize the modified duration method to manage interest rate risk. In addition, the fund’s investment
policy states that the average effective duration of each manager’s portfolio should be within 30
percent of the portfolio’s benchmark duration.
56
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Notes to the Financial Statements
The investments in debt securities of the pension trust funds of the reporting entity as of June 30,
2013, are summarized at fair value as shown below:
Investment Type
Fair Value
Duration
(Years)
Primary Government - Pension Trust Funds:
U.S. Government securities
$
C orporate and other bonds
Asset-backed securities *
Short-term investments
Total fair value
95,082,751
6.0
46,047,990
8.5
27,997,277
5.9
493,803,311
3.4
60,081,461
5.8
90,516,896
5.2
208,141,967
3.2
68,538,931
4.2
88,660,593
4.2
323,460,170
0.1
29,674,338
0.1
143,238,485
0.1
$ 1,675,244,170
Component Unit - Pension Trust Fund:
U.S. Treasuries
$
Agencies
Asset-backed securities *
C ash and C ash equivalents
C orporate bonds
Municipal bonds
101,163,027
4.1
12,808,451
1.7
2,991,078
6.7
13,245,154
0.2
146,515,176
6.0
8,934,563
4.7
109,120,931
2.6
2,589,013
3.2
Foreign bonds
48,531,974
2.1
C onvertible and preferred bonds
12,971,731
7.5
Emerging markets
51,102,964
4.7
25,618,198
535,592,260
0.8
Mortgages
C ommercial mortgage-backed security
Other
Total fair value
$
* The underlying assets of the asset-backed securities are
predominantly mortgages.
3.
Credit Risk
The reporting entity’s policy is to minimize the risk of loss due to the failure of an issuer or other
counterparty to an investment to fulfill its obligations. The reporting entity pre-qualifies financial
institutions, broker-dealers, intermediaries, and advisers with which the County does business. In
addition, the reporting entity limits its pooled investments to the safest types of securities and
diversifies its pooled investment portfolio so that potential losses on individual securities will
be minimized. Also, new investments shall not be made in securities that are listed on Moody’s
Investors Service, Inc. (Moody’s) Watchlist or Standard & Poor’s, Inc. (S&P) Credit Watch with a
negative short term rating. The policy specifies the following acceptable credit ratings for specific
types of investments in the pooled portfolio:
Financial Section
57
Basic Financial Statements
• U.S. government sponsored enterprise instruments shall be rated by both Moody’s and S&P
with a minimum rating of Prime 1 and A-1, respectively.
• Prime quality commercial paper shall be rated by at least two of the following: Moody’s, with
a rating of P-1; S&P, A-1; Fitch Investor’s Services, Inc. (Fitch), F-1; or by Duff and Phelps,
Inc., D-1.
• Mutual funds must have a rating of AAA or better by S&P, Moody’s, or another nationally
recognized rating agency.
• Bank deposit notes must have a rating of at least A-1 by S&P and P-1 by Moody’s.
• Banker’s acceptances shall be rated by at least two of the following: Moody’s, with a rating of
P-1; S&P, A-1; Fitch Investor’s Services, Inc. (Fitch), F-1; or by Duff and Phelps, Inc., D-1.
• Corporate notes must have a rating of at least Aa by Moody’s and a rating of at least AA by
S&P.
While the overall investment guidelines for the primary government’s pension trust funds do not specifically address credit risk, investment managers have specific quality limits appropriate for the type
of mandate they are managing and that fit within the total risk tolerance of the fund. The component
unit’s pension trust fund’s investment policy states that the average credit quality of a fixed income
portfolio must be at least AA. The policy also permits up to 10 percent of the portfolio to be invested
in Moody’s or S&P’s quality rating below Baa or BBB, respectively. If a security is downgraded below the minimum rating, the investment manager must notify the Board of Trustees and an exception
to the guidelines must be granted in order for the security to remain in the portfolio.
As of June 30, 2013, the reporting entity had investments in the following issuers with credit quality
ratings as a percent of total investments in debt securities as shown on the opposite page:
58
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Notes to the Financial Statements
C redit Quality Rating *
Investment Type
AAA
AA
A
BBB
BB
B
Below B
Unrated
Primary Government
Pooled Investments:
C ommercial paper
-
Money market funds
-
%
0.6 %
-
12.4 %
-
-
%
-
%
-
%
-
%
22.0
4.9
C orporate notes
-
0.3
-
-
-
-
-
-
Negotiable
-
7.9
31.0
-
-
-
-
-
Insured
-
-
-
-
-
-
-
3.0
-
6.5
-
-
-
-
-
-
1.2
10.2
-
-
-
-
-
**%
**
C ertificates of deposit:
Agency discount note
Demand deposit account
**
Pension Trust Funds:
U.S. Government securities
0.3 %
9.8 %
-
C orporate and other bonds
2.0
2.2
4.3
%
1.7
-
%
5.7
-
%
8.0
-
%
2.8
-
Asset-backed securities
0.2
8.0
0.3
0.6
0.5
0.3
8.0
Short-term investments
-
2.1
-
-
-
-
-
%
-
%
11.9
3.8
27.5
Component Units
Pooled Investments:
C ommercial paper
-
Money market funds
-
C orporate notes
Negotiable
Insured
Agency discount note
%
0.6 %
-
12.4 %
-
-
%
-
-
%
-
-
%
-
-
%
-
22.0
4.9
-
0.3
-
-
-
-
-
-
-
7.9
31.0
-
-
-
-
-
-
-
-
-
-
-
-
3.0
-
6.5
-
-
-
-
-
-
1.2
10.2
-
-
-
-
-
Demand deposit account
**%
**
**
Pension Trust Fund:
Government securities/agencies
Mortgage-backed securities
-
%
9.1 %
-
0.3
6.4
0.1
Domestic bonds
-
0.5
2.6
C onvertible bonds
-
-
-
2.2
0.3
6.6
-
-
-
International bonds
C ash and cash equivalents
%
0.1
%
-
%
-
%
-
%
4.3
-
-
-
8.9
3.6
1.7
0.6
0.6
0.8
-
-
0.9
3.5
2.0
-
-
3.4
-
-
-
-
3.5
%
0.1
37.9
* C redit quality ratings are determined using S&P's long-term rating schema, which approximates the greatest degree of risk as of
June 30, 2013.
** Insured C D's are not rated by rating agencies. Though not rated on S&P long term, the 22.0% of C ommercial Paper and 4.9% of
Money Market Funds held in pooled investments are rated A1 and AAA-m, respectively, on S&P short-term schema.
Financial Section
59
Basic Financial Statements
4.
Concentration of Credit Risk
The reporting entity’s investment policy sets the following limits for the types of securities held in its
pooled investment portfolio:
Repurchase agreements, money market funds and demand deposit accounts
30%
maximum
Bank notes, banker's acceptances and negotiable certificates of deposit
40%
maximum
C ommercial paper
35%
maximum
C orporate notes
25%
maximum
100%
maximum
40%
maximum
US Treasury and agency securities
Non-negotiable certificates of deposit
In addition, not more than 5 percent of the total pooled funds available for investment at the time
of purchase may be invested in any one issuing or guaranteeing corporation for commercial paper,
banker’s acceptances, corporate notes, and bank notes. The County shall seek to maintain 5% of the
investment portfolio in a combination of mutual funds, demand deposit accounts or open repurchase
agreements to meet liquidity requirements.
While the overall investment guidelines for the primary government’s pension trust funds do not
specifically address concentration of credit risk, investment managers have specific concentration
limits appropriate for the type of mandate they are managing and that fit within the total risk tolerance
of the fund. The pension trust funds do not have investments (other than U.S. Government and U.S.
Government-guaranteed obligations) in any one organization that represents 5 percent or more of net
position available for benefits. The component unit’s pension trust fund’s policy for equity holdings
is to limit securities of any one issuer to the greater of 5 percent or the security’s weight in the benchmark index plus 2 percent of each equity portfolio at market value. For fixed income holdings, the
securities of any one issuer with the exception of U.S. Government and its agencies are limited to 10
percent at cost and 15 percent at market of each fixed income portfolio. In addition, the combined
allocation to non-U.S. bonds, below investment grade securities, emerging market debt, and convertible bonds may not exceed 35 percent of the portfolio. Concerning cash, no more than 10 percent of
the cash portfolio shall be invested in certificates of deposit or bankers acceptances issued by any
single bank. Up to 35 percent of the cash portfolio may be invested in commercial paper and corporate bonds, with no more than 5 percent invested with any single issuer. Each manager’s portfolio
should have no more than 5 percent of its assets allocated to cash. These policies were implemented
to ensure diversification of the portfolio.
5.
Custodial Credit Risk
For deposits, custodial credit risk is the risk that in the event of a failure of a depository financial
institution, the reporting entity may not recover its deposits. In accordance with the Virginia Security
for Public Deposits Act (Act), all of the reporting entity’s deposits are covered by federal depository
insurance or collateralized in accordance with the Act, which provides for the pooling of collateral
pledged by financial institutions with the Treasurer of Virginia to secure public deposits as a class.
No specific collateral can be identified as security for one public depositor, and public depositors are
prohibited from holding collateral in their name as security for deposits. If any member financial
institution fails, the entire collateral pool becomes available to satisfy the claims of governmental
entities. If the value of the pool’s collateral is inadequate to cover a loss, additional amounts are
assessed on a pro rata basis to the members of the pool. The State Treasury Board is responsible
for monitoring compliance with the collateralization and reporting requirements of the Act and for
notifying local governments of compliance by participating financial institutions. A multiple financial
institution collateral pool that provides for additional assessments is similar to depository insurance,
60
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Notes to the Financial Statements
therefore, funds deposited in accordance with the requirements of the Act are considered to be fully
insured.
For investments, custodial credit risk is the risk that, in the event of the failure of a counterparty,
the reporting entity will not be able to recover the value of its investments or collateral securities
that are in the possession of an outside party. Per policy, all of the investments purchased by the
reporting entity are insured or registered or are securities held by the reporting entity or its agent in
the reporting entity’s name.
The Boards of Trustees of the pension trust funds permit the funds to participate in a securities
lending program, which is administered by a custodian. Under this program, certain securities are
loaned to approved broker/dealers who borrow the securities and provide collateral in the form of
cash, U.S. Treasury or government agency securities, letters of credit, and other securities as specified
in the securities lending agreement. The value of the collateral for domestic securities must equal
102 percent of the market value of the security and 105 percent of the market value of the foreign
security. The custodian monitors the market value of the collateral on a daily basis. Cash collateral
is invested in a fund which is maintained by the custodian or its affiliate. The pension trust funds
did not impose any restrictions during the period on the amounts of loans security lending agents
made on their behalf, and the agents have agreed to indemnify the pension trust funds by purchasing
replacement securities, or returning the cash collateral thereof, in the event a borrower fails to return
loaned securities or pay distributions thereon. There were no such failures by any borrower during
the fiscal year, nor were there any losses during the period resulting from the default of a borrower or
lending agent. At year end, the pension trust funds had no custodial credit risk exposure to borrowers
because the amounts the pension trust funds owed the borrower exceeded the amounts the borrowers
owed the pension trust funds. Information pertaining to the securities lending transactions as of June
30, 2013, is as follows:
Underlying
Securities Lent
Securities
Primary Government - Pension Trust Funds:
Lent for cash collateral:
U.S. Government securities
$
3,100,047
C orporate and other bonds
6,059,643
C ommon and preferred stock
64,138,611
Lent for securities collateral:
U.S. Government securities
78,489,762
C orporate and other bonds
3,887,792
C ommon and preferred stock
193,181,943
Total securities lent
$
348,857,798
Component Unit - Pension Trust Fund:
Lent for cash collateral:
U.S. Government and agency securities $
Domestic corporate bonds
Domestic stock
International stock
Total securities lent
$
6.
1,925,021
6,593,923
52,324,482
3,986,141
64,829,567
C ash C ollateral
Investment Value
Securities
C ollateral
Investment Value
3,163,945
6,214,970
66,396,709
-
75,775,624
80,670,106
3,967,711
212,887,397
297,525,214
1,964,661
6,753,205
53,587,572
4,193,530
66,498,968
-
Foreign Currency Risk
Per the reporting entity’s policy, pooled investments are limited to U.S. dollar denominated
instruments. The pension trust funds are allowed to invest in foreign currency denominated
instruments. The component unit’s pension trust fund’s policy allows investment managers to invest
Financial Section
61
Basic Financial Statements
up to 25 percent of the portfolio in securities issued by non-U.S. guarantors with up to 10 percent
in emerging markets. As of June 30, 2013, the fair value in U.S. dollars of the pension trust funds’
foreign currency investments are as follows:
International Securities
C ash and
C ash
Equivalents
C onvertible
and
Fixed Income
Equity
Total
U.S. Dollars
Primary Government - Pension Trust Funds:
Australian dollar
$
67,968
30,036,289
23,189,651
5,166
2,315,655
5,042,963
7,363,784
British pound sterling
291,600
40,100,370
45,766,128
86,158,098
C anadian dollar
161,621
11,116,742
1,363,201
12,641,564
-
7,612,093
5,084,792
12,696,885
635,826
57,956,102
51,156,127
109,748,055
47,344
29,247,296
6,568,122
35,862,762
-
2,940,349
6,013,305
8,953,654
888,059
58,063,303
49,194,837
108,146,199
Brazil real
Danish krone
Euro currency unit
Hong Kong dollar
Hungarian forint
Japanese yen
Malaysian ringgit
Mexican new peso
53,293,908
-
3,119,762
6,479,736
9,599,498
434,942
13,316,103
23,244,220
36,995,265
New Turkish Lira
-
1,960,358
4,025,407
5,985,765
2,955
2,232,511
5,389,419
7,624,885
Norwegian krone
-
-
3,317,374
3,317,374
Philippines peso
-
130,675
1,100,149
1,230,824
Polish zloty
-
3,049,410
6,272,563
9,321,973
6,072
10,837,733
4,721,968
15,565,773
28,550
5,608,716
4,699,090
10,336,356
-
3,166,088
7,999,251
11,165,339
273,201
8,085,766
5,406,709
13,569,260
14
15,309,367
7,898,219
23,207,600
72,183
3,266,113
1,797,561
5,135,857
2,915,501
309,470,801
275,730,792
587,920,678
New Zealand dollar
Singapore dollar
South African comm rand
South Korean won
Swedish krona
Swiss franc
Other currencies
Total fair value
$
Component Unit - Pension Trust Fund:
Australian dollar
$
Brazil real
C anadian dollar
4,533,115
3,733,573
8,345,106
29,075
1,319,733
12,232,194
13,581,002
59,005
11,201,414
6,313,729
17,574,148
1,481,005
-
671,291
2,152,296
96,963
-
4,179,923
4,276,886
C zech koruna
2,521
-
-
2,521
Danish krone
-
1,035,166
-
1,035,166
Euro currency unit
558,184
67,179,721
1,288,276
69,026,181
Hong Kong dollar
420,952
14,761,042
-
15,181,994
C hilean peso
C olumbian peso
Hungarian forint
83
-
2,194,601
2,194,684
9,594
257,649
-
267,243
Israeli Shekel
10,114
-
-
10,114
Japanese yen
175,706
46,420,387
-
46,596,093
Malaysian ringgit
Indonesian rupian
105,720
1,418,822
4,315,452
5,839,994
Mexican new peso
5,593
1,297,169
7,941,978
9,244,740
New Taiwan Dollar
-
4,618,994
-
4,618,994
New Turkish Lira
10,608
2,204,287
2,566,572
4,781,467
New Zealand dollar
34,735
165,321
7,286,014
7,486,070
Norwegian krone
13,161
4,946,245
2,723,572
7,682,978
-
-
2,689,845
2,689,845
Philippine peso
85,333
40,561
-
125,894
Polish zloty
98,279
418,355
6,324,943
6,841,577
Pound Sterling
242,872
48,861,069
279,568
49,383,509
Russian rouble
-
-
3,238,945
3,238,945
94
1,297,673
4,933,380
6,231,147
46,483
6,444,095
4,362,008
10,852,586
5,645
9,214,948
2,217,393
11,437,986
99
5,400,984
-
5,401,083
206,825
17,337,545
-
17,544,370
Peruvian nuevo sol
South African comm rand
Singapore dollar
South Korean Won
Swedish krona
Swiss franc
Thailand baht
Total fair value
62
78,418
$
574,641
1,743,581
-
2,318,222
4,351,708
252,117,876
79,493,257
335,962,841
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Notes to the Financial Statements
7.
Derivatives
In order to enhance investment returns and manage risk exposure, the Primary government’s pension
trust funds regularly invest in derivative financial instruments with off-balance-sheet risk. The
Systems also entered into derivative transactions to gain exposure to currencies and markets where
derivatives are the most cost-effective instrument. During fiscal year 2013, the Systems invested
directly in various derivatives including asset-backed securities, collateralized mortgage obligations,
exchange-traded futures contracts, forward currency contracts, options, swaps, and floating rate
securities. Some traditional on balance sheet securities, such as structured notes, can have derivativelike characteristics where the return may be linked to one or more indices. Asset-backed securities,
such as collateralized mortgage obligations (CMOs), are sensitive to changes in interest rates and
pre-payments. Futures, forwards, options, and swaps generally are not recorded on the financial
statements, whereas floating rate securities, structured notes, and asset-backed securities are recorded.
The Systems also have exposure to derivatives indirectly through its ownership interests in certain
hedge funds, mutual funds and commingled funds which may use, hold or write derivative financial
instruments.
Derivative investments may involve credit and market risk in excess of amounts recognized on the
financial statements. The Systems could be exposed to risk if the counterparties to the contracts
are unable to meet the terms of the contracts. Holders of futures contracts look to the exchange for
performance under the contract and not to the other party holding the offsetting futures position;
therefore, the amount at risk due to nonperformance of counterparties to futures contracts is minimal.
For counterparties involving over the counter derivatives, the Boards of Trustees of the pension trust
funds seek to control such risk through counterparty credit evaluations, counterparty credit limits,
and exposure monitoring procedures conducted by investment managers and staff. To address
counterparty risk, the Systems instruct the investment managers who use swaps, forwards, and options
to only enter into contracts with counterparties rated at investment grade of BBB or better by at least
one nationally recognized rating agency.
The Systems held four types of derivative financial instruments with notional values carried offbalance sheet: futures, swaps, currency forwards, and options. Those financial instruments provide
the Systems with the opportunity to build passive benchmark positions, manage portfolio duration
in relation to various benchmarks, adjust portfolio yield curve exposure, enhance returns, and gain
market exposure to various indices in a more efficient way and at lower transaction costs. Risk is
inherent to most investments.
Futures contracts are contracts to deliver or receive securities at a specified future date and at a
specified price or yield. Futures contracts are traded on organized exchanges (exchange-traded) and
typically require an initial margin (collateral) in the form of cash or marketable securities. The net
change in the futures contract value is settled daily with the exchanges in cash and the net gains or
losses are included in the
System’s financial statements.
Future C ontract Types
Amount
Holders of futures contracts
Primary Government - Pension Trust Funds:
look to the exchange for
C ash & C ash Equivalent Futures:
performance under the contract
Long
$
87,077,523
and not to the entity holding
Equity Futures:
the offsetting futures position.
Long
360,482,220
Accordingly, the amount at
Fixed Income Futures:
risk posed by nonperformance
Long
208,892,211
of counterparties to futures
Short
(452,657)
contracts is minimal. The
C ommodity Futures
notional value of the Systems’
Long
17,667,058
investment in futures contracts
Short
(5,675,425)
at June 30, 2013 is shown in
Total
$
667,990,930
the table on the right.
Financial Section
63
Basic Financial Statements
The Systems enter into several types of swap contracts in which two counterparties agree to exchange one
stream of payments for another over some agreed to period of time. Swaps are used to manage risk and
enhance returns. All counterparties are rated A or better. The Systems’ swap contracts outstanding at June 30,
2013 is summarized as follows:
Swap Types
Base Exposure
Market Value
Primary Government - Pension Trust Funds:
Equity Swaps:
Total Return Swaps
$
Variance Swaps
(2,620,881)
3,130
11,962
3,130
Fixed Income Swaps:
C redit Default Swaps
Inflation Swaps
Interest Rate Swaps
Total Return Swaps
(29,275)
(27,900)
51,833
51,833
522,451
522,248
(4,248,595)
(30,086)
4,896
(6,316,440)
4,896
536,083
C ommodity Swaps:
C ommodity Swaps
Total
$
Option contracts may be exchanged traded or negotiated directly in over the counter transactions between
two counterparties. Options holders have the right, but not the obligation, to purchase or sell a financial
instrument at a future price and date. The Systems can both purchase and write options. Exchange traded
options rely on the exchange for performance and the risk to non-performance of counterparties is minimal.
All counterparties for over the counter options are rated A or better. The Systems option contracts at June 30,
2013 are presented as follows:
Proceeds
Market Value
Primary Government - Pension Trust Funds:
C ash & cash Equivalent Options:
Put
$
(15,605)
(1,161)
C ommodity Options:
C all
(23,202)
(516,520)
Equity Options:
C all
(11,440)
17
Put
(13,660)
(5,384)
Fixed Income Options:
C all
(24,499)
(12,786)
Put
(128,470)
(201,441)
Total
$
(216,876)
(737,275)
Unrealized
Gain/(loss)
14,444
(493,318)
11,457
8,276
11,713
(72,971)
(520,399)
Currency forwards represent foreign exchange contracts and are used to effect settlements and to protect
the base currency value of portfolio assets denominated in foreign currencies against fluctuations in the
exchange rates of those currencies or to gain exposure to the change in market value of a specific currency.
A forward foreign currency exchange contract is a commitment to purchase or sell a foreign currency at a
future date and at a negotiated price. The credit risk of currency contracts that are exchange-traded lies with
the clearinghouse of the exchange where the contracts are traded. The credit risk of currency contracts traded
over-the counter lies with the counterparty, and exposure usually is equal to the unrealized profit on in-the
money contracts. All counterparties are rated A or better. The market risk in foreign currency contracts is
64
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Notes to the Financial Statements
related to adverse movements in currency exchange rates. The net unrealized gain on foreign currency spot
and forward contract at June 30, 2013 was $1,971,777, and the Systems’ currency forwards contracts are
summarized as follows:
Notional
Foreign C urrency C ontracts Purchased
(Local C urrency)
Primary Government - Pension Trust Funds:
Australian Dollar
Fair Value of Foreign
C urrency C ontract
Payable in U.S. Dollars
(26,075,185) $
C anadian Dollar
2,806,857
(1,652,000)
58,605
(19,019,039)
177,813
Pound Sterling
(633,167)
12,436
Hong Kong Dollar
(640,361)
Euro C urrency Unit
(31)
Indian Rupee
(42,374,690)
13,964
Japanese Yen
(188,433,471)
15,269
Mexican New Peso
(4,232,560)
212
New Zealand Dollar
(8,500,000)
119,476
Philippines Peso
(9,223,142)
Polish Zloty
Russian Rubel (New)
Swedish Krona
Singapore Dollar
Foreign C urrency C ontracts Sold
3,865
(143,800,000)
146,756
(475,149)
392
(729,425)
S African C omm Rand
South Korean Won
Total Foreign C urrency C ontracts Purchased
(366)
(989,155)
(524)
(1,187,098)
11,078
(10,852,000,000)
$
Notional
(Local C urrency)
305,716
3,671,518
Fair Value of Foreign
C urrency C ontract
Receivable in U.S. Dollars
Primary Government - Pension Trust Funds:
Australian Dollar
Brazil Real
C anadian Dollar
C hilean Peso
Euro C urrency Unit
Pound Sterling
173,957
$
9,564,515
(1,685)
(458,853)
844,000
(26,958)
3,638,770,000
(141,715)
3,963,204
(88,336)
9,374,000
(340,708)
Indian Rupee
680,380,700
(353,314)
Japanese Yen
241,043,650
(77,359)
17,011,369
(25,766)
Mexican New Peso
Polish Zloty
Russian Rubel (New)
Singapore Dollar
S African C omm Rand
South Korean Won
Thailand Baht
Total Foreign C urrency C ontracts Sold
Financial Section
1,250,720
(14,451)
143,800,000
(170,905)
41,094
105
130,500
162
42,551,663
5
1,166,118
$
(90)
(1,699,868)
65
Basic Financial Statements
As permitted by the Board’s policies, the Systems hold off balance sheet derivatives in a small number of
separately managed accounts. Investment managers are prohibited from purchasing securities on margin
or using leverage unless specifically permitted within the investment manager’s guidelines. Derivative
instruments covered under the scope of GASB 53 are reported at fair value. The changes in fair value of
derivative instruments that are used for investment purposes are reported within the investment revenue
classification. Gains and losses on derivative securities are determined based upon fair market values as
determined by our custodian and recorded in the Statement of Changes in Plan Net Position of the pension
trust funds.
