The Town of Cape Charles is entering a new financial chapter, according to a newly released Comprehensive Financial Review prepared by Davenport & Company, which outlines strong economic growth, significant reserves, and major capital decisions on the horizon.
The report follows the Town’s $15 million sale of its water and wastewater system to Virginia American Water in May 2024 — a move that allowed Cape Charles to eliminate all outstanding debt and significantly boost its fund balance.
Town officials are now weighing how best to use those funds while maintaining long-term financial stability, and will discuss at next Thursday’s work session, Apr 2 2026, 6 pm.
Strong Economy Drives Growth
The review highlights a steadily growing local economy, with total assessed property values increasing every year since 2017 and nearly doubling since 2015. Real estate accounts for approximately 97% of the Town’s tax base, underscoring the importance of property values to municipal revenues.
Cape Charles has also generated budget surpluses in four of the past five fiscal years between 2020 and 2024. During that time:
- Recurring revenues grew more than 18% annually
- Expenditures increased by just over 4% annually
- The Town posted an estimated $500,000 surplus for FY 2025
Tourism-related revenues continue to play a major role. “Other Local Taxes” — including meals tax, lodging tax, and business licenses — accounted for more than 40% of total operating revenue in the last two fiscal years.
Large Capital Projects on the Horizon
Despite the strong financial position, the report identifies significant capital needs totaling approximately $11.7 million over the next five years, plus an additional $750,000 in potential vehicle and fleet costs.
The largest proposed investment is a $6.5 million new municipal building, described as a “generational” project for the Town.
In addition, officials have identified approximately $5 million in additional capital needs beyond the new Town Hall.
Davenport recommends that the Town conserve cash and maintain flexibility, particularly given the size of these upcoming projects and limited recurring capital funding.
Proposed Financing Strategy
To fund the new municipal building, the report outlines a potential financing strategy:
- Interim Financing:
- Approximately $350,000 annual interest-only payments
- 5-year term (planning estimate)
- Permanent Financing:
- $5.5 million to $6.5 million range
- Annual payments between $475,000 and $555,000
- 20-year financing term (planning estimate)
If financed, the annual payment impact would be roughly equivalent to:
- 4.3 cents on the real estate tax rate
- 2.82% increase in meals tax
- 2.71% increase in transient occupancy tax
However, no tax increases are currently proposed — the figures are provided for planning comparisons.
Tax Rates Remain Competitive
The report also notes that Cape Charles’ current tax rates remain below peer communities:
- Town Real Estate Tax Rate: 14.81 cents
- Combined Town + County Rate: 83.31 cents
- Meals Tax: 5.50%
Both figures fall below comparison town averages, suggesting potential flexibility if needed in the future.
Maintaining Financial Stability
Davenport emphasized the importance of maintaining a strong fund balance, noting that reserves:
- Provide emergency funding
- Avoid short-term borrowing
- Support capital project financing
- Improve borrowing rates
- Strengthen financial flexibility
With strong revenues, no outstanding debt, and substantial reserves following the utility sale, Cape Charles now faces strategic decisions about investing in infrastructure while preserving long-term sustainability.
The review is expected to guide Town Council discussions in the coming months as officials determine how best to balance growth, capital investment, and fiscal responsibility.
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The future Gambling Casino expected to be built next to the Concrete Plant should really supercharge the cash flow.
Damn shame what you people did to Cape Charles. You should all be ashamed of yourselves.