By. Bryan Rothamel, Field Officer
The Fluvanna County Board of Supervisors have a tentatively agreed to finance the Zion Crossroads (ZXR) water project with $8 million of debt. The county was approved to finance up to $8.5 million through the Virginia Resource Authority.
The ZXR project is projected to cost $10.2 million. The county has $4 million in cash savings, most commonly called the fund balance. Supervisors debated how much they would feel comfortable financing between $6 million and $8 million and for how long.
“I would encourage you to go $8 [million],” said county administrator Steve Nichols.
Tony O’Brien (Rivanna District) said, “The more flexibility we have in regards to the fund balance, the better.”
The county was advised by staff to go no more than 25 years on the bonds to avoid financing a project longer than the project’s replacement cycle. The estimated lifespan of the project is 50 years for the water tower, 15 to 20 years for mechanical parts and 70 to 80 years for the pipes.
“You should view this debt as an investment,” said O’Brien.
Don Weaver (Cunningham District) said, “It is definitely an investment.”
Also at the June 7 meeting, supervisors decided it will sit back and watch the market in regards to how to reinvest $58 million worth of bonds. In third quarter 2018, the school bonds will have about a 100-day span where money can be reinvested. The proceeds of the investments would be profit for the county.
“I don’t think you will make less [later] than you are going to make today,” said Patricia Eager (Palmyra District).
The county explored a float agreement where the county would now offer companies an opportunity to invest money when the chance arises in 2018. The companies would pay the county now for the opportunity later.
Another option is to buy state and local government series (SLGS) securities. However, the government regulates when those can be purchased. Currently SLGS securities are not allowed to be purchased but it is expected to open again.
As the opportunity to reinvest the bonds gets closer, the float agreement becomes less advantageous because companies would not be ‘betting’ on the market. Another issue with the float agreement is the county would pay fees which would take away maximum income.
If SLGS window is closed during the reinvestment period, the county could purchase treasury bonds for a similar rate.
“In other words, [by not doing anything now] we are taking a risk?” said Mozell Booker (Fork Union District).
Eager responded, “Not a very big risk.”
The county administration recent discovered a new ‘bed and breakfast’. Staff has discovered 20 to 25 homes are listed on popular sharing economy website airbnb, where owners can rent out spare rooms to strangers.
The state now allows localities to regulate this new type of lodging options. Many localities have had an adversarial relationship with airbnb because many owners are failing to pay lodging (and business) taxes. [Albemarle County is considering a new lodging tax and business tax ordinance this Wednesday]
However Fluvanna has no lodging taxes. County staff asked the supervisors for direction regarding the issue. Weaver found no issue if renting your own home was legal.
“Have you had any issues?” Weaver asked and received a no. “Then leave it alone.”
County attorney Fred Payne said, “I think [the market] is so new, it is still shaking down.”
Staff offered an opportunity to require airbnb hosts to register with the county. “I think it is a very fluid market,” said O’Brien.
Staff research and return to the board with opportunities or regulations.
The next Fluvanna Board of Supervisors meeting is June 21 at 7 p.m.
The Free Enterprise Forum’s coverage of Fluvanna County is provided by a grant from the Charlottesville Area Association of REALTORS®and by the support of readers like you.
Photo Credit: Fluvanna County