During the fiscal year, consistent with standard accounting principle guidelines, the ERFC invested in
currency forward derivatives that were not reported on the financial statements as of June 30, 2013. These
derivatives are used for hedging non-USD denominated physical instruments back to the base currency. As
of June 30, 2013, exposure to the currency forward contracts was $(906,824). In addition, the ERFC had
indirect investments in derivatives through its ownership interest in EB DV Large Capital Stock Fund and
Emerging Markets Debt Fund, plus with two of the Private Real Estate managers. These portfolios are
commingled funds in which ERFC has a percentage ownership. Derivatives in these portfolios consisted of
interest rate swaps which reduce the effect of interest rate fluctuations by converting floating rate financing
into fixed rate loans for real estate investments. Futures, because they are more liquid than over the counter
derivatives, have among the lowest transaction costs available, carry minimal counterparty risk and are de
facto currency hedged. Non Deliverable Forward’s (NDF’s) obtain exposure to a currency and its interest rate
where the actual purchase of onshore debt is difficult. The interest rate exposure comes through the difference
between the spot F/X rate and the forward F/X rate, and through investing the USD cash used as collateral in
short dated US bonds. At June 30, 2013, exposure to interest rate swaps was $163,432, exposure to futures
contracts was $227,872, exposure to NDF’s was $1,510,081, and exposure to commodity forwards was
$179,569.
C.
Property Taxes
Real estate is assessed on January 1 each year at the estimated fair market value of all land and improvements.
Real estate taxes are due in equal installments, on July 28 and December 5. Unpaid taxes automatically
constitute liens on real property which must be satisfied prior to sale or transfer, and after three years,
foreclosure proceedings can be initiated.
Personal property taxes on vehicles and business property are based on the estimated fair market value at
January 1 each year. The tax on a vehicle may be prorated for the length of time the vehicle has situs in the
County. A declaration form is required to be filed, and there is a ten percent penalty for late filing. Personal
property taxes are due on October 5, with certain exceptions. Delinquency notices are sent before statutory
measures, such as the seizure of property and the placing of liens on bank accounts and/or wages, are
initiated.
Real estate and personal property taxes not paid by the due dates are assessed a ten percent late payment
penalty on the tax amount. Furthermore, interest accrues from the first day following the due date at an
annual rate of ten percent for the first year and thereafter at the rate set by the Internal Revenue Service. The
net delinquent taxes receivable, including interest and penalties, as of June 30, 2013, after allowances for
uncollectible amounts, is $20,494,032 of which $2,807,642 has been included in tax revenue for fiscal year
2013 because it was collected within 45 days after June 30.
As required by GAAP, the County reports real estate and personal property taxes (net of allowances) assessed
for calendar year 2013 as receivables (net of payments totaling $98,142,459 received in advance of the due
date) and deferred tax revenue because the County has an enforceable legal claim to these resources at June
30, 2013; however, these resources, which amount to $2,743,662,768, will not be available to the County until
fiscal year 2014.
66
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Notes to the Financial Statements
The 1998 Virginia General Assembly enacted the Personal Property Tax Relief Act to provide property
tax relief on the first $20,000 of value of motor vehicles not used for business purposes. Due to budget
constraints, the 2003 Virginia General Assembly froze the tax reduction at 70 percent. The 2005 Virginia
General Assembly revised this measure further to limit its tax relief payments to all localities to a total of
$950 million per tax year beginning with 2006 (fiscal year 2007). The County’s fixed share of the $950
million is $211,313,944, as determined by its share of the total payments made to all localities by the
Commonwealth during calendar years 2004 and 2005 for tax year 2004 (fiscal year 2005). The County’s fixed
share from the Commonwealth is reported as intergovernmental revenue in the General Fund.
D.
Receivables
Receivables and allowances for uncollectible receivables of the primary government, excluding fiduciary
funds, at June 30, 2013, consist of the following:
Nonmajor
Governmental
Funds
General
Fund
Internal
Service
Funds
Enterprise
Fund
Total Primary
Government
(Exhibit A)
Receivables:
Accounts
$
Accrued interest
17,568,393
15,225,614
208,793
54,132
33,056,932
49,340
3,955,545
2,774
1,527
4,009,186
Property taxes:
Delinquent
Not yet due
Business license taxes - delinquent
Loans
Total receivables
35,435,391
-
-
-
35,435,391
2,439,387,004
-
-
-
2,439,387,004
10,436,078
-
-
-
10,436,078
-
58,484,315
-
-
58,484,315
2,502,876,206
77,665,474
211,567
55,659
2,580,808,906
(5,381,382)
(270,080)
-
-
(5,651,462)
Allowances for uncollectibles:
Accounts receivable
Property taxes:
Delinquent
Not yet due
Business license taxes - delinquent
Loans
(15,062,516)
-
-
-
(15,062,516)
(5,180,638)
-
-
-
(5,180,638)
(7,285,571)
-
-
-
(7,285,571)
(911,890)
-
-
(911,890)
(1,181,970)
-
-
(34,092,077)
211,567
55,659
-
Total allowances for uncollectibles
Total net receivables
(32,910,107)
$ 2,469,966,099
76,483,504
2,546,716,829
Receivables of the component units, excluding fiduciary funds, at June 30, 2013, consist of the following:
Public
Schools
FC RHA
Total
C omponent
Units
Park
Authority
Receivables:
Accounts
Accrued interest
Notes
Total receivables
Allowances for uncollectibles
Total net receivables
Financial Section
$ 4,097,440
1,050,713
4,675
172,210
326,480
62,268
560,958
-
28,149,819
-
28,149,819
4,269,650
29,527,012
66,943
33,863,605
$ 4,269,650
(1,801,730)
27,725,282
66,943
5,152,828
(1,801,730)
32,061,875
67
Basic Financial Statements
Delinquent property taxes receivable from taxpayers in the General Fund as of June 30, 2013, consist of the
following:
Real
Estate
Personal
Property
7,206,414
7,042,757
14,249,171
2011
2,308,825
3,124,609
5,433,434
2010
1,196,799
2,230,045
3,426,844
Prior years
1,977,748
4,573,194
6,550,942
12,689,786
16,970,605
29,660,391
Year of Levy
2012
$
Total delinquent taxes
Penalty and interest
Total
5,896,157
Total delinquent taxes, penalty and interest
35,556,548
Allowances for uncollectibles
(15,062,516)
Net delinquent tax receivables
$ 20,494,032
Amounts due to the primary government and component units from other governmental units at June 30,
2013, include the following:
Primary Government
Nonmajor
Enterprise
Governmental
Fund
Funds
General
Fund
Federal government
2,479,866
C omponent
Unit Public
Schools
Total
(Exhibit A)
11,909,047
1,237,620
15,626,533
43,334,449
-
-
-
-
-
-
-
-
-
-
-
-
211,313,944
-
State government:
Property tax relief:
Delinquent
Allowance for
uncollectibles
Property tax relief - not yet due
211,313,944
Allowance for
uncollectibles
Other
Local governments
Total intergovernmental units
44,286,830
-
-
-
-
8,148,125
1,300,000
53,734,955
19,610,925
1,283,326
6,280,484
42,982,591
50,546,401
417,521
$ 259,363,966
26,337,656
45,520,211
331,221,833
63,362,895
Federal-Build America Bond subsidy
726,358
Total (Exhibit A)
E.
331,948,191
Interfund Balances and Transfers
Interfund
Receivables
Primary Government
General Fund
Nonmajor Governmental Funds
Payments for fringe benefits are made through
Enterprise Fund
the General Fund on behalf of all funds of the
Internal Service Funds
County. As a result, interfund payables primarily
Total
primary government
represent the portion of fringe benefits to be paid by
certain other funds to the General Fund. Interfund Component Unit
receivables and payables are also recorded when
Public Schools:
funds overdraw their share of pooled cash. All
General Fund
amounts are expected to be paid within one year.
Nonmajor Governmental Funds
The composition of interfund balances as of June 30, Internal Service Funds
Fiduciary Funds
2013, is as shown on the right.
Total component units
68
Interfund
Payables
$ 5,450,834
-
1,827,249
7,837,249
-
270,125
829,291
-
$ 8,107,374
8,107,374
$ 6,746,800
-
-
5,878,000
-
831,100
-
37,700
$ 6,746,800
6,746,800
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Notes to the Financial Statements
Due to/from primary government and component units represent amounts paid by one entity on behalf of the
other entity. Due to/from primary government and component units as of June 30, 2013, are as follows:
Receivable Entity
Payable Entity
Component Units
Primary Government
Amount
Public Schools
General Fund
Park Authority
General Fund
Park Authority
Nonmajor Governmental Fund
367,763
EDA
General Fund
484,394
$
279,978
1,415,255
Total
Primary Government
General Fund
Component Unit
FC RHA
General Fund
Park Authority
$
2,547,390
$
128,676
234,666
$
Total
363,342
The primary purpose of interfund transfers is to provide funding for operations, including those of the FairfaxFalls Church Community Services Board, debt service, and capital projects. Interfund transfers for the year
ended June 30, 2013, are as follows:
Transfers In
Transfers Out
Primary Government
General Fund
$ 10,030,457
485,201,216
515,305,143
51,152,920
Nonmajor Governmental Funds
Internal Service Funds
Total primary government
11,018,536
-
$ 536,354,136
536,354,136
Component Unit
Public Schools:
General Fund
C apital Projects Fund
Nonmajor Governmental Funds
Total component units
Financial Section
$
-
30,393,112
7,616,120
-
22,776,992
-
$ 30,393,112
30,393,112
69
Basic Financial Statements
F.Capital Assets
Capital assets activity for the primary government for the year ended June 30, 2013, is as follows:
Balances
July 1, 2012
Increases
Balances
June 30, 2013
Decreases
Primary Government
Governmental activities:
Non-depreciable/non-amortizable:
Land
$
Easements
C onstruction in progress
Equipment under construction
Software in development
Total non-depreciable/non-amortizable
417,792,216
816,917
(206,883)
3,605,076
-
(50,018)
418,402,250
3,555,058
208,056,448
142,121,089
(40,236,702)
309,940,835
21,337,570
25,103,378
(33,785,577)
12,655,371
4,377,149
1,571,733
(2,031,048)
3,917,834
655,168,459
169,613,117
(76,310,228)
748,471,348
(32,911,640)
384,571,807
Depreciable/amortizable:
377,402,681
40,080,766
Software
Equipment
70,637,283
16,160,332
-
Library collections
83,928,314
3,557,440
-
87,485,754
1,200,022,802
8,352,202
-
1,208,375,004
Improvements
120,360,182
13,051,219
(35,860)
133,375,541
Infrastructure
692,432,866
31,027,817
(822,718)
722,637,965
2,544,784,128
112,229,776
(33,770,218)
2,623,243,686
Buildings
Total depreciable/amortizable
86,797,615
Less accumulated depreciation/amortization for:
Equipment
Software
Library collections
Buildings
Improvements
Infrastructure
Total accumulated depreciation/amortization
Total capital assets, being depreciated/amortized, net
Total capital assets, net - Governmental activities
(211,758,289)
(33,684,389)
27,592,925
(1,936,424)
(5,136,532)
-
(7,072,956)
(73,546,886)
(3,747,947)
-
(77,294,833)
(354,613,415)
(25,640,520)
50,018
(380,203,917)
(48,846,154)
(4,174,212)
(218,411,154)
(16,022,260)
(909,112,322)
(4,953,037)
348,547
(217,849,753)
(57,973,403)
(234,084,867)
(88,405,860)
23,038,453
1,635,671,806
23,823,916
(10,731,765)
1,648,763,957
(974,479,729)
2,290,840,265
193,437,033
(87,041,993)
2,397,235,305
17,370,540
36,783
-
371,381
35,448
-
85,651,793
48,647,937
(19,150,542)
115,149,188
103,393,714
48,720,168
(19,150,542)
132,963,340
11,617,382
1,889,262
(1,327,223)
823,610,880
45,436,821
-
Business-type activities:
Non-depreciable/non-amortizable:
Land
Easements
C onstruction in progress
Total non-depreciable/non-amortizable
17,407,323
406,829
Depreciable/amortizable:
Equipment
Purchased capacity
Buildings
Infrastructure
Total depreciable/amortizable
12,179,421
869,047,701
88,398,832
-
-
88,398,832
1,021,344,142
25,033,104
-
1,046,377,246
1,944,971,236
72,359,187
(1,327,223)
2,016,003,200
Less accumulated depreciation/amortization for:
Equipment
Purchased capacity
Buildings
Infrastructure
Total accumulated depreciation/amortization
Total capital assets, being depreciated/amortized, net
Total capital assets, net - Business-type activities
Total capital assets, net - Primary government
70
$
(8,732,243)
(813,409)
1,170,306
(8,375,346)
(229,434,178)
(28,022,334)
-
(257,456,512)
(37,020,421)
(2,188,049)
-
(39,208,470)
(469,656,322)
(23,334,507)
-
(492,990,829)
(744,843,164)
(54,358,299)
1,170,306
(798,031,157)
1,200,128,072
18,000,888
(156,917)
1,217,972,043
1,303,521,786
66,721,056
(19,307,459)
1,350,935,383
3,594,362,051
260,158,089
(106,349,452)
3,748,170,688
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Notes to the Financial Statements
Capital assets activity for the component units for the year ended June 30, 2013, is as follows:
Balances
June 30, 2012
Increases
Balances
June 30, 2013
Decreases
Component Units
Public Schools
Non-depreciable/non-amortizable:
Land
$
C onstruction in progress
Software in development
Total non-depreciable/non-amortizable
44,869,395
-
194,676,267
108,003,068
(109,305,017)
44,869,395
193,374,318
4,843,645
1,703,127
(281,251)
6,265,521
244,389,307
109,706,195
(109,586,268)
244,509,234
254,773,603
21,194,455
(8,223,612)
267,744,446
4,187,036
678,388
33,477,414
3,507,141
Depreciable/amortizable:
Equipment
Software
Library collections
(2,215,375)
4,865,424
34,769,180
Buildings
1,178,370,955
21,095,241
-
1,199,466,196
Improvements
1,724,134,760
112,002,099
-
1,836,136,859
3,194,943,768
158,477,324
Total depreciable/amortizable
(10,438,987)
3,342,982,105
Less accumulated depreciation/amortization for:
Equipment
(168,631,095)
(15,936,609)
6,054,995
(1,629,917)
(844,584)
-
(2,474,501)
(24,753,427)
(3,721,208)
4,163,796
(24,310,839)
Buildings
(479,242,319)
(30,993,110)
-
(510,235,429)
Improvements
(691,700,341)
(68,570,532)
-
(760,270,873)
(1,365,957,099)
(120,066,043)
10,218,791
(1,475,804,351)
Software
Library collections
Total accumulated depreciation/amortization
Total capital assets, being depreciated/amortized, net
Total capital assets, net - Public Schools
(178,512,709)
1,828,986,669
38,411,281
(220,196)
1,867,177,754
2,073,375,976
148,117,476
(109,806,464)
2,111,686,988
FCRHA
Non-depreciable/non-amortizable:
Land
C onstruction in progress
Total non-depreciable/non-amortizable
42,096,776
-
885,043
1,994,241
(1,046,280)
-
42,096,776
1,833,004
42,981,819
1,994,241
(1,046,280)
43,929,780
Depreciable/amortizable:
Equipment
Buildings and improvements
Total depreciable/amortizable
1,943,111
-
-
1,943,111
217,117,252
980,550
-
218,097,802
219,060,363
980,550
-
220,040,913
Less accumulated depreciation/amortization for:
Equipment
Buildings and improvements
Total accumulated depreciation/amortization
Total capital assets, being depreciated/amortized, net
Total capital assets, net - FCRHA
(5,058,496)
(7,390)
-
(5,065,886)
(108,289,066)
(6,242,213)
-
(114,531,279)
(113,347,562)
(6,249,603)
-
(119,597,165)
105,712,801
(5,269,053)
-
100,443,748
148,694,620
(3,274,812)
(1,046,280)
144,373,528
(19,210,120)
346,960,303
Park Authority
Non-depreciable/non-amortizable:
Land
364,918,503
1,251,920
Easements
17,016,009
-
C onstruction in progress
10,391,490
8,896,661
(5,877,780)
13,410,371
392,326,002
10,148,581
(25,087,900)
377,386,683
(555,030)
Total non-depreciable/non-amortizable
-
17,016,009
Depreciable/amortizable:
Equipment
Buildings and improvements
Total depreciable/amortizable
13,510,516
732,696
353,474,528
12,062,227
366,985,044
12,794,923
(555,030)
13,688,182
365,536,755
379,224,937
Less accumulated depreciation/amortization for:
Equipment
Buildings and improvements
Total accumulated depreciation/amortization
Total capital assets, being depreciated/amortized, net
Total capital assets, net - Park Authority
(11,997,307)
(427,711)
565,176
(11,859,842)
(160,226,880)
(10,036,650)
-
(170,263,530)
(172,224,187)
(10,464,361)
565,176
(182,123,372)
194,760,857
2,330,562
10,146
587,086,859
12,479,143
(25,077,754)
(8,346)
197,101,565
574,488,248
EDA
Depreciable/amortizable:
Equipment
Buildings
Total depreciable/amortizable
47,193
-
767,961
-
815,154
-
(8,346)
38,847
767,961
806,808
Less accumulated depreciation/amortization for:
Equipment
Buildings
Total accumulated depreciation/amortization
Total capital assets, net - EDA
Total capital assets, net - Component units
Financial Section
(43,441)
(2,480)
8,346
(37,575)
(222,957)
(74,319)
-
(297,276)
(266,398)
(76,799)
8,346
(334,851)
548,756
(76,799)
-
$ 2,809,706,211
157,245,008
(135,930,498)
471,957
2,831,020,721
71
Basic Financial Statements
Depreciation and amortization expense for the year ended June 30, 2013, charged to the functions of the
primary government and component units is as follows:
Governmental
Activities
Business-type
Activities
C omponent
Units
Primary Government
General government administration
$20,381,441
-
-
979,728
-
-
Judicial administration
Public safety
11,822,984
-
Public works
15,238,162
54,358,299
-
2,676,178
-
-
Health and welfare
C ommunity development
18,271,430
-
-
7,067,617
-
-
11,968,320
-
120,066,043
Parks, recreation, and cultural
In addition, depreciation on capital assets held by the
C ounty's internal service funds is charged to the various
functions based on asset usage.
Component Units
Public Schools
-
-
FC RHA
-
-
6,249,603
Park Authority
-
-
10,464,361
EDA
Total depreciation and amortization expense
-
-
76,799
$ 88,405,860
54,358,299
136,856,806
G.Retirement Plans
The reporting entity administers the following four separate public employee retirement systems that provide
pension benefits for various classes of employees. In addition, professional employees of Public Schools
participate in a plan sponsored and administered by the Virginia Retirement System (VRS).
1.
Fairfax County Employees’ Retirement System
Plan Description
The Fairfax County Employees’ Retirement System (ERS) is a cost-sharing multiple-employer
defined benefit pension plan which covers only employees of the reporting entity. The plan covers
full-time and certain part-time employees of the reporting entity who are not covered by other plans
of the reporting entity or the VRS. Information regarding membership in the ERS is disclosed in item
6 of this note.
Benefit provisions are established and may be amended by County ordinances. All benefits vest at
five years of creditable service. Members who were hired before January 1, 2013 may elect to join
Plan A or Plan B, and members who were hired on or after January 1, 2013 may elect to join Plan C
or Plan D. To be eligible for normal retirement, an individual must meet the following criteria: (a)
attain the age of 65 with five years of service, (b) for Plans A and B, attain the age of 50 with age
plus years of service being greater than or equal to 80, or (c) for Plans C and D, attain the age of 55
with age plus years of service being greater than or equal to 85. The normal retirement benefit is
calculated using average final compensation (i.e., the highest 78 consecutive two week pay periods
or the highest 36 consecutive monthly pay periods) and years (or partial years) of creditable service
at date of termination. In addition, if normal retirement occurs before Social Security benefits are
scheduled to begin, an additional monthly benefit is paid to retirees. The plan provides that unused
sick leave credit may be used in the calculation of average final compensation by projecting the final
salary during the unused sick leave period. The benefit for early retirement is actuarially reduced and
payable at early termination.
72
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Notes to the Financial Statements
Effective July 1, 2005, a Deferred Retirement Option Program (DROP) was established for eligible
members of the ERS. Members who are eligible for normal service retirement are eligible to
participate in this program. DROP provides the ability for an employee to retire for purposes of the
pension plan, while continuing to work and receive a salary for a period of three years. During the
DROP period, the pension plan accumulates the accrued monthly benefit into an account balance
identified as belonging to the member. The account balance is credited with interest in the amount
of 5.0 percent per annum, compounded monthly. The monthly benefit is calculated using service
and final compensation as of the date of entry in DROP, with increases equal to the annual COLA
adjustment provided for retirees.
The ERS issues a publicly available annual financial report that includes financial statements and
required supplementary information. That report may be obtained by writing to the Employees’
Retirement System, 10680 Main Street, Suite 280, Fairfax, VA 22030, or by calling (703) 279-8200.
Funding Policy
The contribution requirements of ERS members are established and may be amended by County
ordinances. Plan A and Plan C require member contributions of 4.0 percent of compensation up to the
maximum Social Security wage base and 5.33 percent of compensation in excess of the wage base.
Plan B and Plan D require member contributions of 5.33 percent of compensation.
The County is required to contribute at an actuarially determined rate; the rate for the year ended June
30, 2013, was 18.49 percent of annual covered payroll. The decision was made to commit additional
funding and a rate of 19.05 percent was adopted for fiscal year 2013. In the event the ERS’s funded
ratio (the ratio of the actuarial value of assets to the actuarial accrued liability) exceeds 120 percent
or falls below 90 percent, the contribution rate will be adjusted to bring the funded ratio back within
these parameters.
Annual Pension Cost
For the years ended June 30, 2013, 2012, and 2011, the County’s and Public Schools’ annual pension
costs and actual contributions are as follows:
Annual Pension C osts and Actual C ontributions
for Years Ended June 30
2013
C ounty
Public Schools
Total
2012
2011
$ 91,742,368
82,844,146
69,637,538
35,705,650
31,838,392
26,969,997
$ 127,448,018
114,682,538
96,607,535
For the years ended June 30, 2013, 2012, and 2011, the County’s and Public Schools’ annual required
contributions (ARC) are as follows:
ARC for Years Ended June 30
2013
C ounty
Public Schools
Total
Financial Section
$113,847,222
2012
102,784,539
2011
88,254,921
44,308,744
39,501,819
34,180,344
$158,155,966
142,286,358
122,435,265
73
Basic Financial Statements
The ARC for the year ended June 30, 2013 was determined as part of the July 1, 2012, actuarial
valuation using the entry age actuarial cost method. Significant actuarial assumptions used in the
valuation include:
a.
A rate of return on the investment of present and future assets of 7.5 percent per year
compounded annually, including an inflation component of 3.0 percent.
b.
Projected annual salary increases of 4.0 to 10.0 percent, including an inflation component of
3.0 percent.
c.
Cost of living adjustments increases of 2.75 percent.
The actuarial value of ERS’s assets was determined using techniques that smooth the effects of shortterm volatility in the market value of investments over a three-year period. Any excess of these assets
over actuarial accrued liability is amortized as a level percentage of projected payroll over an open 15
year period. The remaining amortization period is 15 years.
