Addressing the city's borrowing and future annual debt payments (OPINION)
City's debt balloons to over $143 million and over $260 million in debt service payments
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The Williamsburg City Council is set to approve the Fiscal Yearl 2027 budget at a meeting this Wednesday at 9am in Stryker Center. The agenda packet with finalized budget details can be found here. This post addresses the issue of the City’s Debt and future annual debt payments. My analysis largely relies on the data in Davenport’s Report to the City presented on February 13, 2026 at the council’s budget work session. That document can be reviewed starting on Page 43 of the agenda packet from that meeting.
The City’s Capital Improvement Plan contains the following statement:
“Revenues of the CIP Fund are derived from the 1% Sales Tax that is collected and distributed monthly by the state. All taxable purchases in the Hampton Roads area of Virginia are charged at the rate of 6%, 1% of which is returned to localities by law. It has been the policy of the City Council for over 30 years to use this revenue to fund general capital projects in the City. Examples of projects completed with the use of these funds are schools, municipal buildings, land acquisition, roads, vehicles, and equipment.”
However, this City Council has shredded this policy over the past 5 years increasing City debt from $15 million to over $143 million and over $260 million in debt service payments including the proposed library and water system spending and its pro-rata portion of the Regional Sports Center debt. So, here’s how it breaks down.
Recent budget posts by Bob Wilson:
Page 40 of the Davenport Report shows that after adding the $26 million in proposed debt for the Library, total tax-supported debt will be over $72 million on which we’ll pay a total of $130 million with interest thru 2055. Davenport estimated the total cost of the Library debt at over $52 million. You will recall that I was roundly criticized for suggesting this figure last year.
But that’s not all our Debt. Page 37 of the Davenport Report shows current Utility debt is $11.3 million on which they disclose we’ll ultimately pay $22 million with interest. And the City is planning to spend another $16.6 million on the water system which I estimate will ultimately cost over $28 million with interest. We also have financed fire equipment using lease purchase agreements for another $2.7 million. Annual debt payments on all this will be about $6 million by FY2028.
But that’s not all, we’re missing a major piece. On page 19 of the Report, Davenport stated that it did not include $64 million in bonds and $15 million in notes of the Historic Area Regional Facilities Authority related to the Regional Sports Facility.
The City has entered into a Support Agreement and a Financing Agreement with the HTRFA to pledge the annual payment of 64% of the annual debt service, or at least $2.5 million annually. In fact, this year we paid the $2.5 million plus another $586,000 is maintenance support.
Why isn’t the $2.5 million annually of the pro-rata $41 million of HTRFA Debt included in Davenport’s calculations? The City will say it is not a debt of the City but an appropriation pledge. This is disingenuous because if the City doesn’t pay it, the HTRFA will default on the debt and go bankrupt. This would negatively impact the City’s credit rating.
Here’s what Standard & Poor’s had to say about the HTRFA Bond rating:
Including the City’s proportionate share of the HTRFA debt and annual debt service changes virtually all the metrics presented in the Davenport Report for the worse. Total Debt is now $143 million and annual debt payments will exceed $8 million by FY2028.
So I think that a number of citizens are concerned that if real estate assessments drop to the 1-2% range, the City will need to raise the real estate tax rate to make ends meet. But the value of a 1 Cent increase in the rate only generates $350,000 in added revenue, so major increases in the rate could be required. That’s why many citizens are concerned about the increased spending and increased levels of debt.
About the Writer: During a 45-year career, Robert Wilson, PhD worked with senior leadership teams to develop and implement innovative strategic and business plans that have fostered growth and profitability. Dr. Wilson holds a BBA degree from the College of William & Mary, a MS in Finance degree from the University of Arizona, and a Doctorate in Management from the University of Maryland Global Campus.
I appreciate this stream of reporting. The emphasis on increasing taxes and aggressively writing parking citations is quickly killing the incentive to visit the Colonial area. I recently received a parking citation. I was confused as I routinely use the passport app. Upon further investigation, I learned that the ticket was from November 2025 — more than five months ago. I paid the fine online and went to the office to politely register my dissatisfaction with the issuance of a ticket from more the. Five months ago. I was told there had been a “glitch “ in the system. When I attempted to check my payment history on the app it would only go back to December. The city employee simply shrugged and stated some people could see their histories. Disappointing outcome, but utterly predictable. Taxing as a strategy will ultimately fail.
When I asked about how budgets were made in the city, I use the example of wanting a new car, deciding how much we could afford, and then looking for a car within that budget. I was told that's not how it works. Apparently in government, you decide what you want, and then you figure out how to pay for it. Perhaps this is because the funding is unlimited. On the backs of the taxpayers.