For fiscal years ended June 30, 2011 through June 30, 2013, the County’s Employees’ Retirement
System funding progress is as follows:
Actuarial
Unfunded
Accrued
AAL (UAAL)
Liability (AAL)
(Funding
- Entry Age
Excess)
(000) ( b )
(000) ( b-a )
UAAL (Funding
Excess) as a
Percentage of
C overed Payroll
( ( b-a ) / c )
Actuarial
Valuation
Date
Actuarial
Value of
Assets
(000) ( a )
7/1/2010
2,636,052
3,771,060
1,135,008
69.90
629,249
180.38
7/1/2011
2,841,466
4,018,924
1,177,458
70.70
642,073
183.38
7/1/2012
3,053,412
4,264,175
1,210,763
71.61
642,639
188.40
Funded
Ratio
( a/b )
C overed
Payroll
(000) ( c )
Concentrations
The ERS does not have investments (other than U.S. Government and U.S. Government guaranteed
obligations) in any one organization that represent 5.0 percent or more of net position held in trust for
pension benefits.
2.
Fairfax County Police Officers Retirement System
Plan Description
The Fairfax County Police Officers Retirement System (PORS) is a legally separate single-employer
defined benefit pension plan established under the Code of Virginia. The plan covers County police
officers who are not covered by other plans of the reporting entity or the VRS and former Park Police
officers who elected to transfer to the PORS from the Uniformed Retirement System effective January
22, 1983. Information regarding membership in the PORS is disclosed in item 6 of this note.
Benefit provisions are established and may be amended by County ordinances. All benefits vest at
five years of creditable service. To be eligible for normal retirement, an individual must meet the
following criteria: (a) if employed before July 1, 1981; attain the age of 55 or have completed 20
years of creditable service, or (b) if employed on or after July 1, 1981; attain the age of 55 or have
completed 25 years of creditable service. The normal retirement benefit is calculated using average
74
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Notes to the Financial Statements
final compensation and years (or partial years) of creditable service at date of termination. The plan
provides that unused sick leave credit may be used in the calculation of average final compensation
by projecting the final salary during the unused sick leave period. Those sworn in on or after January
1, 2013, may not use more than 2,080 hours of accrued sick leave toward service credit for retirement
or DROP entry. To be eligible for early retirement, the employee must have 20 years of creditable
service (does not apply if hired before July 1, 1981). The benefit for early retirement is actuarially
reduced and payable at early termination.
Effective October 1, 2003, a DROP was established for eligible members of the PORS. Members
who are eligible for normal service retirement are eligible to participate in this program. DROP
provides the ability for an employee to retire for purposes of the pension plan, while continuing to
work and receive a salary for a period of three years. During the DROP period, the pension plan
accumulates the accrued monthly benefit into an account balance identified as belonging to the
member. The account balance is credited with interest in the amount of 5.0 percent per annum,
compounded monthly. The monthly benefit is calculated using service and final compensation as of
the date of entry in DROP, with increases equal to the annual COLA adjustment provided for retirees.
The PORS issues a publicly available annual financial report that includes financial statements and
required supplementary information. That report may be obtained by writing to the Police Officers
Retirement System, 10680 Main Street, Suite 280, Fairfax, VA 22030, or by calling (703) 279-8200.
Funding Policy
The contribution requirements of PORS members are established and may be amended by County
ordinances. Member contributions are based on 10.0 percent of compensation.
The County contributes at a fixed rate as determined by an annual actuarial valuation, unless the
PORS’s funding ratio falls outside of a pre-determined range. Once outside the range, the rate is
either increased or decreased to accelerate or decelerate the funding until the ratio falls back within
the range. The range for the PORS is a minimum funding ratio of 90 percent and a maximum funding
ratio of 120 percent. The actuarial rate for the year ended June 30, 2013, was 32.04 percent of annual
covered payroll. The decision was made to commit additional funding and a rate of 33.15 percent
was adopted for fiscal year 2013.
Annual Pension Cost
Information related to the County’s annual pension cost, ARC, actual contributions, and net pension
obligation (NPO) for fiscal years 2013, 2012, and 2011 are as follows:
2013
ARC , for the year ended June 30
$
Interest on NPO from prior year
Actuarial adjustment
Annual pension cost
Actual contributions
Increase in the NPO, for the year ended June 30
NPO, beginning of year
NPO, end of year
Percentage of annual pension cost contributed
Financial Section
$
2012
2011
43,091,299
39,408,110
4,126,101
3,581,943
36,872,751
3,033,289
(4,959,941)
(4,033,924)
(3,416,039)
42,257,459
38,956,129
36,490,001
(34,011,347)
8,246,112
(31,700,690)
7,255,439
(29,174,611)
7,315,390
55,014,678
63,260,790
47,759,239
55,014,678
40,443,849
47,759,239
80.49%
81.38%
79.95%
75
Basic Financial Statements
The ARC for the year ended June 30, 2013, was determined as part of the July 1, 2012, actuarial
valuation using the entry age actuarial cost method. Significant actuarial assumptions used in the
valuation include:
a.
A rate of return on the investment of present and future assets of 7.5 percent per year
compounded annually, including an inflation component of 3.0 percent.
b.
Projected annual salary increases of 4.8 to 11.0 percent, including an inflation component of
3.0 percent.
c.
Cost of living adjustments increases of 2.75 percent.
The actuarial value of the PORS’s assets was determined using techniques that smooth the effects of
short-term volatility in the market value of investments over a three-year period. Any excess of these
assets over the actuarial accrued liability is amortized as a level percentage of projected payroll over
an open 15 year period. The remaining amortization period is 15 years.
For fiscal years ended June 30, 2011 through June 30, 2013, the County’s Police Officers Retirement
System funding progress is as follows:
Actuarial
Valuation
Date
Actuarial
Value of
Assets
(000) ( a )
Actuarial
Accrued
Liability (AAL)
- Entry Age
(000) ( b )
Unfunded
AAL (UAAL)
(Funding
Excess)
(000) ( b-a )
7/1/2010
899,543
1,135,015
235,472
79.25
7/1/2011
982,154
1,219,609
237,455
7/1/2012
1,035,444
1,286,841
251,397
Funded
Ratio
( a/b )
C overed
Payroll
(000) ( c )
UAAL (Funding
Excess) as a
Percentage of
C overed Payroll
( ( b-a ) / c )
100,500
234.30
80.53
99,070
239.68
80.46
101,121
248.61
Concentrations
The PORS does not have investments (other than U.S. Government and U.S. Government guaranteed
obligations) in any one organization that represent 5.0 percent or more of net position held in trust for
pension benefits.
3.
Fairfax County Uniformed Retirement System
Plan Description
The Fairfax County Uniformed Retirement System (URS) is a single-employer defined benefit
pension plan. The plan covers uniformed employees including non-clerical employees of the Fire
and Rescue Department, Office of Sheriff, Park Police, Helicopter Pilots, Animal Wardens and
Game Wardens who are not covered by other plans of the reporting entity or the VRS. Information
regarding membership in the URS is disclosed in item 6 of this note.
Benefit provisions are established and may be amended by County ordinances. All benefits vest
at five years of creditable service. To be eligible for normal retirement an individual must meet
the following criteria: (a) attain the age of 55 with six years of creditable service, or (b) complete
25 years of creditable service. The normal retirement benefit is calculated using average final
compensation and years (or partial years) of creditable service at date of termination. Annual costof-living adjustments are provided to retirees and beneficiaries equal to the lesser of 4.0 percent or
76
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Notes to the Financial Statements
the percentage increase in the Consumer Price Index for the Washington Consolidated Metropolitan
Statistical Area. The plan provides that unused sick leave credit may be used in the calculation of
average final compensation by projecting the final salary during the unused sick leave period. Those
who commenced employment on or after January 1, 2013, may not use more than 2,080 hours
of accrued sick leave toward service credit for retirement or DROP entry. To be eligible for early
retirement, employees must have 20 years of creditable service. The benefit for early retirement is
actuarially reduced and payable at early termination.
Effective October 1, 2003, a Deferred Retirement Option Program (DROP) was established for
eligible members of the URS. Members who are eligible for normal service retirement are eligible
to participate in this program. DROP provides the ability for an employee to retire for purposes of
the pension plan, while continuing to work and receive a salary for a period of three years. During
the DROP period, the pension plan accumulates the accrued monthly benefit into an account balance
identified as belonging to the member. The account balance is credited with interest in the amount
of 5.0 percent per annum, compounded monthly. The monthly benefit is calculated using service
and final compensation as of the date of entry in DROP, with increases equal to the annual COLA
adjustment provided for retirees.
The URS issues a publicly available annual financial report that includes financial statements and
required supplementary information. That report may be obtained by writing to the Uniformed
Retirement System, 10680 Main Street, Suite 280, Fairfax, VA 22030, or by calling (703) 279-8200.
Funding Policy
The contribution requirements of URS members are established and may be amended by County
ordinances. Plan A members were given the opportunity to enroll in Plan B as of July 1, 1981 and to
enroll in Plan C as of April 1, 1997. From July 1, 1981 through March 31, 1997, all new hires were
enrolled in Plan B. Plan B members were given the opportunity to enroll in Plan D as of April 1,
1997. From April 1, 1997 through December 31, 2012, all new hires were enrolled in Plan D. From
January 1, 2013 forward all new hires are enrolled in Plan E. Plan A requires member contributions
of 4.0 percent of compensation up to the Social Security wage base and 5.75 percent of compensation
in excess of the wage base. Plan B requires member contributions of 7.08 percent of compensation
up to the Social Security wage base and 8.83 percent of compensation in excess of the wage base.
Plan C requires member contributions of 4.0 percent of compensation. Plan D and Plan E require
contributions of 7.08 percent of compensation.
The County contributes at a fixed rate as determined by an annual actuarial valuation, unless the
URS’s funding ratio falls outside of a pre-determined range. Once outside the range, the rate is either
increased or decreased to accelerate or decelerate the funding until the ratio falls back within the
range. The range for the URS is a minimum funding ratio of 90 percent and a maximum funding
ratio of 120 percent. The County is required to contribute at an actuarially determined rate; the rate
for the year ended June 30, 2013, was determined actuarially to be 34.04% of annual covered payroll.
The decision was made to commit additional funding and a rate of 35.00% was adopted for fiscal year
2013.
Annual Pension Cost
Information related to the County’s annual pension cost, ARC, actual contributions, and NPO for
fiscal years 2013, 2012, and 2011 is presented on the following page:
Financial Section
77
Basic Financial Statements
2013
ARC , for the year ended June 30
2012
$ 62,240,960
Interest on NPO from prior year
Actuarial adjustment
2011
57,663,522
53,208,307
3,612,716
3,093,579
2,563,493
(4,342,808)
(3,483,937)
(2,886,962)
Annual pension cost
61,510,868
57,273,164
52,884,838
Actual contributions
(53,722,160)
(50,351,335)
(45,817,015)
Increase in the NPO, for the year ended June 30
NPO, beginning of year
NPO, end of year
7,788,708
6,921,829
7,067,823
48,169,553
$ 55,958,261
41,247,724
48,169,553
34,179,901
41,247,724
Percentage of annual pension cost contributed
87.34%
87.91%
86.64%
The ARC for the year ended June 30, 2013, was determined as part of the July 1, 2012, actuarial
valuation using the entry age actuarial cost method. Significant actuarial assumptions used in the
valuation include:
a.
A rate of return on the investment of present and future assets of 7.5 percent per year
compounded annually, including an inflation component of 3.0 percent.
b.
Projected annual salary increases of 4.8 to 11.0 percent, including an inflation component of
3.0 percent.
c.
Cost of living adjustments increases of 2.75 percent.
The actuarial value of URS’s assets was determined using techniques that smooth the effects of shortterm volatility in the market value of investments over a three-year period. URS’s unfunded actuarial
accrued liability is amortized as a level percentage of projected payroll over an open 15 year period.
The remaining amortization period is 15 years.
For fiscal years ended June 30, 2011 through June 30, 2013, the County’s Uniformed Retirement
System funding progress is as follows:
78
Actuarial
Valuation
Date
Actuarial
Unfunded
Actuarial
Accrued
AAL (UAAL)
Value of
Liability (AAL)
(Funding
Assets
- Entry Age
Excess)
(000) ( a )
(000) ( b )
(000) ( b-a )
Funded
Ratio
( a/b )
7/1/2010
1,095,080
1,427,617
332,537
76.71
146,777
226.56
7/1/2011
1,185,594
1,526,218
340,624
77.68
147,326
231.20
7/1/2012
1,247,526
1,613,654
366,128
77.31
148,236
246.99
C overed
Payroll
(000) ( c )
UAAL (Funding
Excess) as a
Percentage of
C overed Payroll
( ( b-a ) / c )
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Notes to the Financial Statements
Concentrations
The URS does not have investments (other than U.S. Government and U.S. Government guaranteed
obligations) in any one organization that represent 5.0 percent or more of net position held in trust for
pension benefits.
4.
Educational Employees’ Supplementary Retirement System of Fairfax County
Plan Descriptions
The Educational Employees’ Supplementary Retirement System of Fairfax County (ERFC) is a
legally separate single-employer retirement system established under the Code of Virginia. The
ERFC covers all full-time educational and civil service employees who are employed by the Public
Schools and who are not covered by other plans of the reporting entity. The ERFC contains two
plans, ERFC and ERFC 2001. ERFC is the original defined benefit plan effective July 1, 1973, and
remains in effect. It is, however, closed to new members. Effective July 1, 2001, all new-hire fulltime educational and civil service employees are enrolled in the ERFC 2001 plan. This new defined
benefit plan incorporates a streamlined stand-alone retirement benefit structure.
The ERFC and ERFC 2001 plans provide retirement, disability, and death benefits to plan members
and their beneficiaries. Annual post-retirement increases of 3.0 percent are effective each March 31.
All benefits vest after five years of creditable service. Benefit provisions are established and may
be amended by the Fairfax County Public School Board. The ERFC plan supplements the Virginia
Retirement System plan. The benefit structure is designed to provide a level retirement benefit
through a combined ERFC/VRS benefit structure. The ERFC 2001 plan has a stand-alone structure.
Member contributions for the ERFC and ERFC 2001 plans are made through an arrangement which
results in a deferral of taxes on the contributions. Further analysis of member contributions may be
found in Article III of the ERFC and ERFC 2001 Plan Documents.
The ERFC and ERFC 2001 plans provide for a variety of benefit payment types. Minimum eligibility
conditions for receipt of full benefits for ERFC members are either attaining the age of 55 with
25 years of creditable service or completing five years of creditable service at age 65. Minimum
eligibility conditions for receipt of full benefits for ERFC 2001 members are either completing
five years of creditable service prior to age 60 or any age with 30 years of creditable service. A
description of each of the types of benefits payments is contained in the actuarial valuation and the
Plan Documents. Total plan membership for the plans is disclosed in item 6 of this note.
The ERFC issues a publicly available financial report that includes financial statements and required
supplementary information. That report may be obtained by writing to the Educational Employees’
Supplementary Retirement System, 8001 Forbes Place, Springfield, VA 22151.
Funding Policy
The contribution requirements for ERFC and ERFC 2001 members are established and may be
amended by the ERFC Board of Trustees with the approval of the School Board. All members are
required to contribute 4.0 percent of their covered salaries. The employer is required to contribute
at an actuarially determined rate. For fiscal year 2013, Public Schools is required to contribute 5.34
percent of annual covered payroll for educational employees and civil service employees.
Annual Pension Cost
For each of the years ended June 30, 2013, 2012, and 2011, the Public Schools’ annual pension
cost of $67,734,634; $52,934,245; and $47,118,111, respectively, was equal to its ARC and actual
contributions.
Financial Section
79
Basic Financial Statements
The ARC for the year ended June 30, 2013, was determined as part of the December 31, 2012,
actuarial valuation using the entry age actuarial cost method. Significant actuarial assumptions used
in the valuation include:
a.
A rate of return on the investment of present and future assets of 7.5 percent per year
compounded annually, including an inflation component of 3.75 percent.
b.
Projected annual salary increases of 3.75 to 9.05 percent, including an inflation component of
3.75 percent.
c.
Post-retirement benefit increases of 3.0 percent compounded annually.
The actuarial value of the ERFC’s assets was determined using techniques that smooth the effects of
short-term volatility in the market value of investments over a five-year period. Any excess of assets
over the actuarial accrued liability is amortized as a level percentage of closed payrolls over a future
period, which has never exceeded 30 years. The remaining amortization period, which is closed at
December 31, 2012, was 26 years.
For the fiscal years 2011 through 2013, the County’s Educational Employees’ Supplementary
Retirement System funding progress is as follows:
Actuarial
Valuation
Date
Actuarial
Value of
Assets
(000) ( a )
Actuarial
Accrued
Liability (AAL)
- Entry Age
(000) ( b )
Unfunded
AAL (UAAL)
(Funding
Excess)
(000) ( b-a )
Funded
Ratio
( a/b )
C overed
Payroll
(000) ( c )
UAAL (Funding
Excess) as a
Percentage of
C overed Payroll
( ( b-a ) / c )
12/31/2010
1,822,603
2,384,061
561,458
76.45
1,191,290
47.13
12/31/2011
12/31/2012
1,866,952
1,935,292
2,470,964
2,566,128
604,012
630,836
75.56
75.42
1,246,973
1,297,537
48.44
48.62
Concentrations
ERFC’s investment guidelines limit the securities of any one issue to 10 percent at cost and 15
percent at market of each fixed income portfolio. These guidelines allow an exception for U.S.
government securities and its agencies.
5.
Virginia Retirement System
Plan Description
Public Schools contributes to the Virginia Retirement System (VRS) on behalf of covered
professional Public Schools employees. VRS is a cost-sharing multiple-employer public employee
defined benefit pension plan administered by the Commonwealth of Virginia for its political
subdivisions. All full-time, salaried, permanent employees of participating employers must
participate in the VRS.
In accordance with the requirements established by State statute, the VRS provides retirement
and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and
beneficiaries. The VRS issues a publicly available annual report that includes financial statements
and required supplementary information for the VRS. This report can be obtained by writing to the
Virginia Retirement System, P.O. Box 2500, Richmond, VA 23218-2500.
80
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Notes to the Financial Statements
Funding Policy
Plan members are required by State statute to contribute 5.0 percent of their annual covered salary to
the VRS. If a plan member leaves covered employment, the accumulated contributions plus interest
earned may be refunded. In accordance with State statute, Public Schools is required to contribute
at an actuarially determined rate or a rate approved by the General Assembly. In fiscal year 2013,
The General Assembly adopted a highter VRS emplyer contribution rate of 11.66 percent compared
to the prior year rate of 6.33 percent. In fiscal years 2011 and 2012, the General Assembly approved
significantly lower VRS rates in order to mitigate state budget cuts to localities. By doing so, Virginia
school districts are essentially deferring a portion of the recommended employer contibutions in those
years. FCPS will have to repay these deferred contibutions beginning in fiscal year 2013. The FCPS
Board committed $16.9 million of June 30, 2013 fund balance toward this purpose. In addition,
the General Assembly approved an employer rate increase from 0.6 percent in fiscal year 2012 to
1.11 percent in fiscal year 2013 for the VRS Retiree Health Insurance Credit. State statute may be
amended only by the Commonwealth of Virginia Legislature. The combined FCPS employer and
member contributions to VRS, including the Retiree Health Insurance Credit, for the years ended June
30, 2013, 2012, and 2011 were $242,343,488; $146,454,888; and $112,157,560 respectively, equal to
the required contributions for each year.
6.
Current Plan Membership
At July 1, 2012 (December 31, 2012, for ERFC), the date of the latest actuarial valuations,
membership in the reporting entity’s plans consisted of the following:
C omponent Unit Public Schools
Primary Government
ERS
PORS
URS
ERFC
Retirees and beneficiaries receiving benefits
6,888
876
1,109
9,788
Terminated employees entitled to, but not yet receiving, benefits
3,099
1,542
33
44
DROP participants
629
73
119
Active employees
14,107
1,276
1,870
21,519
Total number of plan members
23,166
2,258
3,142
34,406
7.
n/a
Required Supplementary Information
Pension trend data, including the schedule of funding progress and the schedule of employer
contributions, can be found in the required supplementary information section immediately following
the notes to the financial statements.
H.OTHER POST-EMPLOYMENT BENEfiTS
The reporting entity administers two separate other post-employment benefits (OPEB) plans and has
established trust funds to account for the cost of OPEB.
1.
Fairfax County OPEB Plan
Plan Description
The Fairfax County OPEB Trust Fund is a single-employer defined benefit plan administered by
Fairfax County. The County provides medical/dental, vision, and life insurance benefits to eligible
retirees and their spouses. In order to participate, retirees must have reached the age of 55 or be
Financial Section
81
Basic Financial Statements
on disability retirement and must have health benefit coverage in a plan provided by the County.
Retirees must have five years of service in order to participate in this program. Beginning in fiscal
year 2004, the amount of monthly subsidy provided by the County is based on years of service and
ranges from $30 per month to $220 per month. Retirees receiving the subsidy prior to fiscal year
2004 are grandfathered at $100 per month unless their years of service entitle them to receive a higher
monthly subsidy.
In addition, the Board of Supervisors has established a program to subsidize the continuation of term
life insurance, at reduced coverage amounts, for retirees. Retirees generally pay for 50 percent of
their coverage amounts at age-banded premium rates, with the County incurring the balance of the
cost. Benefit provisions are established and may be amended by the Board of Supervisors.
Funding Policy
The contributions to the OPEB Trust Fund are established and may be amended by the Board
of Supervisors. The contributions are typically based on projected pay-as-you-go financing
requirements, with an additional amount to prefund benefits. GASB Statement No. 45 requires
recognition of the current expense of OPEB based on each governing body’s annual required
contribution, but does not require funding of the related liability.
Fairfax County is one of the founding participants in the Virginia Pooled OPEB Trust Fund sponsored
by VML/VACo. The Virginia Pooled OPEB Trust Fund is established as an investment vehicle for
participating employers to accumulate assets to fund OPEB. Plan assets for purposes of GASB
Statement No. 45 are usually in the form of stocks, bonds, and other classes of investments, that
have been segregated and restricted in a trust, in which (a) contributions to the plan are irrevocable,
(b) assets are dedicated to providing benefits to retirees and their beneficiaries, and (c) assets are
legally protected from creditors of the employer or plan administrator, for the payment of benefits in
accordance with the terms of the plan. Further information, including financial statements, can be
obtained by writing to VML/VACo Finance Program, 919 East Main Street, Suite 1100, Richmond,
Virginia 23219.
Annual OPEB Cost
The County’s annual OPEB cost (expense) is calculated based on the annual required contribution
of the employer (ARC), an amount actuarially determined in accordance with the parameters of
GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is
projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding
excess) over a period not to exceed thirty years.
The County’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the
net OPEB asset for 2013, 2012, and 2011 are as follows:
2013
ARC , for the year ended June 30
$
Interest on net OPEB asset from prior year
Actuarial adjustment
Annual OPEB cost
Actual contributions
(Increase) decrease in net OPEB asset, for the year ended June 30
Net OPEB asset, beginning of year
Net OPEB (asset) obligation, end of year
Percentage of annual OPEB cost contributed
82
38,858,000
37,640,000
(153,000)
351,000
127,000
(291,000)
2011
35,373,000
(713,000)
529,000
38,832,000
37,700,000
35,189,000
(38,306,000)
(44,421,000)
(21,004,000)
526,000
$
2012
(6,721,000)
14,185,000
(2,041,610)
(1,515,610)
4,679,390
(2,041,610)
(9,505,610)
4,679,390
98.65%
117.83%
59.69%
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Notes to the Financial Statements
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and
assumptions about the probability of occurrence of events far into the future. Examples include
assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined
regarding the funded status of the plan and the annual required contributions of the employer
are subject to continual revision as actual results are compared with past expectations and new
estimates are made about the future. The schedule of funding progress, also presented as required
supplementary information following the notes to the financial statements, presents multi-year trend
information about whether the actuarial value of plan assets is increasing or decreasing over time
relative to the actuarial accrued liabilities for benefits.
For the fiscal years 2011 through 2013, the County’s OPEB funding progress is as follows:
Actuarial
Accrued
Liability (AAL)
- Entry Age
(000) ( b )
Unfunded
AAL (UAAL)
(Funding
Excess)
(000) ( b-a )
UAAL (Funding
Excess) as a
Percentage of
C overed Payroll
( ( b-a ) / c )
Actuarial
Valuation
Date
Actuarial
Value of
Assets
(000) ( a )
7/1/2010
60,473
489,203
428,730
12.36
777,040
55.17
80,087
474,229
394,142
16.89
799,500
49.30
103,270
503,786
400,516
20.50
824,504
48.58
7/1/2011
7/1/2012
Funded
Ratio
( a/b )
C overed
Payroll
(000) ( c )
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as
understood by the employer and the plan members) and include the types of benefits provided at the
time of each valuation and the historical pattern of sharing of benefit costs between the employer and
plan members to that point. The actuarial methods and assumptions used include techniques that are
designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial
value of assets, consistent with the long-term perspective of the calculations.
The ARC for fiscal year 2013 was determined as part of the July 1, 2012, actuarial valuation using the
entry age actuarial cost method. Significant actuarial assumptions used in the valuation include:
a.
A rate of return on the investment of present and future assets of 7.5 percent per year
compounded annually.
b.
Projected annual salary increases of 3.0 percent.
c.
An annual healthcare cost trend rate of 7.76 percent initial Pre 65 and 7.47 percent Post 65,
reduced by decrements to an ultimate rate of 5.0 percent.
The actuarial value of the OPEB assets was determined using techniques that smooth the effects of
short-term volatility in the market value of investments over a five-year period. Any excess of these
assets over actuarial accrued liability is amortized as a level percentage of projected payroll over an
open 30 year period. The remaining amortization period is 30 years.
The Fairfax County OPEB Trust Fund does not issue a stand-alone financial report and is not included
in the report of a public employee retirement system or of another entity.
Financial Section
83
Basic Financial Statements
Concentrations
The Fairfax County OPEB Trust Fund does not have investments (other than U.S. Government and
U.S. Government guaranteed obligations) in any one organization that represent 5.0 percent or more
of net position held in trust for OPEB benefits.
2.
Public Schools OPEB Plan
Plan Description
The Fairfax County Public Schools OPEB Trust Fund is a single-employer defined benefit plan
administered by the Fairfax County Public Schools (Public Schools). Public Schools provides health
benefits to eligible retirees and their spouses. In order to participate, retirees must have reached the
age of 55 or be on disability retirement and must have health benefit coverage in a plan provided by
Public Schools. There is no minimum number of years of service required to participate in this plan.
Plan participants may continue medical coverage by paying the appropriate subsidized premiums. The
amount of monthly subsidy is based on years of service and ranges from $15 per month to $175 per
month. Benefit provisions may be amended by the School Board.
Funding Policy
The contributions to the Public Schools OPEB Trust Fund are established and may be amended
by the School Board. The contributions are typically based on projected pay-as-you-go financing
requirements, with an additional amount to prefund benefits. The costs of administering the plan are
paid for by the Public Schools OPEB Trust Fund through the use of investment income and employer
contributions. GASB Statement No. 45 requires recognition of the current expense of the plan based
on each annual required contribution, but it does not require funding of the related liability.
Public Schools is a participant in the Virginia Pooled OPEB Trust Fund sponsored by the Virginia
Municipal League and the Virginia Association of Counties (VML/VACo). The Virginia Pooled
OPEB Trust Fund is established as an investment vehicle for participating employers to accumulate
assets to fund OPEB. Plan assets for purposes of GASB Statement No. 45 are usually in the form of
stocks, bonds, and other classes of investments, that have been segregated and restricted in a trust,
in which (a) contributions to the plan are irrevocable, (b) assets are dedicated to providing benefits
to retirees and their beneficiaries, and (c) assets are legally protected from creditors of the employer
or plan administrator, for the payment of benefits in accordance with the terms of the plan. Further
information, including financial statements, can be obtained by writing to VML/VACo Finance
Program, 919 East Main Street, Suite 1100, Richmond, Virginia 23219.
Annual OPEB Cost
Public Schools’ annual OPEB cost (expense) is calculated based on the annual required contribution
(ARC), an amount actuarially determined in accordance with the parameters of GASB Statement
No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover
normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over an
open period not to exceed thirty years.
For the year ended June 30, 2013, 2012, and 2011, Public Schools’ OPEB funding progress is
presented on the following page:
84
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Notes to the Financial Statements
2013
ARC , for the year ended June 30
$
2012
31,142,000
Actuarial adjustment
(9,000)
Annual OPEB cost
Actual contributions
(Increase) decrease in net OPEB asset, for the year ended June 30
Net OPEB obligation (asset), beginning of year
Net OPEB obligation (asset), end of year
$
Percentage of annual OPEB cost contributed
2011
30,630,000
38,163,000
33,000
172,000
31,133,000
30,663,000
38,335,000
(34,471,108)
(42,426,871)
(45,492,399)
(3,338,108)
(11,763,871)
(7,157,399)
(10,054,877)
(13,392,985)
1,708,994
(10,054,877)
8,866,393
1,708,994
110.72%
138.37%
118.67%
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and
assumptions about the probability of occurrence of events far into the future. Examples include
assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined
regarding the funded status of the plan and the annual required contributions of the employer
are subject to continual revision as actual results are compared with past expectations and new
estimates are made about the future. The schedule of funding progress, also presented as required
supplementary information following the notes to the financial statements, presents multi-year trend
information about whether the actuarial value of plan assets is increasing or decreasing over time
relative to the actuarial accrued liabilities for benefits.
For the fiscal years 2011 through 2013, Public Schools’ OPEB funding progress is as follows:
Actuarial
Accrued
Liability (AAL)
- Entry Age
(000) ( b )
Unfunded
AAL (UAAL)
(Funding
Excess)
(000) ( b-a )
UAAL (Funding
Excess) as a
Percentage of
C overed Payroll
( ( b-a ) / c )
Actuarial
Valuation
Date
Actuarial
Value of
Assets
(000) ( a )
7/1/2010
19,563
471,617
452,054
4.15
1,432,000
31.57
40,051
431,303
391,252
9.29
1,005,000
38.93
53,423
448,849
395,426
11.90
1,045,000
37.84
7/1/2011
7/1/2012
Funded
Ratio
( a/b )
C overed
Payroll
(000) ( c )
Projections of benefits for financial reporting purposes are based on Public Schools’ substantive
plan (the plan as understood by Public Schools and the plan members) and include the types of
benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs
between Public Schools and plan members to that point. The actuarial methods and assumptions
used include techniques that are designed to reduce the effects of short-term volatility in actuarial
accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the
calculations.
The ARC for fiscal year 2013 was determined as part of the July 1, 2011, actuarial valuation using the
entry age actuarial cost method. Significant actuarial assumptions used in the valuation include:
a.
A rate of return on the investment of present and future assets of 7.5 percent per year
compounded annually, including an inflation component of 4.0 percent.
b.
An annual healthcare cost trend rate of 8.0 percent, reduced by decrements of 0.5 percent for
the next three years.
The actuarial value of OPEB assets was determined using techniques that smooth the effects of shortterm volatility in the market value of investments over a five-year period. Any excess of these assets
over actuarial accrued liability is amortized as a level percentage of projected payroll over an open 30
year period. The remaining amortization period is 30 years.
Financial Section
85
Basic Financial Statements
The Public Schools OPEB Trust Fund does not issue a stand-alone financial report and is not included
in the report of a public employee retirement system or of another entity.
Concentrations
The Fairfax County Public Schools OPEB Trust Fund does not have investments (other than U.S.
Government and U.S. Government guaranteed obligations) in any one organization that represent 5.0
percent or more of net position held in trust for OPEB benefits.
3.
Current Plan Membership
The latest actuarial valuations for Fairfax County and Fairfax County Public Schools were July 1,
2012 and July 1, 2011, respectively. At that time membership in the reporting entity’s plans consisted
of the following:
Retirees and beneficiaries receiving benefits
Primary
Government
C omponent Unit Public Schools
OPEB
OPEB
4,469
8,636
Active employees
12,954
18,396
Total number of plan members
17,423
27,032
I.Risk Management
The reporting entity is exposed to various risks of loss related to torts, theft of, damage to, and destruction
of assets, errors and omissions, injuries to employees, and natural disasters. The County and Public Schools
maintain self-insurance internal service funds for workers’ compensation claims and certain property and
casualty risks and for health insurance benefits. The County and Public Schools believe that it is more cost
effective to manage certain risks internally rather than purchase commercial insurance. The FCRHA, Park
Authority, and EDA participate in the County’s self-insurance program. Participating funds and agencies are
charged “premiums” which are computed based on relevant data coupled with actual loss experience applied
on a retrospective basis.
Liabilities are reported in the self-insurance funds when it is probable that losses have occurred and the
amounts of the losses can be reasonably estimated. Liabilities include an amount for claims that have
been incurred but not reported to date. Because actual claims liabilities depend on such complex factors as
inflation, changes in governing laws and standards, and court awards, the process used in computing claims
liabilities is reevaluated periodically, to include an annual actuarial study, to take into consideration the
history, frequency and severity of recent claims and other economic and social factors. These liabilities are
computed using a combination of actual claims experience and actuarially determined amounts and include
any specific, incremental claim adjustment expenses and estimated recoveries. The liabilities do not include
nonincremental claim adjustment expenses.
The claims liabilities in the self-insurance funds are discounted at 0.45 percent and 0.60 percent at June 30,
2013 and 2012, respectively, to reflect anticipated investment income. Changes in the balances of claims
liabilities during fiscal years 2013 and 2012 are presented on the following page:
86
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Notes to the Financial Statements
Internal Service Funds
Primary Government
Liability balances, June 30, 2011
C laims incurred
C laims and changes in estimates
C laims payments
Liability balances, June 30, 2012
C omponent Unit - Public Schools
Self-Insurance
Health Benefits
Insurance
$ 40,416,658
11,697,500
29,894,740
16,175,889
138,462,249
11,245,905
(15,098,834)
(132,897,788)
Health Benefits
Trust
18,378,000
-
41,493,713
(9,390,566)
17,261,961
31,750,079
24,850,485
127,037,432
11,831,316
(19,187,198)
(132,776,550)
291,142,914
(289,860,914)
19,660,000
C laims incurred
C laims and changes in estimates
C laims payments
Liability balances, June 30, 2013
$ 47,157,000
11,522,843
(9,290,075)
34,291,320
306,977,640
(307,743,640)
18,894,000
In addition to the self-insurance program, commercial property insurance is carried for buildings and contents
plus certain large and costly items, such as fire apparatus and helicopters. Excess liability and workers’
compensation insurance policies are maintained for exposures above a $1,000,000 self-insured retention.
Settled claims have not exceeded any of these commercial coverages in any of the past three fiscal years.
Financial Section
87
Basic Financial Statements
J.Long-term Obligations
The following is a summary of changes in the government-wide long-term obligations of the primary
government and component units for the year ended June 30, 2013 (in thousands):
Balance
June 30, 2012
Additions
Reductions
Balance
June 30, 2013
Due
Within
One Year
Primary Government
Governmental activities:
General obligation bonds payable:
Principal amount of bonds payable
$ 2,017,435
334,335
(302,930)
2,048,840
176,290
142,772
62,233
(26,960)
178,045
25,816
716,700
42,390
(24,666)
734,424
23,795
33,234
6,319
(3,492)
36,061
3,303
Premium on bonds payable
Revenue bonds payable:
Principal amount of bonds payable
Premium on bonds payable
Discount on bonds payable
(870)
Notes payable, net
-
47
(823)
(46)
8,708
-
(645)
8,063
645
26,725
24,650
(26,725)
24,650
3,185
917
-
(917)
-
-
105,873
64,838
(63,002)
107,709
63,235
Landfill closure and postclosure obligation
64,350
68,182
(64,350)
68,182
-
Obligations under capital leases and installment purchases
11,234
904
(8,660)
3,478
1,729
Bond anticipation notes:
Principal amount of bonds anticipation notes
Premium on bond anticipation notes
C ompensated absences payable
Insurance and benefit claims payable
Net pension obligation
58,756
151,888
(151,964)
58,680
29,514
103,184
119,219
(103,184)
119,219
-
Other:
HUD Section 108 loans
Obligations for claims and judgments
Library Exchange
Total governmental activities
12,155
-
(662)
11,493
667
7,975
1,203
(7,975)
1,203
1,203
20,054
-
(835)
19,219
838
3,329,202
876,161
(786,920)
3,418,443
330,174
20,915
Business-type activities:
Sewer revenue bonds payable:
Principal amount of bonds payable
552,254
107,850
(17,217)
642,887
Premium on bonds payable
9,278
15,157
(845)
23,590
886
C ompensated absences payable
2,158
1,467
(1,438)
2,187
1,223
Total business-type activities
Total long-term liabilities - Primary government
563,690
124,474
(19,500)
668,664
23,024
$ 3,892,892
1,000,635
(806,420)
4,087,107
353,198
Component Units
Public Schools
32,804
24,487
(22,963)
34,328
24,029
Obligations under capital leases and installment purchases
C ompensated absences payable
$
87,533
10,294
(12,879)
84,948
17,219
Insurance and benefit claims payable
51,410
29,977
(28,202)
53,185
24,808
1,333
-
(367)
966
-
173,080
64,758
(64,411)
173,427
66,056
Unearned rent
Total Public Schools
FCRHA
Mortgage revenue bonds payable
26,667
-
(667)
26,000
698
Mortgage notes payable
69,701
162
(2,249)
67,614
7,159
C ompensated absences payable
Total FC RHA
1,098
701
(579)
1,220
572
97,466
863
(3,495)
94,834
8,429
7,745
4,800
(7,745)
4,800
-
Park Authority
Revenue bonds payable:
Principal amount of bonds payable
Discount on bonds payable
(42)
Premium on bonds payable
-
Loan from primary government
C ompensated absences payable
Total Park Authority
-
42
-
-
701
-
701
58
13,042
-
(210)
12,832
244
4,560
2,361
(2,325)
4,596
2,579
25,305
7,862
(10,238)
22,929
2,881
260
19
1,071
-
EDA
C ompensated absences payable
Unearned rent
Total EDA
Total long-term liabilities - Component units
88
$
(82)
279
159
989
101
1,331
19
(82)
1,268
260
297,182
73,502
(78,226)
292,458
77,626
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Notes to the Financial Statements
Compensated absences payable, obligations under capital leases, obligation to component unit, and
obligations for claims and judgments for the primary government are liquidated by the General Fund and
other governmental funds. The landfill closure and postclosure obligation will be liquidated by the I-95
Refuse Disposal Fund, a special revenue fund. In addition, the County, FCRHA, Park Authority, and EDA
are required to adhere to and be in compliance with the rebate and reporting requirements of the federal
regulations pertaining to arbitrage investment earnings on certain bond proceeds.
1.
General Obligation Bonds
General obligation bonds are issued to provide funding for long-term capital improvements. In
addition, they are issued to refund outstanding general obligation bonds when market conditions
enable the County to achieve significant reductions in its debt service payments. Such bonds are
direct obligations of the County, and the full faith and credit of the County are pledged as security.
The County is required to submit to public referendum for authority to issue general obligation bonds.
At June 30, 2013, the amount of
general obligation bonds authorized
and unissued is summarized to the
right (in thousands).
Bond Purpose
School improvements
Transportation improvements
Amount
$
442,613
146,858
Parks and park facilities
95,173
The Commonwealth of Virginia
Public safety facilities
131,491
does not impose a legal limit on
Public library facilities
31,135
the amount of general obligation
Flood control
30,000
indebtedness that the County can
Total authorized but unissued bonds
$
877,270
incur or have outstanding. The
Board of Supervisors, however, has
self-imposed bond limits to provide
that the County’s net debt may not exceed three percent of the total market value of taxable real and
personal property in the County. In addition, the annual debt service may not exceed ten percent
of the annual General Fund disbursements. As a financial guideline, the Board of Supervisors also
follows a self-imposed limitation in total general obligation bond sales of $1.375 billion over a fiveyear period or an average of $275 million annually, with a maximum of $300 million in any given
year. All self-imposed bond limits have been complied with at June 30, 2013.
In January 2013, the County issued $206,335,000 of Series 2013A General Obligation Public
Improvement and $128,000,000 of Series 2013B refunding bonds with average interest rates of 4.96
percent and 3.58 percent, respectively. The Refunding Bonds, totaling $128,000,000, were issued to
advance refund $15,755,000 of outstanding Series 2004A bonds, $9,270,000 of outstanding Series
2004B bonds, $33,185,000 of outstanding Series 2005A bonds, $35,190,000 of outstanding Series
2007A bonds, and $35,160,000 of outstanding Series 2008A bonds. Proceeds of $145,945,515 were
used to purchase U.S. Government securities which were deposited in an irrevocable escrow account
to provide for the resources to redeem the Series 2004A bonds on April 1, 2014, the Series 2004B
bonds on October 1, 2014, the Series 2005A bonds on October 1, 2015, the Series 2007A bonds on
April 1, 2015, and the Series 2008A on April 1, 2018. The County refunded these bonds to reduce its
total debt service payments over the next twelve years by approximately $14.0 million and to obtain
an economic gain of approximately $12.2 million.
Detailed information regarding the general obligation bonds outstanding as of June 30, 2013, is
contained in Section 5 of this note.
Financial Section
89
Basic Financial Statements
2.
Revenue Bonds
In March 1994, the EDA issued $116,965,000 of lease revenue bonds (Series 1994) to finance the
County’s acquisition of certain land and office buildings adjacent to its main government center. In
October 2003, the EDA issued $85,650,000 of lease revenue refunding bonds to advance refund
$88,405,000 of outstanding Series 1994 lease revenue bonds. In June 2003, the EDA issued
$70,830,000 of revenue bonds to finance the development and construction of a public high school
and a public golf course and related structures, facilities, and equipment in the Laurel Hill area of
the southern part of the County. In April 2012, the Authority issued $47,745,000 to advance refund
a portion of the outstanding Series 2003 Laurel Hill revenue bonds. In January 2005, the EDA
issued $60,690,000 of facilities revenue bonds to finance the acquisition of land and an existing
office building to enable the Fairfax County Public Schools to consolidate numerous Public Schools
administrative offices. In March 2010, the EDA issued $43,390,000 of lease revenue bonds to
current refund the FCRHA $3,365,000 of outstanding Series 1996 lease revenue bonds, $2,960,000
of outstanding Series 1998 lease revenue bonds, $835,000 of outstanding Series 1999 lease revenue
bonds, and to advance refund the FCRHA $7,245,000 of outstanding Series 2004 lease revenue
bonds, and the County’s $25,580,000 of outstanding Series 2000 certificate of participation bonds.
In May 2011, the EDA issued $205,705,000 of transportation district improvement revenue bonds
(Silver Line Phase 1 Project) Series 2011 and in September 2012, the EDA issued $42,390,000 of
transportation district improvement revenue bonds (Silver Line Phase 1 Project) Series 2012 to
finance a portion of the costs of the construction of the first phase of an extension of the Washington
Metropolitan Area Transit Authority’s mass transit system in Fairfax County. In July 2011, the EDA
issued $99,430,000 of revenue bonds Series 2011 to finance a portion of the costs of the construction
of a public parking facility on public lands within Fairfax County, Virginia, to serve the Wiehle
Avenue Metrorail Station. In May 2012, the EDA issued $65,965,000 of revenue bonds Series 2012
to finance the improvement of certain properties to be used by Fairfax County as mental health
facilities and as a neighborhood community center. As the County is responsible, under the related
documents and subject to annual appropriation, to make payments to a trustee sufficient to pay
principal and interest on these bonds, the related transactions, including the liability for the bonds,
have been recorded in the County’s financial statements and not in those of EDA.
In November 2007, the FCRHA issued a $105,485,000 bond anticipation note (Series 2007B)
to finance a portion of the purchase price of a multi-family rental housing property as part of the
County’s affordable housing initiative. In October 2008, the FCRHA issued a $104,105,000 bond
anticipation notes (Series 2008B) to repay the outstanding $105,485,000 bond anticipation notes
(Series 2007B). In August 2009, the FCRHA issued a $94,950,000 of revenue bonds to provide
funds, together with other funds, sufficient to pay the outstanding $104,105,000 short-term bond
anticipation notes (Series 2008B) that matured on October 1, 2009. The bonds bear an average
interest rate of 4.53 percent and mature on October 1, 2039. As the County is responsible, under the
related documents and subject to annual appropriation, to make payments to a trustee sufficient to pay
principal and interest on these bonds, the related transactions, including the liability for these bonds,
have been recorded in the County’s financial statements and not in those of the FCRHA.
In June 2011, Community Development Authority (the “Authority”) issued $46,980,000 Revenue
Bonds (Mosaic District Project) Series 2011A. In July 2011, the Authority issued $18,670,000
Revenue Bonds (Taxable) Series 2011A-T. The bonds were issued to finance certain public
infrastructure improvements within or serving the Authority district. The 2011 Bonds are limited
obligations of the Authority, payable solely from and secured by a pledge of certain County Advanced
Revenues and certain Special Assessment Revenues.
None of these revenue bonds nor the related payment responsibilities of the County are general
obligation debt of the County, and the full faith and credit of the County is not pledged to these bonds
for such payment responsibility.
90
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Notes to the Financial Statements
Detailed information regarding the revenue bonds outstanding as of June 30, 2013 is contained in
Section 5 of this note.
3.
Sewer Revenue Bonds
In October 2004, the Sewer System issued $94,005,000 of Series 2004 Sewer Revenue Refunding
Bonds with an average interest rate of 4.61 percent to advance refund $91,430,000 of the outstanding
Series 1996 Sewer Revenue Bonds with an average interest rate of 5.82 percent. Net proceeds of the
Refunding Bond were used mostly to redeem the Series 1996 Bonds on July 15, 2006. The lower
interest rate of the Refunding Bond would reduce total debt service payment over future years by
approximately $16.8 million. In June 2009, the Sewer System issued $152,255,000 of Series 2009
Sewer Revenue Bonds with an average interest rate of 4.88 percent to fund the System’s portion of
upgrade costs at certain wastewater treatment facilities that are owned by, or that provide service to,
the County, the purchase of additional capacity, and the costs for other system improvements. In
August 2012, the System issued $90,710,000 of Series 2012 Sewer Revenue Bonds with an average
interest rate 4.54 percent to fund upgrade costs allocable to the System at certain treatment facilities
that are owned by, or that provide service to, the County, the purchase of additional capacity, and
the costs for other system improvements. As of June 30, 2013, the outstanding bonds consist of
$90,710,000 of Series 2012 Revenue Bonds, $144,890,000 of Series 2009 Revenue Bonds and
$76,235,000 of Series 2004 Refunding Bonds.
The aforementioned sewer revenue bonds were issued in accordance with the General Bond
Resolution adopted by the Board of Supervisors on July 29, 1985, and are payable from and secured
by the net revenue generated through the Sewer System’s operations. Accordingly, the Master
Bond Resolution includes a rate covenant under which the Sewer System agreed that it will charge
reasonable rates for the use of and services rendered by the Sewer System. Furthermore, the Sewer
System will adjust the rates from time to time to generate net revenues sufficient to provide an
amount equal to 100 percent of its annual principal and interest requirements and the Sewer System’s
annual commitments to fund its proportionate share of other jurisdictions’ debt service requirements.
In addition, payment of the principal and interest on all bonds is insured by municipal bond insurance
policies.
In January 1995, UOSA, a joint venture, issued $288,600,000 of Regional Sewer System Revenue
Bonds to finance the cost of expanding the capacity of its wastewater treatment facilities and
$42,260,000 of Regional Sewer System Revenue Refunding Bonds to refund certain outstanding
bonds that had been issued to finance a prior expansion. In December 2003, UOSA issued
$58,150,000 of Regional Sewer System Revenue Refunding Bonds to advance refund its outstanding
Series 1993 bonds. In November 2004, UOSA issued $49,395,000 of Regional Sewer System
Revenue Refunding Bonds to advance refund a portion of the outstanding Series 1995 bonds. On
July 1, 2005, UOSA issued $82,465,000 of Regional Sewer System Revenue Refunding Bonds, of
which the Sewer System’s share is $53,201,198, to advance refund another portion of the outstanding
Series 1995 bonds, resulting in a $1,909,604 accounting gain, which is being amortized over the life
of the Series 2005 Bonds. In February 2007, UOSA issued $90,315,000 of Regional Sewer System
Revenue Refunding bonds, of which the Sewer System’s share is $58,265,521, to advance refund
another portion of the outstanding Series 1995 Bonds, resulting in an $83,868 accounting loss, which
is amortized over the life of the Series 2007 Bonds. In December 2007, UOSA issued $119,715,000
of Regional Sewer System Revenue Bonds, of which the System’s share is $53,925,458, to finance
the cost of expanding its wastewater treatment and conveyance facilities. In December 2010, UOSA
issued $85,180,000 of Regional Sewer System Revenue Bonds, of which the System’s share is
$34,113,615, to finance the cost of certain capital improvements.
Financial Section
91
Basic Financial Statements
In July 2011, UOSA entered into VRA loan 2011A for $6,100,000 to fund costs related to the Energy
Service (ESCO) project. In December 2011, UOSA entered into VRA loan 2011B for $13,934,552 to
fund Phase 1 of the Nutrient Compliance Improvement Project (P1NR). The System’s total share at
June 30, 2013, is $8,384,801.
In May 2013, UOSA issued $101,615,000 of Regional Sewer System Revenue Refunding Bonds
of which the System’s share is $65,555,566, to refund Series 2005 Bonds. Although the refunding
resulted in an accounting loss of $12,354,368 which is being amortized over the life of the Series
2013A Bonds, the System reduced total debt service payments over future years by approximately
$4.9 million.
The Sewer System’s share of UOSA’s total outstanding debt at June 30, 2013, is $283,269,711, and it
is subordinate to the sewer revenue bonds issued by the Sewer System.
In June 2001 and June 2002, the Sewer System issued 20-year subordinated sewer revenue bonds
in the amounts of $40,000,000 and $50,000,000, respectively, to the Virginia Water Facilities
Revolving Fund, acting by and through the Virginia Resources Authority. The proceeds have been
used to finance a portion of the Sewer System’s share of incurred expansion and upgrade costs
of the Alexandria Sanitation Authority’s wastewater treatment facilities, which provide service to
certain County residents. In September 2012, the System executed a rate reduction agreement with
VRA reducing the interest rates on these bonds from 4.1 percent per annum and 3.75 percent per
annum, respectively, to 2.35 percent per annum and the collectively require semi-annual debt service
payments from $3,318,536 to $3,101,638. The bonds are subordinated to all outstanding prior bond
issues of the Sewer System and payments for operation and maintenance expenses. As of June 30,
2013, the outstanding principal for the 2001 and 2002 subordinated revenue bonds is $20,247,399
and $27,534,588 respectively.
Detailed information regarding the sewer revenue bonds outstanding as of June 30, 2013 is contained
in Section 5 of this note.
4.
Bond Anticipation Notes
In February 2008, the FCRHA issued a $37,615,000 refunding bond anticipation notes to repay a
portion of a 2007 short-term note that matured on February 12, 2008. The original short-term note
was issued to partially finance the purchase of a multi-family rental housing complex as part of the
County’s affordable housing initiative. In May 2011, the FCRHA issued $28,905,000 of bond anticipation notes to current refund $30,215,000 of outstanding Series 2008A bond anticipation notes.
In February 2013, the FCRHA issued $24,650,000 of bond anticipations notes to current refund
$26,725,000 of outstanding Series 2011 bond anticipation notes. The note matures on March 1, 2015.
As the County is responsible, under the related documents and subject to appropriation, to pay timely
the principal of and interest on the note, the related transactions, including the liability for the note,
have been recorded in the County’s financial statements and not in those of the FCRHA. The note is
not a general obligation debt of the County, and the full faith and credit of the County is not pledged
to the note.
Detailed information regarding the bond anticipation note outstanding as of June 30, 2013, is contained in Section 5 of this note.
5.
County Debt and Related Interest to Maturity
The County’s outstanding general obligation bonds, revenue bonds, notes payable, HUD Section
108 loans, Sewer System revenue bonds, and the related interest to maturity as of June 30, 2013, are
comprised of the issues presented on the opposite page:
92
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Notes to the Financial Statements
Series
Interest
Rate
(%)
Issue
Date
Final
Maturity
Date
Annual
Principal
Payments
(000)
Original
Issue
(000)
Principal
Outstanding
(000)
Interest
Payable to
Maturity
(000)
Total Principal
Outstanding &
Interest
Payable to
Maturity
(000)
Governmental activities:
General obligation bonds:
General C ounty:
Series 2004A
Public Improvement
4.00.5.25
04-14-04
04-01-24
815-3,180
63,530
8,892
2,108
11,000
Series 2004A
Refunding
4.50-5.25
04-14-04
04-01-17
1,898-5,580
67,200
11,885
1,262
13,147
Series 2004B
Public Improvement
4.50-5.00
10-19-04
10-01-19
28-3,455
69,120
10,820
888
11,708
Series 2004B
Refunding
4.50-5.00
10-19-04
10-01-19
825-2,555
30,375
14,335
2,027
16,362
Series 2005A
Public Improvement
4.25-5.00
08-16-05
10-01-25
65-4,315
85,655
32,557
8,771
41,328
Series
Series
Series
Series
Series
Series
Series
Series
Series
Series
Series
Series
Series
Series
Refunding
Public Improvement
Public Improvement
Public Improvement
Refunding
Refunding
Public Improvement
Public Improvement (BABs)
Public Improvement
Refunding
Public Improvement
Refunding
Public Improvement
Refunding
4.25-5.00
4.00-5.00
4.13-5.00
3.50-5.00
3.00
3.00-5.00
5.00
3.10-5.25
4.00-5.00
5.00
2.00-5.00
3.00-5.00
1.50-5.00
3.00-4.00
08-16-05
02-07-07
01-30-08
01-28-09
01-28-09
10-28-09
10-28-09
10-28-09
02-10-11
02-10-11
02-02-12
02-02-12
01-24-13
01-24-13
10-01-21
04-01-27
04-01-28
04-01-29
04-01-14
10-01-19
10-01-14
10-01-29
04-01-31
04-01-15
04-01-32
04-01-24
10-01-32
10-01-25
3,045-10,155
5,389
4,955-4,960
2,450
3,840
3,019-14,578
10,739-10,743
4,247
2,400-2,410
1,703-1,719
3,855-3,860
2,334-13,142
3,925-3,930
1,242-9,255
117,505
107,780
99,155
49,000
31,884
48,527
53,710
63,700
47,880
6,912
77,185
74,759
78,535
54,389
73,437
21,556
59,490
39,200
3,840
48,527
21,482
63,700
43,215
3,422
73,330
74,759
78,535
54,389
13,176
4,661
20,977
13,986
115
9,732
1,074
28,768
18,796
256
26,011
29,400
39,654
15,082
86,613
26,217
80,467
53,186
3,955
58,259
22,556
92,468
62,011
3,678
99,341
104,159
118,189
69,471
1,226,801
737,371
236,744
974,115
2005A
2007A
2008A
2009A
2009 B
2009 C
2009 D
2009 E
2011 A
2011 A
2012 A
2012 B
2013 A
2013 B
Total general obligation bonds - General C ounty
Schools:
04-01-24
1,543-6,005
120,215
16,813
3,985
20,798
Series 2004A
Refunding
4.50-5.25
04-14-04
04-01-17
2,027-6,485
78,165
14,955
1,434
16,389
Series 2004B
Series 2004A
Public Improvement
Public Improvement
4.50-5.00
4.00.5.25
10-19-04
04-14-04
10-01-19
47-5,815
116,280
18,210
1,495
19,705
Series 2004B
Refunding
4.50-5.00
10-19-04
10-01-19
2,600-8,070
96,035
45,305
6,408
51,713
Series 2005A
Public Improvement
4.25-5.00
08-16-05
10-01-25
80-5,270
104,685
39,803
10,727
50,530
Series 2005A
Refunding
4.25-5.00
08-16-05
10-01-21
5,820-20,335
235,740
148,783
26,912
175,695
Series 2007A
Public Improvement
4.00-5.00
02-07-07
04-01-27
6,341
126,820
25,364
5,485
30,849
Series
Series
Series
Series
Series
Series
Series
Series
Series
Series
Series
Series
Public Improvement
Public Improvement
Refunding
Refunding
Public Improvement
Public Improvement (BABs)
Public Improvement
Refunding
Public Improvement
Refunding
Public Improvement
Refunding
4.13-5.00
3.50-5.00
3.00
3.00-5.00
5.00
3.10-5.25
4.00-5.00
5.00
2.00-5.00
3.00-5.00
1.50-5.00
3.00-4.00
01-30-08
01-28-09
01-28-09
10-28-09
10-28-09
10-28-09
02-10-11
02-10-11
02-02-12
02-02-12
01-24-13
01-24-13
04-01-28
04-01-29
04-01-14
10-01-19
10-01-14
10-01-29
04-01-31
04-01-15
04-01-32
04-01-24
10-01-32
10-01-25
6,765
7,525
3,190
5,081-24,052
2,636-2,637
9,233
6,230
2,902-2,955
7,020-7,025
4,516-21,057
6,390
1,518-14,285
135,320
150,510
26,487
83,273
13,185
138,500
123,515
11,783
140,470
117,591
127,800
73,611
81,180
120,400
3,190
83,273
5,273
138,500
112,140
5,833
133,445
117,591
127,800
73,611
28,633
42,958
96
16,212
264
62,549
48,789
437
47,331
46,189
64,549
20,230
109,813
163,358
3,286
99,485
5,537
201,049
160,929
6,270
180,776
163,780
192,349
93,841
2,019,985
1,311,469
434,683
1,746,152
3,246,786
2,048,840
671,427
2,720,267
2008A
2009A
2009B
2009C
2009D
2009E
2011 A
2011 A
2012 A
2012 B
2013 A
2013 B
Total general obligation bonds - Schools
Total general obligation bonds
Revenue bonds:
EDA revenue bonds:
Series 2003
Refunding
Series 2005
Series 2010
5.00
10-01-03
11-15-18
6,025-7,885
85,650
41,175
7,324
48,499
4.00-5.00
01-27-05
04-01-35
1,415-3,615
60,690
51,480
31,584
83,064
2.00-5.00
03-10-10
04-01-32
1,280-2,785
43,390
35,720
12,530
48,250
Series 2011
Silver Line Phase 1 Project
2.00-5.00
05-26-11
04-01-36
4,935-13,685
205,705
194,675
135,787
330,462
Series 2011
Metrorail Station Parking Project2.00-5.00
07-28-11
08-01-34
3,275-7,225
99,430
99,430
56,578
156,008
Series 2012A
Refunding Laurel Hill Project
3.00-5.00
04-17-12
06-01-33
670-4,205
47,745
47,745
14,711
62,456
Series 2012A
Facilities Revenue Bonds
4.50-5.00
05-30-12
03-01-42
1,190-3,700
65,965
64,770
51,601
116,371
Series 2012
Silver Line Phase 1 Project
3.00-5.00
10-10-12
04-01-37
980-2,835
42,390
41,200
30,245
71,445
Series 2003
3.50
07-22-03
8-01-23
44-176
2,530
1,514
294
1,808
Series 2005
3.50-3.60
06-16-05
06-01-15
810
8,105
1,620
87
1,707
Series 2009
2.5-5.00
08-20-09
10-01-39
1,940-5,610
94,950
89,445
65,854
155,299
6.25-6.88
06-09-11
03-01-36
465-5,315
46,980
46,980
54,608
101,588
7.25
07-06-11
03-01-36
150-2,180
18,670
18,670
23,281
41,951
822,200
734,424
484,484
1,218,908
FC RHA lease revenue bonds:
C DA revenue bonds:
Series 2011A Tax-Exempt
Series 2011A Taxable
Total revenue bonds
Notes payable
3.73-4.29
12-27-05
12-31-25
323-645
12,900
8,063
2,173
10,236
HUD Section 108 loan #8
4.97-6.67
07-01-01
08-01-21
115
2,300
1,035
90
1,125
HUD Section 108 loan #11
Variable
06-29-09
08-01-28
196-334
5,040
4,267
1,436
5,703
HUD Section 108 loan #12
Variable
02-14-11
08-01-30
343-344
6,535
6,191
1,564
7,755
13,875
11,493
3,090
14,583
Total HUD Section 108 loans
Bond Anticipation Note Series 2013A-Taxable
.04-.66
02-14-13
03-01-15
3,185-21,465
Total governmental activities
24,650
24,650
303
24,953
4,120,411
2,827,470
1,161,477
3,988,947
436,046
Business-type activities:
Sewer revenue bonds:
UOSA Bonds
Subordinated
2.00-6.00
01-12-95
07-01-43
1,760-21,526
277,621
283,270
152,776
Series 2001
Subordinated
4.10
06-01-01
02-01-21
2,329-2,743
40,000
20,247
2,081
Series 2002
Subordinated
Series 2004
Refunding
22,328
3.75
09-01-02
03-01-22
2,781-3,353
50,000
27,535
3,175
30,710
3.00-5.00
10-14-04
07-15-28
3,155-6,725
94,005
76,235
32,506
108,741
260,613
Series 2009
Revenue
2.50-5.00
06-17-09
07-15-40
2,670-9,415
152,255
144,890
115,723
Series 2012
Revenue
2.00-5.00
08-08-12
07-15-43
1,440-5,435
90,710
90,710
75,982
166,692
704,591
642,887
382,243
1,025,130
4,825,002
3,470,357
1,543,720
5,014,077
Total business-type activities
Total County bond, note, and loan indebtedness
Financial Section
$
93
Basic Financial Statements
Principal and interest to maturity (in thousands) for the County’s general obligation bonds, revenue
bonds, loans, and Sewer System revenue bonds outstanding at June 30, 2013, are as follows:
Governmental Activities
Fiscal Year
General Obligation
Bonds
Principal
Interest
Business-Type
Revenue
Bonds
Principal
Interest
Notes
and Loans
Principal
Interest
Sewer System
Revenue Bonds
Principal
Interest
Total
Principal
Interest
2014
176,290
93,373
23,795
34,937
4,497
784
20,915
27,415
225,497
156,509
2015
171,720
82,031
25,504
34,054
22,784
735
22,157
26,260
242,165
143,080
2016
166,980
73,983
28,849
32,879
1,326
560
23,210
25,342
220,365
132,764
2017
161,295
65,990
30,404
31,706
1,333
526
24,224
24,350
217,256
122,572
2018
151,760
58,681
29,984
30,282
1,340
486
25,260
23,321
208,344
112,770
2019-2023
640,095
200,206
131,959
131,534
6,706
1,777
133,177
100,441
911,937
433,958
2024-2028
422,790
82,677
135,934
101,809
4,855
640
146,048
75,384
709,627
260,510
2029-2033
157,910
14,486
174,385
64,978
1,365
58
91,649
46,525
425,309
126,047
2034-2038
-
-
128,785
20,156
-
-
88,978
27,142
217,763
47,298
2039-2043
-
-
24,825
2,149
-
-
67,269
6,063
92,094
8,212
2044-2048
-
-
-
-
-
-
-
-
-
-
$ 2,048,840
$ 671,427
$ 734,424
$ 484,484
5,566
642,887
382,243
3,470,357
1,543,720
Totals
6.
$
44,206
$
FCRHA Bonds, Notes, and Loans Payable
The FCRHA issues various debt instruments, including bonds, notes and mortgages, to finance
the cost of acquisition, construction, and equipping of its workforce, senior, disabled, low income,
transient, and homeless affordable housing projects. These debt instruments are usually secured by
the properties being financed. Sources of permanent financing include the Federal Department of
Housing and Urban Development (HUD), the Virginia Housing Development Authority (VHDA),
commercial lenders, and the County. In addition, the FCRHA maintains unsecured $10 million taxexempt and $5 million taxable lines of credit with a commercial bank to provide interim (bridge)
financing.
The table on the facing page, details all FCRHA bonds, notes (including a loan from the County), and
loans payable as of June 30, 2013, excluding FCRHA’s component units:
94
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Notes to the Financial Statements
Series
Interest
Rate (%)
Secured By
Annual
Principal
Payments
(000)
Final
Maturity
Date
Issue
Date
Total
Principal
Outstanding
(000)
Original
Issue
(000)
Housing Bonds Payable:
Mortgage revenue bonds
Little River Glen rental property
4.65-6.10
08-29-96
09-01-26 $
6,340
4,295
Tax-exempt revenue bonds
Herndon Harbor I - rental property
6.10
08-01-97
07-01-27
150-190
24-30
$
2,875
712
Multi-family revenue bonds
C astellani Meadows
6.15
04-01-98
03-01-28
20-26
1,700
641
Lease revenue refunding bonds
FC RHA revenues
4.71
06-15-98
06-15-18
180-220
3,630
1,250
Multi-family revenue bonds
Herndon Harbor II - rental property
4.875-5.50
05-01-99
05-01-29
44-56
2,000
1,524
Multi-family revenue bonds
C edar Ridge Apartments
5.984
03-29-07
10-01-48
62-115
13,200
12,712
Multi-family revenue bonds
Olley Glen - senior rental property
3.15-5.75
08-26-08
08-01-51
30-355
12,220
4,866
41,965
26,000
26-32
363
22
2,605
Total mortgage bonds payable - FC RHA
Mortgage Notes Payable and Loan from County:
United Bank
One University Plaza office building
5.00
02-01-04
02-01-14
$
Faircrest North, Laurel Hill, Westcott
Ridge, Holly Acres, Legato C orner,
Sun Trust Bank
and Willow Oaks rental properties
6.21
01-01-07
12-01-21
54-65
2,998
East Market, Fair oaks, Bryson
6.14
12-06-07
12-01-22
15-22
856
762
Stockwell, Northampton, Halstead I & II
6.11
07-24-09
07-01-24
15-22
868
801
United C ommunity Ministries
4.71
08-25-98
04-01-13
30-36
400
-
C reighton Square
7.10
06-25-99
07-01-12
50-62
550
-
Leland Road Group Home property
5.55
10-06-99
04-01-17
34-43
615
189
Hopkins Glen rental property
4.33
12-02-02
10-01-16
10-62
475
228
4.54
04-01-95
04-01-15
53-68
1,072
157
1.04
03-01-12
03-01-14
-
1,834
1,834
Bank of America
McLean Hills and Springfield Green
PNC Bank
C redit Line
rental properties
U.S. Dept. of Housing
and Urban Development
Virginia Housing
Various FC RHA rental properties
6.45-9.15
02-01-92
varies
285
5,690
-
Various FC RHA rental properties
3.73-7.90
02-01-93
varies
110-115
3,100
115
Various FC RHA rental properties
4.75-7.18
08-01-94
varies
195-205
3,775
90
Various FC RHA rental properties
5.36-7.66
08-01-96
varies
5-50
1,080
75
Various FC RHA rental properties
1.21-5.29
08-07-03
varies
35
500
180
Olley Glen property
1.29-3.44
01-29-09
08-01-23
100-125
2,050
1,482
Minerva Fisher-Hall Group Home
Development Authority
The C ity of Fairfax
8.07
07-01-79
06-01-19
2-16
437
173
Penderbrook rental property
property
7.17
09-01-88
10-01-18
16-25
770
312
First Stop Group Home property
8.00
01-01-93
04-01-22
5-15
246
301
9.00-12.50
varies
varies
5-6
Various properties owned by note
holder
Total mortgage notes payable - FC RHA
Total public housing bonds, notes, and loans payable - FC RHA primary government
$
65
47
27,744
9,373
69,709
35,373
The FCRHA’s annual required principal and interest payments to maturity on the bonds, notes
(including a loan from the County), and loans payable, excluding FCRHA’s component units, at June
30, 2013, are as follows:
C omponent Unit - FC RHA (Primary Government)
Fiscal Year
2014
Housing Bonds
Payable
Principal
Interest
697,786
1,405,354
Mortgage Notes Payable
and Loan from C ounty
Principal
Interest
2,617,384
402,081
Principal
Total
3,315,170
Interest
1,807,435
2015
744,195
1,366,721
615,961
367,805
1,360,156
1,734,526
2016
781,598
1,325,757
521,806
339,946
1,303,404
1,665,703
2017
860,621
1,282,330
462,679
311,972
1,323,300
1,594,302
2018
876,893
1,236,548
885,123
401,872
1,762,016
1,638,420
2019-2023
3,553,465
5,563,548
3,657,886
999,011
7,211,351
6,562,559
2024-2028
4,299,535
4,357,438
612,020
79,505
4,911,555
4,436,943
2029-2033
2,113,238
3,472,611
-
-
2,113,238
3,472,611
2034-2038
2,663,944
2,870,764
-
-
2,663,944
2,870,764
2039-2043
3,542,233
2,072,150
-
-
3,542,233
2,072,150
2044-2048
4,711,301
1,007,459
-
-
4,711,301
1,007,459
2049-2052
Totals
Financial Section
1,155,397
101,292
-
-
1,155,397
101,292
$ 26,000,206
26,061,972
9,372,859
2,902,192
35,373,065
28,964,164
95
Basic Financial Statements
7.
Park Authority Bonds, Loans, and Notes Payable
In February 1995, the Park Authority issued $13,870,000 of Park Facilities Revenue Bonds, Series
1995, to fund the construction of additional golf facilities for County residents and patrons. In
September 2001, the Park Authority issued $13,015,000 of Park Facilities Revenue Refunding Bonds,
Series 2001 to advance refund $11,670,000 of the outstanding Series 1995 bonds. The outstanding
$7.02 million of Revenue Bonds Series 2001 was refunded on June 5, 2013 through the Virginia
Resources Authority bond sale of Series 2013, which resulted in a total debt service savings of
$1.92 million. The bonds are solely the obligation of the Park Authority and are payable from the
Park Revenue Fund’s revenues from operations, earnings on investments, and certain fund balance
reserves.
In June 2003, the Park Authority received a $15,530,000 loan from the County to fund the
development and construction of a public golf course and related structures, facilities, and equipment
to be located in the Laurel Hill area of the southern part of the County. The loan is solely the
obligation of the Park Authority and is payable from the Park Revenue Fund’s revenues from
operations, earnings on investments, and certain fund balance reserves.
The debt service requirements to maturity for the outstanding bonds and loan at June 30, 2013, are as
follows:
Revenue Bonds
Fiscal
Year
Int. Rate
Principal
Loan from Primary Government
Interest
Int. Rate
Principal
Interest
Total
Principal
Interest
2014
-
-
180,206
5.00
243,700
499,434
243,700
679,640
2015
2.42
615,000
191,541
5.00
283,100
487,249
898,100
678,790
2016
4.40
630,000
171,088
5.00
327,900
473,094
957,900
644,182
2017
4.50
655,000
146,884
5.00
372,600
456,699
1,027,600
603,583
2018
4.82
680,000
119,275
5.00
422,300
438,069
1,102,300
557,344
4.23-4.82
2,220,000
161,850
5.00
2,942,600
1,820,741
5,162,600
1,982,591
2019-2023
2024-2028
-
-
-
3.00-5.00
3,765,000
1,150,781
3,765,000
1,150,781
2029-2033
Totals
-
$ 4,800,000
970,844
3.00-4.00
4,475,000
$ 12,832,200
484,256
5,810,323
4,475,000
17,632,200
484,256
6,781,167
8.
Conduit Debt Obligations
The FCRHA is empowered by the Commonwealth of Virginia to issue tax-exempt bonds on behalf of
qualified businesses to develop or rehabilitate low income housing within the County. Principal and
interest on the tax-exempt bonds are paid entirely by the owners of the properties, who have entered
into binding contracts to develop or rehabilitate the subject properties. The terms of the tax-exempt
bonds stipulate that neither the FCRHA nor the County guarantees the repayment of principal and
interest to the bondholders. A bondholder’s sole recourse in the event of default on the tax-exempt
bonds is to the subject property and third-party beneficiaries. Accordingly, these bonds are not
reported as liabilities in the accompanying financial statements. As of June 30, 2013, approximately
$28 million of such tax-exempt bonds that are still outstanding.
The EDA is empowered by the Commonwealth of Virginia to issue Industrial Revenue Bonds (IRBs)
on behalf of businesses relocating and/or expanding their operations within the County. Principal and
interest on the IRBs are paid entirely by the businesses. The terms of the IRBs stipulate that neither
the EDA nor the County guarantees the repayment of principal and interest to the bondholders.
Accordingly, these bonds are not reported as liabilities in the accompanying financial statements. As
of June 30, 2013, the cumulative amount of all IRBs outstanding was $702,367,561.
In October 2003, August 2004, March 2007, and July 2008, the EDA issued $33,375,000;
$57,410,000; $41,505,000 and $51,505,000, respectively, of transportation contract revenue bonds
96
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Notes to the Financial Statements
on behalf of the State Route 28 Transportation Improvement District for the purpose of financing a
portion of the costs of the construction of certain improvements to State Route 28 in the County. In
May 2012, the Authority issued $86,275,000 of transportation contract revenue refunding bonds on
behalf of the State Route 28 Transportation Improvement District to advance refund $29,285,000
of outstanding Series 2003 bonds and $52,755,000 of outstanding Series 2004 bonds. The bonds
are payable from the collection of special improvements assessments levied by the County and by
Loudoun County, Virginia, on property owners in the District. As the County and EDA are not
responsible to make payments to pay principal and interest on the bonds, the related transactions,
including the liability for the bonds, are not recorded in the County’s or EDA’s financial statements.
As of June 30, 2013, the principal amount of transportation contract revenue bonds outstanding was
$180,345,000.
In December 2005, the Park Authority issued two notes totaling $12.9 million to finance the
acquisition of a permanent conservation easement. As the County is responsible, under the related
documents and subject to appropriation, to pay the principal and interest on the notes, the related
transactions, including the liability for the notes, have been recorded in the County’s financial
statements and not in those of the Park Authority. The notes are not general obligation debt of the
County, and the full faith and credit of the County is not pledged to the notes. As of June 30, 2013,
$8.1 million of these notes are outstanding.
9.
Defeasance of Debt
During the fiscal year, the County has defeased certain outstanding bonds by placing the proceeds
of newly issued bonds in an irrevocable escrow fund to provide for all future debt service payments
on the old bonds. Accordingly, the escrow fund assets and the liabilities for the defeased bonds are
not included in the financial statements. As of June 30, 2013, the outstanding bonds but considered
defeased are $386 million in general obligation bonds.
10. Sanitary Landfill Closure and Postclosure Obligation
State and federal laws require the County to place a final cover on its I-95 Sanitary Landfill when
it stops accepting solid waste and to perform certain maintenance and monitoring functions at the
site for 30 years after closure. The existing Municipal Solid Waste unit stopped accepting waste on
December 31, 1995 and the placement of the final closure cap was completed during 2008. The ash
disposal unit continues to accept incinerator ash from the waste to energy facilities and the Norman
Cole Pollution Prevention Plant. Closure expenditures have been incurred for approximately 70
percent of the total area involved. The County holds permits that allow it to continue using the
landfill until approximately 2042.
The $68.2 million reported as the landfill closure and post closure obligation at June 30, 2013,
represents the total estimated cost remaining to be incurred based on landfill capacity used to date.
The actual cost may vary due to inflation, changes in technology, or changes in regulations. It is
expected that the landfill closure and post closure care costs will be funded from existing resources in
the I-95 Refuse Disposal Fund.
11.
Obligations Under Capital Leases and Installment Purchases
The reporting entity has financed the acquisition of certain capital assets, including a satellite
government center, buses, computer equipment, copier machines, and trailers, by entering into capital
lease and installment purchase agreements. The balance of capital assets, net, and the minimum
obligations under these capital lease and installment purchase agreements as of June 30, 2013, are
presented on the following page:
Financial Section
97
Basic Financial Statements
Primary Government Governmental Activities
Asset C lass
Land
$
Buildings
Improvements
Equipment
Total assets, at cost
Accumulated depreciation
Total assets, net
$
Fiscal Year
C omponent Unit Public Schools
-
6,000,000
-
48,158,308
3,774,949
-
14,728,968
67,768,311
18,503,917
121,926,619
(11,686,618)
6,817,299
Minimum Obligations
2014
$
(35,044,975)
86,881,644
Minimum Obligations
1,854,822
17,219,323
2015
599,298
14,571,681
2016
499,631
9,368,297
2017
261,651
8,611,045
2018
261,651
4,409,455
2019-2023
327,360
18,879,912
2024-2028
2029-2033
2034-2038
70,926
-
18,875,485
18,877,550
7,550,825
Total minimum obligations
3,875,339
118,363,573
Portion representing interest
Present value of minimum obligations
(397,345)
3,477,994
(33,415,639)
84,947,934
$
The County is the lessor in a direct financing lease with Public Schools for an administrative office
building and related land. The lease is structured so that Public Schools will make annual lease
payments over 30 years equal to the County’s required debt service payments on the Series 2005
Facilities Revenue Bonds (see Note J-2). The County will transfer ownership of the building to
Public Schools once all the lease obligations are satisfied. The total future minimum lease payments
receivable is $51.5 million and unearned revenue in the amount of $51.5 million is reported.
Minimum lease payments for each of the five succeeding fiscal years are $1,415,000; $1,470,000;
$1,530,000; $1,590,000; and $1,670,000 respectively.
K.
Long-term Commitments
1.
Washington Metropolitan Area Transit Authority (WMATA)
The County’s commitments to WMATA are comprised of agreements to make capital contributions
for the construction of rail lines and for the acquisition, replacement, and renovation of transit
equipment and facilities and to provide operating subsidies for its rail, bus, and paratransit systems.
The County’s commitments in each of these areas are summarized as follows:
Capital Contributions – Transit Equipment and Facilities
Each fiscal year, the County and other local jurisdictions make contributions for WMATA’s
acquisition, replacement, and rehabilitation of transit equipment and facilities and for the debt service
on federally guaranteed transit revenue bonds issued by WMATA. The County’s obligation of
approximately $26.8 million for fiscal year 2013 was funded with $22.6 million of County general
obligation bond proceeds, and $4.2 million of state aid provided through the Northern Virginia
Transportation Commission (NVTC). It is anticipated that the County’s obligation for fiscal year
2014 will amount to $30.9 million and be funded with $2.8 million of state aid provided through the
NVTC, and $28.1 million of County general obligation bond proceeds.
98
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Notes to the Financial Statements
Operating Subsidies
The County and other local jurisdictions contribute annually toward WMATA’s deficits resulting from
the operation of its rail, bus, and paratransit systems. For fiscal year 2013, the County’s obligation of
approximately $87.5 million for operating subsidies was funded with $9.2 million from the County’s
Metro Operations and Construction Fund, $78.3 million from state aid and regional gasoline tax
receipts provided through the NVTC. It is anticipated that the County’s obligation for fiscal year
2014 will amount to $96.2 million and be funded with $88.6 million of state aid and regional gasoline
tax receipts provided through the NVTC and $7.6 million of County funds.
Beginning in fiscal year 2013, the state aid discussed in both Capital Contributions and Operating
subsidies is shown passing through the County and Regional Transportation Projects Fund as the
result of a change in the language used in the State Budget. Prior to fiscal year 2013, this activity was
not reflected as activity on the County financial statements.
2.
Virginia Railway Express (VRE)
The County, as a member of the NVTC and in cooperation with the Potomac and Rappahannock
Transportation Commission (PRTC), is a participating jurisdiction in the operation of the VRE
commuter rail service. The service primarily consists of rush hour trips originating from Manassas,
Virginia and from Fredericksburg, Virginia to Union Station in Washington, DC. There are five
stations in Fairfax County.
In October 1989, the Board of Supervisors of Fairfax County approved the Commuter Rail Master
Agreement and financial plans. These have subsequently been amended to reflect voting criteria
for member jurisdictions, new member requirements, and fairness in the subsidy allocation formula
which took effect for fiscal year 2008. The Board approved this Amended Master Agreement on
September 10, 2007. The Amended Master Agreement requires the County to contribute to capital,
operating, and debt service costs of the VRE on a pro rata basis according to its share of ridership.
The County’s fiscal year 2013 contribution to the VRE was $4.5 million.
3.
Operating Lease Commitments
The County, Public Schools, and the EDA have entered into various long-term lease agreements for
real estate and equipment. Certain real estate leases contain provisions which allow for increased
rentals based upon increases in real estate taxes and the Consumer Price Index. All lease obligations
are contingent upon the Board of Supervisors appropriating funds for each fiscal year’s payments.
For fiscal year 2013, the County’s, Public Schools’, and EDA’s total expenditures for these operating
leases were $18.5 million, $4.2 million, and $0.7 million, respectively. At June 30, 2013, the
minimum long-term lease commitments accounted for as operating leases were as shown below:
Primary Government
Fiscal Year
Financial Section
Governmental Activities
C omponent Units
Public Schools
EDA
2014
16,643,882
4,014,404
714,493
2015
14,498,705
4,115,582
734,162
2016
13,421,572
3,399,712
754,273
2017
12,874,901
1,538,847
775,047
2018
12,730,192
1,555,739
796,263
2019-2023
19,837,520
959,309
1,098,370
2024-2028
5,889,701
-
-
2029-2033
2,710,068
-
-
2034-2038
1,369,227
-
-
2039-2043
Total
1,034,077
101,009,845
15,583,593
4,872,608
$
99
Basic Financial Statements
4.
Intermunicipal Agreements
City of Alexandria, Virginia, Renew Enterprises
The Sewer System is obligated under an agreement with the City of Alexandria, Virginia, Renew
Enterprises (ARE) to share the construction and operating costs and debt service requirements for
its sewage treatment facility. Currently, the Sewer System has a capacity entitlement of 32.4 MGD,
which is 60 percent of the facility’s total capacity of 54 MGD. The Sewer System is allowed only
one non-voting representative at the meetings of the ARE and has no significant influence in the
management of the treatment facility. In addition, the Sewer System has no direct ongoing equity
interest in the assets or liabilities of the ARE.
The ARE facility is currently undergoing major improvements to meet new water quality standards.
The Sewer System paid ARE $9,757,751 for purchase capacity in fiscal year 2013, to fund its share of
construction costs, and it estimates its share of the remaining construction costs to be $153.6 million
of which $40.1 million, is expected to be incurred in fiscal year 2014 and the balance over fiscal years
2015 to 2023. In addition, the Sewer System made payments of $12.8 million to the ARE during
fiscal year 2013 for its share of the ARE’s operating costs.
District of Columbia Water and Sewer Authority
The Sewer System is obligated under an intermunicipal agreement between the County; the District
of Columbia (District); District of Columbia Water and Sewer Authority (DC Water); Montgomery
County, Maryland; Prince George’s County, Maryland; and the Washington Suburban Sanitary
Commission to share the construction and operating costs of the Blue Plains Wastewater Treatment
Plant, which is operated by DC Water. Currently, the Sewer System has a capacity entitlement of 31
MGD, which is approximately 8.4 percent of the Plant’s total capacity of 370 MGD. DC Water has
a Board of Directors comprised of six members from the District, two each from Montgomery and
Prince George’s Counties, and one from the County. The County has no significant control over plant
operations and construction and no ownership interest in the assets of DC Water.
The Blue Plains Plant is currently undergoing a major renovation of its chemical additions and sludge
disposal systems. The Sewer System paid DC Water $27.7 million for purchase capacity during
fiscal year 2013 to fund its share of construction costs, and it estimates its share of the remaining
construction costs to be $136.6 million, of which $26.3 million is expected to be incurred in fiscal
year 2014 and the balance over fiscal years 2015 to 2023. In addition, the Sewer System made
payments of $13.2 million for contractual services to DC Water during fiscal year 2013 for its share of
the Plant’s operating costs.
Upper Occoquan Sewage Authority
As described in Note A, UOSA is a joint venture created under the provisions of the Virginia
Water and Waste Authorities Act to be the single regional entity to construct, finance, and operate
the regional sewage treatment facility for the upper portion of the Occoquan Watershed. The
Sewer System’s allocated share of the UOSA plant’s total capacity of 54.0 MGD is 22.6 MGD, or
approximately 42 percent.
UOSA’s current operating expenses, construction costs, and annual debt service payments are funded
by each of the participating jurisdictions based on their allocated capacity, with certain modifications.
The Sewer System made contractual service payments to UOSA in fiscal year 2013 of $12.6 million
to pay its share of UOSA’s operating costs.
Summarized UOSA financial information as of and for the years ended June 30, 2012, and 2011 (the
most recent audited financial information available), is shown on the following page:
100
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Notes to the Financial Statements
2012
Total assets
$
Total liabilities
Total net assets
$
Operating revenues
$
Operating expenses
2011
633,347,332
637,303,357
(533,484,845)
(537,851,308)
99,862,487
99,452,049
26,287,967
26,552,992
(47,735,959)
(46,966,704)
Nonoperating revenues, net
11,666,621
5,842,390
C apital contributions
10,191,809
9,736,587
Increase (decrease) in net assets
$
410,438
(4,834,735)
Arlington County, Virginia
The Sewer System is obligated under an agreement with Arlington County, Virginia, to share the
construction and operating costs of the sewage treatment facility owned and operated by Arlington
County. Currently, the Sewer System has a capacity entitlement of 3 MGD, which is 7.5 percent
of the facility’s total capacity of 40 MGD. The Sewer System has no significant influence over the
management of the treatment facility. In addition, the Sewer System has no direct on-going equity
interest in the facility’s assets and liabilities.
The Arlington facility is currently undergoing a major upgrade to meet new water quality standards.
The Sewer System paid Arlington $3.1 million in fiscal year 2013 to fund its share of the construction
costs, and it estimates its share of the remaining construction costs to be $3.6 million, of which $0.6
million is expected to be incurred in fiscal year 2014 and the balance over fiscal years 2015 to 2023.
In addition, the Sewer System made payments of $2.2 million for contractual services to Arlington
during fiscal year 2013 for its share of Arlington’s operating costs.
Loudoun County, Virginia
The Sewer System is obligated under an agreement with Loudoun County, Virginia, to share the
construction and operating costs and debt service requirements for the sewage treatment facility
owned and operated by Loudoun Water. Currently, the Sewer System has a capacity entitlement of
1.0 MGD, which is 9.0 percent of the facility’s total capacity of 11 MGD. The Sewer System has no
significant influence over the management of the treatment facility. Furthermore, the Sewer System
has no direct on-going equity interest in the facility’s assets and liabilities.
The System did not pay any operating cost to Loudoun Water in fiscal year 2013. The System will
incur operating costs once it starts to deliver flows to Loudoun Water’s facilities which is not expected
to start in fiscal year 2014.
5.
Long-term Contracts
At June 30, 2013, the primary government had contractual commitments of $67,203,245 in the
capital projects funds and $47,902,000 in the Sewer System for construction of various sewer
projects. At June 30, 2013, the component units had contractual commitments of $144,327,131 and
Financial Section
101
Basic Financial Statements
$17,009,427 in the capital projects funds of the Public Schools and the Park Authority, respectively,
for construction of various projects.
L.
Contingent Liabilities
The County is contingently liable with respect to lawsuits and other claims that arise in the ordinary course of
its operations. Although the outcome of these matters is not presently determinable, in the opinion of County
management, the resolution of these matters will not have a material adverse effect on the County’s financial
condition.
The County receives grant funds, principally from the federal government, for construction and various
other programs. Certain expenditures of these funds are subject to audit by the grantor, and the County is
contingently liable to refund amounts received in excess of allowable expenditures. In the opinion of County
management, no material refunds will be required as a result of expenditures disallowed by the grantors.
M.
Special Items
In September 2010, the Board of Supervisors approved a two phase Contract of Sale with Inova Health
Systems which included the transfer of approximately 15 acres of land including the Woodburn Mental
Health Center and Woodburn Place from the County to Inova. In exchange for this land, Inova provided
the County with an approximate 5-acre parcel at Willow Oaks II, a $15 million cash payment, and a 10year lease of 40,000 square feet within the new Mid County Center building. In fiscal year 2011, the first
installment of $7,300,000 was paid. In fiscal year 2012, the second installment of $3,500,000 was paid. For
fiscal year 2013, the remaining $4,200,000 resides in an escrow account. This amount will be offset by the
costs owed to Inova Health System for infrastructure construction completed. At the end of the project, any
residual amounts not used for construction costs will be returned to the County.
N.
Implementation of New Accounting Pronouncements
In Fiscal Year 2013, the County implemented GASB Statement No. 60, “Accounting and Financial Reporting
for Service Concession Arrangements”. The implementation of the new standard did not have a material
impact on the County’s financial statements for Fiscal Year 2013.
The County implemented GASB Statement No. 61, “The Financial Reporting Entity Omnibus — an
amendment of GASB Statements No. 14 and No. 34”. The implementation of the new standard did not have
a material impact on the County’s financial statements for Fiscal Year 2013.
The County implemented GASB Statement No. 62, “Codification of Accounting and Financial Reporting
Guidance contained in Pre-November 30, 1989 FASB and AICPA”. The implementation of the new standard
did not have a material impact on the County’s financial statements for Fiscal Year 2013.
The County implemented GASB Statement No. 63, “Financial Reporting of Deferred Outflows of Resources,
Deferred Inflows of Resources and Net Position”. The implementation of the new standard has replaced the
statement of net assets with the statement of net position which includes the deferred outflows of resources
and deferred inflow of resources.
102
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Notes to the Financial Statements
The County, with the exception of the County Retirement Systems, has opted to early implement GASB
Statement No. 65, “Items Previously Reported as Assets and Liabilities”. Bond issuance costs, except any
portion related to prepaid insurance costs, are recognized as an expense in fiscal year 2013. Prior to the
implementation, these items were deferred and amortized over the life of the existing debt. The County
has reclassified the deferred amount on refunding previously reported as assets and liabilities as deferred
outflows of resources and deferred inflows of resources. The balance of Deferred Bond Issuance Cost in
fiscal year 2012 as reported were $19,137,654 for Governmental Activities, $1,037,765 for Business Type
Activities, and $1,350,550 for Component Units. The cumulative effect of applying GASB 65 has resulted in
an increase to fiscal year 2012 total expenses by $20,400,502. The recalculated expenses and net position for
fiscal year 2012, to obtain fiscal year 2013 beginning net position are as follows:
2012 Total net
assets
Governmental Activities
Business-type Activities
Total Primary Government
C omponent Units
Total Reporting Entity
$
Deferred Bond
Issuance C osts
Expensed
2012 net position,
as adjusted
359,003,686
(19,137,654)
937,806,425
(1,037,765)
936,768,660
1,296,810,111
(20,175,419)
1,276,634,692
3,135,907,944
(225,083)
3,135,682,861
$ 4,432,718,055
(20,400,502)
$ 4,412,317,553
2012 Total
expenditures
Bond Issuance
C osts Expense
$
339,866,032
2012 total
expenditures,
as adjusted
Governmental Activities
$ 3,988,442,783
19,137,654
$ 4,007,580,437
Business-type Activities
162,918,142
1,037,765
163,955,907
4,151,360,925
20,175,419
4,171,536,344
2,653,124,458
225,083
2,653,349,541
$ 6,804,485,383
20,400,502
$ 6,824,885,885
Total Primary Government
C omponent Units
Total Reporting Entity
The County has also opted to early implement GASB Statement No. 66, “Technical Corrections – 2012”.
The implementation of the new standard did not have a material impact on the County’s financial statements
for Fiscal Year 2013.
Financial Section
103
Basic Financial Statements
104
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Required
Supplementary Information
T
he Required Supplementary Information
subsection includes the budgetary comparison
schedule for the County of Fairfax’s major fund, the
General Fund. It also includes trend data, including
the schedule of funding progress and the schedule
of employer contributions, related to the pension trust
funds of the County of Fairfax and the Fairfax County
Public Schools component unit. The notes to required
supplementary information are also included in this
subsection.
Required Supplementary Information
County of Fairfax, Virginia
Budgetary Comparison Schedule - General Fund (Budget Basis)
For the fiscal year ended June 30, 2013
Budgeted Amounts
Original
Final
Actual Amounts
(Budget Basis)
Variance from
Final Budget
Positive
(Negative)
REVENUES
Taxes
$
2,981,818,327
2,980,259,769
3,008,000,381
27,740,612
34,902,539
35,747,734
38,201,352
2,453,618
341,525,676
332,199,305
332,278,726
79,421
C harges for services
70,095,102
70,971,358
72,674,073
1,702,715
Fines and forfeitures
13,595,913
14,612,835
14,131,523
Revenue from the use of money and property
18,169,566
18,160,015
18,097,468
(62,547)
Recovered costs
14,716,245
14,858,461
15,285,540
427,079
3,474,823,368
3,466,809,477
3,498,669,063
31,859,586
100,674,663
106,765,325
97,974,104
8,791,221
33,073,100
33,897,463
33,451,817
445,646
421,729,844
432,020,788
416,235,478
15,785,310
Permits, privilege fees, and regulatory licenses
Intergovernmental
Total revenues
(481,312)
EXPENDITURES
General government administration
Judicial administration
Public safety
Public works
Health and welfare
67,736,780
72,930,851
68,389,977
4,540,874
298,699,875
301,333,216
281,524,289
19,808,927
C ommunity development
44,582,338
48,267,746
42,704,669
5,563,077
Parks, recreation, and cultural
50,128,306
51,376,421
49,448,162
1,928,259
287,116,896
285,476,845
279,594,237
5,882,608
1,303,741,802
1,332,068,655
1,269,322,733
62,745,922
2,171,081,566
2,134,740,822
2,229,346,330
94,605,508
Nondepartmental
Total expenditures
Excess of revenues over expenditures
OTHER FINANCING SOURCES (USES)
6,770,457
Transfers in from other primary government funds
6,770,457
6,770,457
-
(550,722,589)
(577,171,807)
(577,171,807)
-
Transfers out to component units
(1,683,322,285)
(1,683,322,285)
(1,683,322,285)
-
Total other financing (uses)
(2,227,274,417)
(2,253,723,635)
(2,253,723,635)
-
(56,192,851)
(118,982,813)
(24,377,305)
94,605,508
Transfers out to other primary government funds
Net change in fund balance
$
See accompanying notes to required supplementary information.
Financial Section
105
Required Supplementary Information
County of Fairfax, Virginia
Schedule of Funding Progress
For the fiscal year ended June 30, 2013
Actuarial
Valuation
Date
Actuarial
Value of
Assets
(000) ( a )
Actuarial
Accrued
Liability (AAL)
- Entry Age
(000) ( b )
Unfunded
AAL (UAAL)
(Funding
Excess)
(000) ( b-a )
Funded
Ratio
( a/b )
C overed
Payroll
(000) ( c )
UAAL (Funding
Excess) as a
Percentage of
C overed Payroll
( ( b-a ) / c )
Primary Government
Employees' Retirement System:
7/1/2003
$ 1,903,970
$ 2,251,187
347,217
84.58 % $
530,216
65.49 %
7/1/2004
2,030,539
2,411,135
$
380,596
84.22
552,738
68.86
7/1/2005
2,202,515
2,676,418
473,903
82.29
565,063
83.87
7/1/2006
2,363,844
2,881,780
517,936
82.03
574,294
90.19
7/1/2007
2,596,658
3,139,187
542,529
82.72
579,075
93.69
7/1/2008
2,752,874
3,328,901
576,027
82.70
610,877
94.30
7/1/2009
2,603,284
3,535,874
932,590
73.62
628,481
148.39
7/1/2010
2,636,052
3,771,060
1,135,008
69.90
629,249
180.38
7/1/2011
2,841,466
4,018,924
1,177,457
70.70
642,073
183.38
7/1/2012
3,053,412
4,264,175
1,210,763
71.61
642,639
188.40
83.43
Police Officers Retirement System:
7/1/2003
644,405
703,977
59,572
91.54
71,401
7/1/2004
685,495
749,344
63,849
91.48
78,080
81.77
7/1/2005
732,582
828,702
96,120
88.40
83,939
114.51
7/1/2006
788,766
897,478
108,712
87.89
89,062
122.06
7/1/2007
870,975
968,735
97,760
89.91
95,904
101.94
7/1/2008
908,077
1,031,333
123,256
88.05
99,714
123.61
7/1/2009
879,543
1,076,039
196,496
81.74
99,647
197.19
7/1/2010
899,543
1,135,015
235,472
79.25
100,500
234.30
7/1/2011
982,154
1,219,609
237,455
80.53
99,070
239.68
7/1/2012
1,035,444
1,286,841
251,397
80.46
101,121
248.61
Uniformed Retirement System:
7/1/2003
715,797
795,342
79,545
90.00
100,749
78.95
7/1/2004
767,357
881,015
113,658
87.10
102,960
110.39
7/1/2005
830,702
974,106
143,404
85.28
109,067
131.48
7/1/2006
921,414
1,102,667
181,253
83.56
127,469
142.19
7/1/2007
1,028,385
1,206,624
178,239
85.23
136,487
130.59
7/1/2008
1,097,994
1,285,694
187,700
85.40
142,724
131.51
7/1/2009
1,074,230
1,351,204
276,974
79.50
147,083
188.31
7/1/2010
1,095,080
1,427,617
332,537
76.71
146,777
226.56
7/1/2011
1,185,594
1,526,218
340,624
77.68
147,326
231.20
7/1/2012
1,247,526
1,613,654
366,128
77.31
148,236
246.99
Other Post-Employment Benefits (OPEB):
7/1/2007
-
379,856
379,856
7/1/2008
48,207
350,709
302,502
13.75
650,106
58.43
697,253
43.39
7/1/2009
50,233
441,286
391,053
11.38
761,303
51.37
7/1/2010
60,473
489,203
428,730
12.36
777,040
55.17
7/1/2011
80,087
474,229
394,142
16.89
799,500
49.30
7/1/2012
103,270
503,786
400,516
20.50
824,504
48.58
Component Unit - Public Schools
Educational Employees' Supplementary Retirement System:
6/30/2003
1,597,459
1,772,418
174,959
90.13
866,502
20.19
12/31/2004
1,643,020
1,935,582
292,562
84.89
977,817
29.92
12/31/2005
1,718,399
2,022,962
304,563
84.94
1,050,217
29.00
12/31/2006
1,818,930
2,105,552
286,622
86.39
1,111,828
25.78
12/31/2007
1,924,886
2,186,801
261,915
88.02
1,161,432
22.55
12/31/2008
1,733,946
2,255,298
521,352
76.88
1,211,140
43.05
12/31/2009
1,769,540
2,314,282
544,742
76.46
1,208,093
45.09
12/31/2010
1,822,603
2,384,061
561,458
76.45
1,191,290
47.13
12/31/2011
1,866,952
2,470,964
604,012
75.56
1,246,973
48.44
12/31/2012
1,935,292
2,566,128
630,836
75.42
1,297,537
48.62
23.00
Other Post-Employment Benefits (OPEB):
7/1/2007
299,668
7/1/2008
7,996
458,067
7/1/2009
7/1/2010
7/1/2011
7/1/2012
299,668
-
1,302,665
450,071
1.75
1,352,321
33.28
17,520
466,324
448,804
3.76
1,182,922
37.94
19,563
471,617
452,054
4.15
1,432,000
31.57
40,051
431,303
391,252
9.29
1,005,000
38.93
53,423
448,849
395,426
11.90
1,045,000
37.84
See accompanying notes to required supplementary information.
106
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Required Supplementary Information
County of Fairfax, Virginia
Schedule of Employer Contributions
For the fiscal year ended June 30, 2013
Primary Government
Fiscal
Year
Ended
June 30
Employees' Retirement
Annual
Percentage
Required
C ontributed
C ontribution
Police Officers Retirement
Annual
Percentage
Required
C ontributed
C ontribution
Uniformed Retirement
Annual
Percentage
Required
C ontributed
C ontribution
2004
$ 51,992,031
$ 17,356,995
$ 25,186,003
2005
67,996,277
69.06
20,744,793
71.83
32,320,929
84.13
2006
73,734,724
67.05
22,641,707
73.88
37,668,222
85.31
66.20 %
84.59 %
98.56 %
2007
81,551,794
70.45
26,518,550
72.49
43,009,853
84.83
2008
89,480,173
70.00
28,198,891
76.06
46,849,354
83.43
2009
95,052,308
69.00
27,625,460
85.00
47,247,396
86.00
2010
92,771,532
69.06
30,759,259
77.27
47,289,026
86.22
2011
122,435,265
78.90
36,872,751
79.12
53,208,307
86.11
2012
142,286,358
80.60
39,408,110
81.38
57,663,522
87.91
2013
158,155,966
80.58
43,091,299
80.49
62,240,960
87.34
Fiscal Year
Ended
June 30
Fiscal Year
Ended
June 30
2008
Educational Employees'
Supplementary Retirement
Annual
Required
Percentage
C ontribution
C ontributed
2004
$ 37,331,203
*
100.00 %
2005
32,198,596
*
100.00
2006
34,648,918
*
100.00
2007
36,644,001
*
100.00
2008
38,334,140
*
100.00
2009
40,012,480
*
100.00
2010
37,868,623
*
100.00
2011
47,118,111
*
100.00
2012
52,934,245
*
100.00
2013
67,734,634
*
100.00
Primary Government
Other Post-Employment
Benefits (OPEB)
Annual
Percentage
Required
C ontributed
C ontribution
$ 31,648,000
185.42 %
C omponent Unit - Public Schools
Other Post-Employment Benefits
(OPEB)
Annual
Percentage
Required
C ontributed
C ontribution
$ 25,302,000
103.21 %
2009
25,393,000
84.89
37,522,000
2010
32,553,000
54.59
35,954,000
97.70
75.47
2011
35,373,000
59.38
38,163,000
118.70
2012
37,640,000
118.02
30,630,000
138.37
2013
38,858,000
98.58
31,142,000
110.72
* The annual required contribution is equal to the annual pension cost.
See accompanying notes to required supplementary information.
Financial Section
107
Required Supplementary Information
108
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Notes to Required Supplementary Information
County of Fairfax, Virginia
Notes to Required Supplementary Information
June 30, 2013
A.
Budgetary Data
The Board of Supervisors adheres to the following procedures in establishing the budgetary data reflected in
the financial statements:
a.
By March 1, the County Executive submits to the Board of Supervisors a proposed operating budget
for the fiscal year commencing the following July 1. The operating budget includes proposed
expenditures and the means of financing them. During April, public hearings are conducted to obtain
taxpayer comments. By May 1, the budget is legally enacted through passage of an appropriation
resolution.
b.
The operating budget includes all County appropriated funds and certain non-appropriated funds.
The non-appropriated funds include certain funds of the Park Authority and the FCRHA that are not
financed by the County.
c.
Budget reviews are held during the fiscal year. Public hearings are held if the recommended increase
in the appropriated budget is greater than one percent of expenditures.
d.
The budget is controlled at certain legal and administrative levels. The Code of Virginia requires
that the County annually adopt a balanced budget. The adopted Fiscal Planning Resolution places
legal restrictions on expenditures at the agency (e.g., County organizations in the General Fund) or
fund level and identifies administrative controls at the character (i.e., personnel services, operating
expenses, recovered costs, and capital equipment) or project level. The County’s Department of
Management and Budget is authorized to transfer budgeted amounts between characters or projects
within any agency or fund as a management function. Any revisions that alter the total expenditures
of any agency or fund must be approved by the Board of Supervisors.
e.
Annual operating budgets are adopted for all appropriated governmental funds, except for the capital
projects funds in which budgetary control is achieved on a project-by-project basis. The budgets are
on a basis consistent with GAAP for the General Fund, except that:
•
Revenue from investments is recognized in the governmental funds for budget purposes only if
collected within 45 days of year end, instead of as earned.
•
Certain purchase order transactions that qualify as current expenditures under GAAP, are not
recognized as expenditures in the current budget due to the timing of the receipt of goods or
services.
•
Offsetting revenues and expenditures related to donated food are not budgeted.
•
Capital lease transactions when initiated are not budgeted as offsetting expenditures and other
financing sources.
•
Certain capital outlays are budgeted as functional expenditures.
•
Payments from or to component units are budgeted as transfers rather than functional revenues
and expenditures.
Financial Section
109
Required Supplementary Information
•
Inventories of supplies are not included in the fund balance for budget purposes.
•
Nondepartmental expenditures are reported for budgeting purposes, but are included in functional
expenditures for reporting purposes.
•
The Gift Fund, which is included in the County’s General Fund for reporting purposes, is treated
as an agency fund for budgeting purposes.
•
The Information Technolgy Fund, Consolidated Community Funding Pool Fund and the
Contributory Fund, which are included in the County’s General Fund for reporting purposes, are
treated as special revenue funds for budgeting purposes.
The following schedule reconciles the amounts on the Budgetary Comparison Schedule – General
Fund (Budget Basis) to the amounts on the Statement of Revenues, Expenditures, and Changes in
Fund Balances (Exhibit A-3):
Primary Government
General Fund
Net change in fund balance (Budget basis)
$
Basis difference - Revenue from investments
(24,377,305)
232,320
Timing difference - Purchase expenditures
55,419
Interfund differences - Fringe benefits
(195,824)
Perspective differences:
The Gift Fund and NOVARIS are treated as agency funds for budget purposes
(52,589)
The C onsolidated C ommunity Funding Pool Fund is treated as a special revenue
fund for budget purposes
(31,292)
The C ontributory Fund is treated as a special revenue fund for budget purposes
(58,385)
The Information Technology Fund is treated as a special revenue fund for budget purposes
Net change in fund balance (GAAP basis)
24,739
$
(24,402,917)
f.
Original and final budgeted amounts are shown on the Budgetary Comparison Schedule; amendments
were not significant in relation to the original budget.
g.
Appropriations lapse at June 30 unless the Board of Supervisors approves carrying them forward to
the next fiscal year.
110
County of Fairfax, Virginia  Comprehensive Annual Financial Report
Notes to Required Supplementary Information
B.Pension Trend Data
Six-year historical trend information of the retirement systems administered by the reporting entity is
presented as required supplementary information. This information is intended to help users assess each
system’s funding status on a going concern basis, assess progress made in accumulating assets to pay benefits
when due, and make comparisons with other public employee retirement systems.
Analysis of the dollar amounts of plan net position, actuarial accrued liability, and unfunded actuarial accrued
liability in isolation can be misleading. Expressing plan net position as a percentage of the actuarial accrued
liability provides one indication of each system’s funding status on a going concern basis. Analysis of this
percentage over time indicates whether the system is becoming financially stronger or weaker. Generally,
the greater this percentage is, the stronger the system. Trends in the unfunded actuarial accrued liability and
annual covered payroll are both affected by inflation. Expressing the unfunded actuarial accrued liability as a
percentage of annual covered payroll approximately adjusts for the effects of inflation and aids analysis of the
system’s progress made in accumulating sufficient assets to pay benefits when due. Generally, the smaller this
percentage is, the stronger the system.
Information pertaining to the retirement systems administered by the reporting entity can be found in Note G
to the financial statements.
C.Other Post-Employment Benefits (OPEB) Trend Data
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions
about the probability of occurrence of events far into the future. Examples include assumptions about future
employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of
the plan and the annual required contributions of the employer are subject to continual revision as actual
results are compared with past expectations and new estimates are made about the future. The schedule
of funding progress, presented as required supplementary information following the notes to the financial
statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing
or decreasing over time relative to the actuarial accrued liabilities for benefits.
Information pertaining to the OPEB plans administered by the reporting entity can be found in Note H to the
financial statements.
Financial Section
111
Appendix V
BOOK-ENTRY ONLY SYSTEM
The Depository Trust Company (“DTC”), New York, New York, will act as securities depository
for the Bonds. The Bonds will be issued as fully registered securities registered in the name of Cede &
Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative
of DTC. One fully registered Bond certificate will be issued for each principal amount of Bonds of a
Series bearing interest at a specified interest rate, each in the aggregate principal amount of such quantity
of Bonds, and will be deposited with DTC.
DTC, the world’s largest depository, is a limited purpose trust company organized under the New
York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York
Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A
of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million
issues of U.S. and non U.S. equity issues, corporate and municipal debt issues, and money market
instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC.
DTC also facilitates the post trade settlement among Direct Participants of sales and other securities
transactions in deposited securities, through electronic computerized book entry transfers and pledges
between Direct Participants’ accounts. This eliminates the need for physical movement of securities
certificates. Direct Participants include both U.S. and non U.S. securities brokers and dealers, banks, trust
companies, clearing corporations, and certain other organizations. DTC is a wholly owned subsidiary of
The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC,
National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are
registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the
DTC system is also available to others such as both U.S. and non U.S. securities brokers and dealers,
banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship
with a Direct Participant, either directly or indirectly (“Indirect Participants”). The DTC Rules applicable
to its Participants are on file with the Securities and Exchange Commission. More information about
DTC can be found at www.dtcc.com and www.dtc.org.
Purchases of the Bonds under the DTC system must be made by or through Direct Participants,
which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual
purchaser of the Bonds (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect
Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their
purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of
the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant
through which the Beneficial Owner entered into the transaction. Transfers of ownership interest in the
Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on
behalf of Beneficial Owners. Beneficial Owners will not receive bond certificates representing their
ownership interests in the Bonds, except in the event that use of the book entry system for the Bonds is
discontinued.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are
registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be
requested by an authorized representative of DTC. The deposit of the Bonds with DTC and their
registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial
ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect
only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may
not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain
steps to augment the transmission to them of notices of significant events with respect to the Bonds, such
as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example,
Beneficial Owners of the Bonds may wish to ascertain that the nominee holding the Bonds for their
benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial
Owners may wish to provide their names and addresses to the registrar and request that copies of notices
be provided directly to them.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to
the Bonds unless authorized by a Direct Participant in accordance with DTC’s Procedures. Under its
usual procedures, DTC mails an Omnibus Proxy to the County as soon as possible after the record date.
The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to
whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus
Proxy).
Principal, premium, if any, and interest payments on the Bonds will be made to Cede & Co., or
such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to
credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detailed information
from the County, on a payable date in accordance with their respective holdings shown on DTC’s records.
Payments by Participants to Beneficial Owners will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts of customers in bearer form or registered in
“street name,” and will be the responsibility of such Participant and not of DTC or the County, subject to
any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption
proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be
requested by an authorized representative of DTC is the responsibility of the County, disbursement of
such payments to Direct Participants will be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as depository with respect to the Bonds at any time
by giving reasonable notice to the County. Under such circumstances, in the event that a successor
depository is not obtained, certificates for the Bonds are required to be printed and delivered.
The County may decide to discontinue use of the system of book-entry transfers through DTC (or
a successor securities depository). In that event, certificates for the Bonds will be printed and delivered.
The information in this section concerning DTC and DTC’s book-entry system has been obtained
from sources that the County believes to be reliable, but the County takes no responsibility for the
accuracy thereof.
V-2
Appendix VI
SIDLEY AUSTIN
BEIJING
HONG KONG
SAN FRANCISCO
1501 K STREET, N.W.
BOSTON
HOUSTON
SHANGHAI
WASHINGTON, D.C. 20005
BRUSSELS
LONDON
SINGAPORE
(202) 736 8000
CHICAGO
LOS ANGELES
SYDNEY
(202) 736 8711 FAX
DALLAS
NEW YORK
TOKYO
GENEVA
PALO ALTO
WASHINGTON, D.C.
LLP
FOUNDED 1866
November _, 2014
Board of Supervisors
of Fairfax County, Virginia
Fairfax, Virginia
As bond counsel to Fairfax County, Virginia (the “County”), we have examined certified copies
of the legal proceedings, including the election proceedings and other proofs submitted, relative to the
issuance and sale of
$
Fairfax County, Virginia
Public Improvement Refunding Bonds, Series 2014B (the “Bonds”)
The Bonds are dated the date of their delivery, mature in annual installments on October 1 in each
of the years 2015 to 2026, inclusive, and bear interest, payable on the 1st days of April and October in
each year, commencing October 1, 2015. The Bonds are subject to redemption prior to their respective
maturities in the manner and upon the terms and conditions set forth in the resolution authorizing the
issuance of the Bonds adopted by the Board of Supervisors of Fairfax County on December 3, 2013.
From such examination, we are of the opinion that:
(1) Such proceedings and proofs show lawful authority for the issuance and sale of the Bonds
pursuant to the Constitution and laws of Virginia, and the Bonds constitute valid and binding general
obligations of the County, for the payment of which the full faith and credit of the County are pledged,
and all taxable property in the County is subject to the levy of an ad valorem tax, without limitation as to
rate or amount, for the payment of the Bonds and the interest thereon, which tax shall be in addition to all
other taxes authorized to be levied in the County to the extent other funds of the County are not lawfully
available and appropriated for such purpose.
(2) Except as provided in the following sentence, interest on the Bonds is not includable in the
gross income of the owners thereof for federal income tax purposes under existing law. Interest on the
Bonds will be includable in the gross income of the owners thereof retroactive to the date of issue of the
Bonds in the event of a failure by the County or the school board of the County to comply with applicable
requirements of the Internal Revenue Code of 1986, as amended (the “Code”), and their respective
covenants regarding use, expenditure, and investment of the proceeds of the Bonds and the timely
payment of certain investment earnings to the United States Treasury, and we render no opinion as to the
effect on the exclusion from gross income of the interest on the Bonds for federal income tax purposes of
any action taken or not taken without our approval or upon the advice or approval of counsel other than
us.
VI-1
(3) Interest on the Bonds is not an item of tax preference for purposes of the federal individual
or corporate alternative minimum tax.
The Code contains other provisions that could result in tax consequences, as to which we render
no opinion, as a result of ownership of the Bonds or the inclusion in certain computations (including
without limitation those related to the corporate alternative minimum tax) of interest that is excluded from
gross income.
Respectfully submitted,
VI-2
Appendix VII
CONTINUING DISCLOSURE AGREEMENT
This Continuing Disclosure Agreement (the “Disclosure Agreement”) is executed and delivered
by Fairfax County, Virginia (the “County”), in connection with the issuance by the County of
$___________ aggregate principal amount of its Public Improvement Refunding Bonds, Series 2014B
(the “Bonds”) pursuant to the provisions of a resolution (the “Resolution”) adopted on December 3, 2013,
by the Board of Supervisors of the County. The proceeds of the Bonds are being used by the County to
refund certain outstanding public improvement bonds of the County. The County hereby covenants and
agrees as follows:
SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being
executed and delivered by the County for the benefit of the holders of the Bonds and in order to assist the
Participating Underwriters (defined below) in complying with the Rule (defined below). The County
acknowledges that it is undertaking primary responsibility for any reports, notices, or disclosures that may
be required under this Agreement.
SECTION 2. Definitions. In addition to the definitions set forth in the Resolution, which apply
to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the
following capitalized terms shall have the following meanings:
“Annual Report” shall mean any Annual Report provided by the County pursuant to, and as
described in, Sections 3 and 4 of this Disclosure Agreement.
“Dissemination Agent” shall mean the County, acting in its capacity as Dissemination Agent
hereunder, or any successor Dissemination Agent designated in writing by the County and which has filed
with the County a written acceptance of such designation.
“Filing Date” shall have the meaning given to such term in Section 3(a) hereof.
“Fiscal Year” shall mean the twelve month period at the end of which financial position and
results of operations are determined. Currently, the County’s Fiscal Year begins July 1 and continues
through June 30 of the next calendar year.
“Holder” or “holder” shall mean, for purposes of this Disclosure Agreement, any person who is a
record owner or beneficial owner of a Bond.
“Listed Events” shall mean any of the events listed in subsection (b)(5)(i)(C) of the Rule, which
are as follows:
principal and interest payment delinquencies;
non-payment related defaults; if material;
unscheduled draws on debt service reserves reflecting financial difficulties;
unscheduled draws on credit enhancements reflecting financial difficulties;
substitution of credit or liquidity providers, or their failure to perform;
VII-1
adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final
determinations of taxability, Notices of Proposed Issue (IRS Form 570-TEB) or other material notices or
determinations with respect to or events affecting the tax-exempt status of the Bonds;
modifications to rights of holders, if material;
bond calls, if material, and tender offers;
defeasances;
release, substitution, or sale of property securing repayment of the Bonds, if material;
rating changes;
bankruptcy, insolvency, receivership or similar event of the County; which event is considered to
occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for
the County in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or
federal law in which a court or governmental authority has assumed jurisdiction over substantially all of
the assets of business of the County, or if such jurisdiction has been assumed by leaving the existing
governing body and officials or officers in possession but subject to the supervision and orders of a court
of governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or
liquidation by a court or governmental authority having supervision or jurisdiction over substantially all
of the assets or business of the County;
the consummation of a merger, consolidation, or acquisition involving the County or the sale of
all or substantially all of the assets of the County, other than in the ordinary course of business, the entry
into a definitive agreement to undertake such an action or the termination of a definitive agreement
relating any such actions, other than pursuant to its terms, if material; and
appointment of a successor or additional paying agent or the change of name of a paying agent, if
material.
“Participating Underwriter” shall mean any of the original underwriters of the County’s Bonds
required to comply with the Rule in connection with the offering of such Bonds.
“Repository” shall mean The Electronic Municipal Market Access (“EMMA”) system
administered by the Municipal Securities Rulemaking Board. EMMA is recognized as a National
Repository for purposes of the Rule.
“Rule” shall mean Rule 15c2-12 adopted by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as the same may be amended from time to time.
SECTION 3.
Provision of Annual Reports.
A.
The County shall, or shall cause the Dissemination Agent to, provide to each Repository an
Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement.
Such Annual Report shall be filed on a date (the “Filing Date”) that is not later than March 31 after the
end of any Fiscal Year (commencing with its Fiscal Year ended June 30, 2014). Not later than ten (10)
days prior to the Filing Date, the County shall provide the Annual Report to the Dissemination Agent (if
applicable). In such case, the Annual Report (i) may be submitted as a single document or as separate
documents comprising a package, (ii) may cross-reference other information as provided in Section 4 of
VII-2
this Disclosure Agreement, and (iii) shall include the County’s audited financial statements or, if audited
financial statements are not available, such unaudited financial statements as may be required by the Rule.
In any event, audited financial statements of the County must be submitted, if and when available,
together with or separately from the Annual Report.
B.
The annual financial statements of the County shall be prepared on the basis of generally
accepted accounting principles and will be audited. Copies of the audited annual financial statements,
which may be filed separately from the Annual Report, will be filed with the Repositories when they
become publicly available.
C.
If the County fails to provide an Annual Report to the Repository by the date required in
subsection (A) hereto or to file its audited annual financial statements with the Repository when they
become publicly available, the County shall send a notice to the Repository in substantially the form
attached hereto as Exhibit B.
SECTION 4. Content of Annual Reports. Except as otherwise agreed, any Annual Report
required to be filed hereunder shall contain or incorporate by reference, at a minimum, annual financial
information relating to the County, including operating data, updating such information relating to the
County as described in Exhibit A, all with a view toward assisting Participating Underwriters in
complying with the Rule.
Any or all of such information may be incorporated by reference from other documents, including
official statements of securities issues with respect to which the County is an “obligated person” (within
the meaning of the Rule), which have been filed with the Repository or the Securities and Exchange
Commission. If the document incorporated by reference is a final official statement, it must be available
from the Municipal Securities Rulemaking Board. The County shall clearly identify each such other
document so incorporated by reference.
SECTION 5. Reporting of Listed Events. The County will provide within 10 business days to
the Repository notice of any of the Listed Events.
SECTION 6. Termination of Reporting Obligation. The County’s obligations under this
Disclosure Agreement shall terminate upon the earlier to occur of the legal defeasance or final retirement
of all the Bonds.
SECTION 7. Dissemination Agent. The County may, from time to time, appoint or engage a
Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement and may
discharge any such Agent, with or without appointing a successor Dissemination Agent. If at any time
there is not any other designated Dissemination Agent, the County shall be the Dissemination Agent.
SECTION 8. Amendment. Notwithstanding any other provision of this Disclosure Agreement,
the County may amend this Disclosure Agreement, if such amendment is supported by an opinion of
independent counsel with expertise in federal securities laws, to the effect that such amendment is
permitted or required by the Rule.
SECTION 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed
to prevent the County from disseminating any other information, using the means of dissemination set
forth in this Disclosure Agreement or any other means of communication, or including any other
information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is
required by this Disclosure Agreement. If the County chooses to include any information in any Annual
Report or notice of occurrence of a Listed Event, in addition to that which is specifically required by this
VII-3
Disclosure Agreement, the County shall have no obligation under this Agreement to update such
information or include it in any future Annual Report or notice of occurrence of a Listed Event.
SECTION 10. Default. Any person referred to in Section 11 (other than the County) may take
such action as may be necessary and appropriate, including seeking mandate or specific performance by
court order, to cause the County to file its Annual Report or to give notice of a Listed Event. The holders
of not less than a majority in aggregate principal amount of Bonds outstanding may take such actions as
may be necessary and appropriate, including seeking mandate or specific performance by court order, to
challenge the adequacy of any information provided pursuant to this Disclosure Agreement, or to enforce
any other obligation of the County hereunder. A default under this Disclosure Agreement shall not be
deemed an event of default under the Resolution or the Bonds of the County, and the sole remedy under
this Disclosure Agreement in the event of any failure of the County to comply herewith shall be an action
to compel performance. Nothing in this provision shall be deemed to restrict the rights or remedies of any
holder pursuant to the Securities Exchange Act of 1934, the rules and regulations promulgated thereunder,
or other applicable laws.
SECTION 11. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the
County, the Participating Underwriters, and holders from time to time of the County’s Bonds, and shall
create no rights in any other person or entity.
Date: November __, 2014
FAIRFAX COUNTY, VIRGINIA
By: _________________________________
Susan W. Datta
Chief Financial Officer
VII-4
EXHIBIT A
CONTENT OF ANNUAL REPORT
(a)
Financial Information. Updated information concerning General Fund revenues,
expenditures, categories of expenditures, fund balances, assessed value of taxable property, tax rates,
major taxpayers, and tax levies and collections.
(b) Debt Information.
Updated information concerning general obligation bonds
indebtedness, including bonds authorized and unissued, bonds outstanding, the ratios of debt to the
market value of taxable property, debt per capita, and debt service as a percentage of General Fund
disbursements.
(c)
Demographic Information. Updated demographic information respecting the County
such as its population, public school enrollment, and per pupil expenditure.
(d) Economic Information. Updated economic information respecting the County such as
income, employment, unemployment, building permits, and taxable sales data.
(e)
Retirement Plans. Updated information respecting pension and retirement plans for
County employees, including a summary of membership, revenues, expenses, and actuarial valuation(s)
of such plans.
(f)
Contingent Liabilities. A summary of material litigation and other material contingent
liabilities pending against the County.
In general, the foregoing will include information as of the end of the most recent fiscal year or as
of the most recent practicable date. Where information for the fiscal year just ended is provided, it may
be preliminary and unaudited. Where information has historically been provided for more than a single
period, comparable information will in general be provided for the same number of periods where valid
and available. Where comparative demographic or economic information for the County and the United
States as a whole is contemporaneously available and, in the judgment of the County, informative, such
information may be included. Where, in the judgment of the County, an accompanying narrative is
required to make data presented not misleading, such narrative will be provided.
VII-5
EXHIBIT B
NOTICE OF FAILURE TO FILE ANNUAL REPORT
[AUDITED ANNUAL FINANCIAL STATEMENTS]
Re: FAIRFAX COUNTY VIRGINIA
PUBLIC IMPROVEMENT REFUNDING BONDS,
SERIES 2014B
CUSIP NOS.:
Dated: _____________ __, 20__
NOTICE IS HEREBY GIVEN that Fairfax County, Virginia has not provided an Annual Report
[Audited Annual Financial Statements] as required by Section 3 of the Continuing Disclosure Agreement,
which was entered into in connection with the above-named bonds issued pursuant to that certain
Resolution adopted on December 3, 2013, by the Board of Supervisors of the County, the proceeds of
which were used to finance and refinance various public improvements in the County. [The County
anticipates that the Annual Report [Audited Annual Financial Statements] will be filed by ___________.]
Dated: ________________
FAIRFAX COUNTY, VIRGINIA
By
VII-6
Appendix VIII
NOTICE OF SALE
$230,325,000*
FAIRFAX COUNTY, VIRGINIA
Public Improvement Refunding Bonds, Series 2014B
Electronic Bids, BiDCOMP/Parity Competitive Bidding System (“BiDCOMP/Parity”) only, will
be received by the Board of Supervisors of Fairfax County, Virginia, until 11:00 a.m. Fairfax, Virginia
Time, on
October 21, 2014*
for the purchase of all, but not less than all, of the $230,325,000* Public Improvement Refunding Bonds,
Series 2014B (the “Bonds”), of Fairfax County, Virginia (the “County”), dated the date of their delivery
and maturing, subject to the right of prior redemption as hereinafter set forth, on the 1st day of October in
the following years and in the following amounts, respectively:
Initial Maturity Schedule for the Bonds*
Year of
Maturity
Principal
Amount*
Year of
Maturity
Principal
Amount*
2015
$17,300,000
2021
$9,690,000
2016
5,040,000
2022
41,810,000
2017
4,855,000
2023
41,390,000
2018
15,525,000
2024
44,665,000
2019
2,950,000
2025
25,555,000
2020
9,555,000
2026
11,990,000
The County reserves the right to change the date for receipt of bids (the “Scheduled Bid Date”) in
accordance with the section of this Notice of Sale entitled “Change of Bid Date and Closing Date; Other
Changes to Notice of Sale.”
*
Preliminary, subject to change.
VIII-1
BID PARAMETERS TABLE FOR THE BONDS*
INTEREST
Dated Date:
Anticipated Delivery Date:
Interest Payments Dates:
First Interest Payment Date:
Coupon Multiples:
Date of Delivery
November 4, 2014
April 1 and October 1
April 1, 2015
Bid Award Method:
1/8 or 1/20 of 1%
Zero Coupons:
Not Permitted
Split Coupons:
Not Permitted
Term Bonds:
10%
Not Permitted
Lowest TIC
1% of the Bid Maturity
Schedules, as more fully
described on page 6, under
"Good Faith Deposit"
Good Faith Deposit:
PRINCIPAL
Due after October 1, 2024,
Optional Redemption:
callable on October 1, 2024
and thereafter at par
Post-bid Principal Increases
10%
in Aggregate:
Post-bid Principal
Reductions in Aggregate:
PROCEDURAL
Bids due October 21, 2014
Sale Date and Time:
at 11:00 AM Local Time
Electronic bids through
Bid Submission:
PARITY Only
All or None?
Yes
PRICING
Max. Aggregate Bid Price:
No Limit
Min. Aggregate Bid Price:
107%
Max. Price per Maturity:
No Limit
Min. Price per Maturity:
10/1/15 – 10/1/24:
No Limit
10/1/25 – 10/1/26 : 98%
High Coupon per Maturity:
5.0%
Low Coupon per Maturity:
No Limit
* Subject to the detailed provisions of this Notice of Sale.
Changes to Initial Maturity Schedule for the Bonds
The Initial Maturity Schedule for the Bonds set forth on page 1 above represents an estimate of
the principal amount of Bonds to be sold. The County hereby reserves the right to change the Initial
Maturity Schedule, based on market conditions prior to the sale, by announcing any such change not later
than 30 minutes prior to the announced time and date for receipt of bids via TM3 (www.tm3.com). The
resulting schedule of maturities will become the “Bid Maturity Schedule for the Bonds.” If no such
change is announced, the Initial Maturity Schedule will become the Bid Maturity Schedule.
Changes to Bid Maturity Schedule
The County hereby further reserves the right to change the Bid Maturity Schedule after the
determination of the winning bidder, by increasing or decreasing the aggregate principal amount of the
Bonds, subject to the limitation of no more than a 10% increase or decrease in the aggregate principal
amount of the Bonds.
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THE SUCCESSFUL BIDDER MAY NOT WITHDRAW ITS BID OR CHANGE THE
INTEREST RATES BID OR THE INITIAL REOFFERING TERMS (AS HEREAFTER DEFINED) AS
A RESULT OF ANY CHANGES MADE TO THE PRINCIPAL AMOUNTS WITHIN THESE LIMITS.
The dollar amount bid by the successful bidder will be adjusted to reflect any adjustments in the final
aggregate principal amount of the Bonds. Such adjusted bid price will reflect changes in the dollar
amount of the underwriters’ discount and original issue discount/premium, if any, but will not change the
selling compensation per $1,000 of par amount of the Bonds from the selling compensation that would
have been received based on the purchase price in the winning bid and the Initial Reoffering Terms. The
interest rates specified by the successful bidder for the various maturities at the Initial Reoffering Terms
will not change. The County anticipates that the final annual principal amounts and the final aggregate
principal amount of the Bonds will be communicated to the successful bidder within twenty-four hours of
the County’s receipt of the initial public offering prices and yields of the Bonds (the “Initial Reoffering
Terms”).
Book-Entry System
The Bonds will be issued by means of a book-entry system with no physical distribution of bond
certificates made to the public. One bond certificate for each maturity will be issued to The Depository
Trust Company, New York, New York (“DTC”), and immobilized in its custody. The book-entry system
will evidence beneficial ownership interests of the Bonds in the principal amount of $5,000 and any
multiple thereof, with transfers of beneficial ownership interests effected on the records of DTC
participants and, if necessary, in turn by DTC pursuant to rules and procedures established by DTC and
its participants. The successful bidder, as a condition to delivery of the Bonds, shall be required to
deposit the bond certificates with DTC, registered in the name of Cede & Co., nominee of DTC. Interest
on the Bonds will be payable on each April 1 and October 1, the first interest payment date being April 1,
2015, and principal of and any redemption premium on the Bonds will be payable at maturity or upon
prior redemption, to DTC or its nominee as registered owner of the Bonds. Transfer of principal, interest
and any redemption payments to participants of DTC will be the responsibility of DTC, and transfer of
principal, interest and any redemption payments to beneficial owners of the Bonds by participants of DTC
will be the responsibility of such participants and other nominees of beneficial owners. The County will
not be responsible or liable for such transfers of payments or for maintaining, supervising or reviewing
the records maintained by DTC, its participants or persons acting through such participants.
If (a) DTC determines not to continue to act as securities depository for the Bonds or (b) the
County determines that continuation of the book-entry system of evidence and transfer of ownership of
the Bonds would adversely affect the interests of the beneficial owners of the Bonds, the County will
discontinue the book-entry system with DTC. If the County fails to select another qualified securities
depository to replace DTC, the County will deliver replacement Bonds in the form of fully registered
certificates.
The Bonds
The Bonds will be general obligations of Fairfax County, Virginia, and all taxable property
therein will be subject to the levy of an annual ad valorem tax sufficient in amount to provide for the
payment of the principal of and the interest on the bonds as the same become due, which tax will be
without limitation as to rate or amount and will be in addition to all other taxes authorized to be levied in
the County to the extent other funds of the County are not lawfully available and appropriated for such
purposes.
The Bonds are being, subject to prevailing market conditions, to refund certain maturities or
portions thereof of the County’s outstanding general obligation bonds in order to achieve present value
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debt service savings. If the County’s savings threshold is not met, the County reserves the right to adjust
the principal amounts and maturities of the Bonds, as specified in this Notice of Sale.
Optional Redemption
The Bonds maturing on or before October 1, 2024, are not subject to optional redemption before
their maturity. The Bonds maturing after October 1, 2024, are subject to redemption prior to maturity, at
the option of the County, from any money available for such purpose on any date not earlier than October
1, 2024, in whole or in part (in integral multiples of $5,000) at any time, at a redemption price equal to the
principal amount thereof, together with the interest accrued to the redemption date on the principal
amount to be redeemed.
Electronic Bidding and Bidding Procedures
Registration to Bid
All prospective bidders must be contracted customers of i-Deal LLC’s BiDCOMP/Parity
Competitive Bidding System. If you do not have a contract with BiDCOMP/Parity, call (212) 404-8102
to inquire about becoming a customer. By submitting a bid for the Bonds, a prospective bidder represents
and warrants to the County that such bidder’s bid for the purchase of the Bonds (if a bid is submitted in
connection with the sale) is submitted for and on behalf of such prospective bidder by an officer or agent
who is duly authorized to bind the prospective bidder to a legal, valid and enforceable contract for the
purchase of the Bonds. By contracting with BiDCOMP/Parity a prospective bidder is not obligated to
submit a bid in connection with the sale.
IF ANY PROVISIONS OF THIS NOTICE OF SALE SHALL CONFLICT WITH
INFORMATION PROVIDED BY BiDCOMP/Parity AS APPROVED PROVIDER OF
ELECTRONIC BIDDING SERVICES, THIS NOTICE OF SALE, AS IT MAY BE AMENDED
BY THE COUNTY AS DESCRIBED WITHIN, SHALL CONTROL. Further information about
BiDCOMP/Parity, including any fee charged, may be obtained from BiDCOMP/Parity at (212) 404-8102.
Disclaimer
Each prospective bidder shall be solely responsible to register to bid via BiDCOMP/Parity. Each
qualified prospective bidder shall be solely responsible to make necessary arrangements to access
BiDCOMP/Parity for purposes of submitting its bid in a timely manner and in compliance with the
requirements of the Notice of Sale. Neither the County nor BiDCOMP/Parity shall have any duty or
obligation to undertake such registration to bid for any prospective bidder or to provide or assure such
access to any qualified prospective bidder, and neither the County nor BiDCOMP/Parity shall be
responsible for a bidder’s failure to register to bid or for proper operation of, or have any liability for any
delays or interruptions of, or any damages caused by, BiDCOMP/Parity. The County is using
BiDCOMP/Parity as a communication mechanism, and not as the County’s agent, to conduct the
electronic bidding for the Bonds. The County is not bound by any advice and determination of
BiDCOMP/Parity to the effect that any particular bid complies with the terms of this Notice of Sale and
in particular the “Bid Parameters Table for the Bonds” hereinafter set forth. All costs and expenses
incurred by prospective bidders in connection with their registration and submission of bids via
BiDCOMP/Parity are the sole responsibility of the bidders, and the County is not responsible, directly or
indirectly, for any of such costs or expenses. If a prospective bidder encounters any difficulty in
registering to bid or submitting, modifying or withdrawing a bid for the Bonds, it should telephone
BiDCOMP/Parity and notify Public Financial Management, Inc., the County’s financial advisor, by
telephone at (703) 741-0175. After receipt of bids is closed, the County through BiDCOMP/Parity will
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indicate the apparent successful bidder. Such message is a courtesy only for viewers and does not
constitute the award of the Bonds. Each bid will remain subject to review by the County to determine its
true interest cost rate and compliance with the terms of this Notice of Sale.
Bidding Procedures
Bids must be submitted electronically for the purchase of all, but not less than all, of the Bonds by
means of the Fairfax County, Virginia AON (all or none) Bid Form (the “Bid Form”) via Parity. Bids
must be communicated electronically to Parity by 11:00 a.m., Fairfax, Virginia Time on the Scheduled
Bid Date unless postponed as described herein (see “Change of Bid Date and Closing Date”). Prior to
that time, a prospective bidder may input and save the proposed terms of its bid in BiDCOMP. Once the
final bid has been saved in BiDCOMP, the bidder may select the final bid button in BiDCOMP to submit
the bid to Parity. Once the bids are released electronically via Parity to the County, each bid will
constitute an irrevocable offer to purchase the Bonds on the terms therein provided. For purposes of the
electronic bidding process, the time as maintained on BiDCOMP shall constitute the official Fairfax,
Virginia Time. For information purposes only, bidders are requested to state in their bids the true interest
cost to the County, as described under “Award of Bonds” below, represented by the rate or rates of
interest and the bid price specified in their respective bids.
No bids will be accepted in written form, by facsimile transmission or in any other medium or on
any system other than by means of the Bid Form via Parity. No bid will be received after the time for
receiving such bids specified above.
Good Faith Deposit
After receipt of bids is closed and prior to the award, the apparent successful bidder indicated on
BidCOMP/Parity must submit a good faith deposit (the “Deposit”) for 1% of the Bid Maturity Schedules
to the County by wire transfer. The award to the apparent successful bidder is contingent upon receipt of
the Deposit, and the Bonds will not be awarded to such bidder until the County has confirmation of
receipt of the Deposit.
Wire instructions for the Deposit are as follows:
Bank Name: Bank of America NY
ABA: 026 009 593
Account Name: County of Fairfax, Deposit Account
Account Number: 0000 7902 5799
Attention: Tammy Kennedy-Nichols, 410-547-4320
Award or rejection of bids will be made by or on behalf of the Board of Supervisors of Fairfax
County, Virginia, on the date above stated for the receipt of bids. The proceeds of the Deposit will be
held as security for the performance of the successful bidder’s bid and applied to the purchase price of the
Bonds, but, in the event the successful bidder shall fail to comply with the terms of its bid, the Deposit
will be retained as and for full liquidated damages. No interest will be allowed thereon.
Award of Bonds
Award or rejection of bids will be made by the County prior to 5:00 p.m., Fairfax, Virginia Time
on the date of receipt of bids. ALL BIDS SHALL REMAIN FIRM UNTIL 5:00 P.M., FAIRFAX,
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VIRGINIA TIME, ON THE DATE OF RECEIPT OF BIDS. An award of the Bonds, if made, will be
made by the County within such six-hour period of time (11:00 a.m. – 5:00 p.m.).
The Bonds will be awarded to the bidder offering to purchase the Bonds at the lowest “True or
Canadian” interest cost (“TIC”), such cost to be determined by doubling the semiannual interest rate
(compounded semiannually) necessary to discount the aggregate price bid of the Bonds, the payments of
the principal of and the interest on the Bonds from their payment dates to the dated date of the Bonds. If
two or more bidders offer to purchase the Bonds at the same lowest TIC, the Bonds may be apportioned
between such bidders if it is agreeable to each of the bidders who have offered the bids producing the
same lowest TIC, provided, that if apportionment is not acceptable to such bidders the County will have
the right to award the Bonds to one of such bidders. There will be no auction.
Right of Rejection
The County expressly reserves the right (i) to waive any informalities, (ii) to reject all bids, any
incomplete bid or any bid not fully complying with all of the requirements set forth herein, and (iii) to
solicit new bids or proposals for the sale of the Bonds or otherwise provide for the public sale of the
Bonds if all bids are rejected or the winning bidder defaults, including, without limitation, sale of the
Bonds to one or more of the losing or rejected bidders without regard to their original bid or its
relationship to any other bid.
The County reserves the right to reject bids on the Bonds.
Change of Bid Date and Closing Date; Other Changes to Notice of Sale
The County reserves the right to postpone, from time to time, the date and time established for the
receipt of bids and will undertake to announce any such change via TM3 (www.tm3.com).
Any postponement of the bid date will be announced via TM3 not later than one hour prior to the
announced time for receipt of the bids. An alternative bid date and time will be announced via TM3 at
least 18 hours prior to such alternative bid date.
On such alternative bid date and time, the County will accept bids for the purchase of the Bonds,
such bids to conform in all respects to the provisions of this Notice of Sale, except for the changes in the
date and time for bidding and any other changes announced via TM3 at the time the bid date and time are
announced.
The County may change the scheduled delivery date for the Bonds by notice given in the same
manner as set forth for a change in the date for the receipt of bids.
The County reserves the right to otherwise change this Notice of Sale. The County anticipates
that it would communicate any such changes via TM3 by 4:00 p.m., Fairfax, Virginia Time on the date
prior to the scheduled date for receipt of bids but no later than 30 minutes prior to the scheduled time and
date for receipt of bids.
Conflict Waiver
Sidley Austin LLP is serving as Bond Counsel in connection with the issuance and sale of the
Bonds. By placing a bid, each bidder represents that it understands that Sidley Austin LLP, in its capacity
as Bond Counsel, represents the County, and the successful bidder waives any conflict of interest that
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Sidley Austin LLP’s involvement in connection with the issuance and sale of the Bonds to such
successful bidder presents.
Undertakings of the Successful Bidder
The successful bidder shall make a bona fide public offering of all of the Bonds to the general
public (excluding bond houses, brokers, or similar persons acting in the capacity of underwriters or
wholesalers who are not purchasing for their own account as ultimate purchasers without a view to resell)
and will, within 30 minutes after being notified of the award of the Bonds, advise the County in writing
(via facsimile transmission) of the Initial Reoffering Terms. Prior to the delivery of the Bonds, the
successful bidder will furnish a certificate acceptable to Bond Counsel as to the “issue price” of the Bonds
within the meaning of Section 1273 of the Internal Revenue Code of 1986, as amended. It will be the
responsibility of the successful bidder to institute such syndicate reporting requirements, to make such
investigation, or otherwise to ascertain the facts necessary to enable it to make such certification with
reasonable certainty.
Delivery
The Bonds will be delivered on or about November 4, 2014, in New York, New York, at DTC
against payment of the purchase price therefor (less the amount of the Deposit) in Federal Reserve funds.
The approving opinion of Sidley Austin LLP, Washington, D.C., in substantially the form
appearing in the Preliminary Official Statement, will be furnished without cost to the successful bidder.
There will also be furnished the usual closing papers, including certifications as to the Official Statement
and no-litigation.
CUSIP Numbers
CUSIP numbers are to be applied for by the successful bidder with respect to the Bonds. The
County will assume no obligation for the assignment of such numbers or for the correctness of such
numbers, and no error with respect thereto shall constitute cause for failure or refusal by the successful
bidder to accept delivery or make payment for the Bonds.
Official Statements
Copies of the Preliminary Official Statement may be obtained without cost via the Internet at
www.i-dealprospectus.com. The Preliminary Official Statement at its date is “deemed final” by the
County for purposes of the Securities and Exchange Commission Rule 15c2-12 adopted under the
Securities Exchange Act of 1934, as amended (the “Rule”), but is subject to revision, amendment and
completion.
After the award of the Bonds, the County will prepare copies of the Official Statement (no more
than 300) and will include therein such additional information concerning the reoffering of the Bonds as
the successful bidder may reasonably request; provided, however, that the County will not include in the
Official Statement a “NRO” (“not reoffered”) designation with respect to any maturity of the Bonds. The
successful bidder will be responsible to the County in all respects for the accuracy and completeness of
information provided by such successful bidder with respect to such reoffering. The County expects the
successful bidder to deliver copies of such Official Statement to persons to whom such bidder initially
sells the Bonds and to The Electronic Municipal Market Access System (“EMMA”) administered by the
Municipal Securities Rulemaking Board. The successful bidder will be required to acknowledge receipt
of such Official Statement, to certify that it has made delivery of the Official Statement to EMMA and to
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acknowledge that the County expects the successful bidder to deliver copies of such Official Statement to
persons to whom such bidder initially sells the Bonds and to certify that the Bonds will only be offered
pursuant to such Official Statement and only in states where the offer is legal. The successful bidder will
be responsible to the County in all respects for the accuracy and completeness of information provided by
such successful bidder with respect to such reoffering.
In general, the Rule prohibits an underwriter from purchasing or selling municipal securities, such
as the Bonds, unless it has determined that the issuer of such securities has committed to provide annually
certain information, including audited financial information, and notice of various events described in the
Rule, if material. The County will provide to EMMA annual information respecting the County,
including audited financial statements. In addition, the County will provide to EMMA the required notice
of the occurrence of any events described in the Rule.
Official Statements will be provided within seven (7) business days after the date of the award of
the Bonds in such quantities as may be necessary for the successful bidder’s regulatory compliance.
Further information will be furnished upon application to Public Financial Management, Inc. at
(703) 741-0175.
Reservation of Rights
The right to reject any or all bids and to waive any irregularity or informality in any bid is
reserved.
BOARD OF SUPERVISORS OF FAIRFAX COUNTY, VIRGINIA
By: Catherine A. Chianese, Clerk
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