Tag Archives: debt

Greene Supervisors Approve $28.16 Million School Bond

By. Brent Wilson, Field Officer

The Greene County Board of Supervisors took the final step to approve going forward with a general obligation school bond not to exceed $28.16 million at their August 22nd meeting. . Virginia Public School Authority (VPSA) will purchase the bonds by the fall of this year.

The agenda item was presented during a public hearing – but no one showed up to comment. Chairperson Michelle Flynn (Ruckersville) took this to be a favorable commentary on the open process for the past two years leading up to tonight. She also indicated that she has received only positive feedback related to the project. Former Chairperson Bill Martin (Stanardsville) echoed the same sentiment and that the project will be good for the community and the school system.

Supervisor Jim Frydl (Midway) is the Board’s liaison to the schools and has been involved in the process over the past 30 months. He further stated that high schools are the most expensive schools to build and the project to renovate the high school and other schools in the Greene County School System is the most efficient way to provide quality educational facilities. At the same time, the study was a forward looking process with a look toward 20 years into the future.

Finally, Flynn said that the best way she could summarize the process is to quote Supervisor David Cox (Monroe) – “do it once and do it right”.

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Greene County School System Project

The gross cost of the project of $28.16 million will cost nearly $41 million ($1.63 million x 25 years) assuming an interest rate of 3 % over 25 years. The accumulated Capital Fund Balance of $2.814 million represents excess tax revenue that taxpayers have paid in previous years. When Supervisor Dale Herring (At-Large) was asked if these funds should be used to help pay for the project, he indicated that Tracy Morris, Finance Director and Stephanie Deal, Treasurer indicated that these funds should be released over a period of time and not in a lump sum.

This raises the question – why?

Herring also indicated that the project will solicit quotes from multiple vendors and the project may cost less than the architects estimated – $28.16 million.

Logically, spending the $2.814 million at the beginning of the project would reduce the need for new tax revenue. Plus this is tax revenue already collected from taxpayers. One explanation not to spend it all up-front, has been that the unspent capital needs to be held back for unexpected capital requirements. That may be true to some degree, but it seems excessive to some observers.

The other comment in response to spending the $2.814 million excess capital is it would draw down cash too far. This seems to beg the question, how low should the cash balance be allowed to get down to – especially right before personal property taxes are collected in June and December (the lowest points each year).

The county has a Reserve Fund target, which includes cash and all assets which their auditors have recommended. But you can’t write checks against total assets, you have to have cash in the bank. As nationally known financial advisor Dave Ramsey advises – you need 3-6 months of living expenses on hand for emergencies.

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Dave Ramsey, Financial Advisor

Perhaps Greene County could look to live by Dave’s advice.

If the Board is so inclined, they could easily agree on a transparent Cash Reserve Fund calculation so that a clear, well thought out policy can be developed.

Such a policy could provide the data to clearly determine how much cash could be spent to pay for the school project from excess capital funds. The concerns raised by the Treasurer and Finance Director are testament that there needs to be some safeguard – but it should be formalized. The current board may not spend too much but who is to say that a future board may be too aggressive and get the county back on the edge of bankruptcy.

The final question is – who determines if spending is to be made from the excess capital funds that the school system has accumulated. Per Herring, while the funds are designated for school capital funds, it is part of the overall county reserve position.

Currently, the determination of the usage of the excess capital reserve has not been decided. This needs to be clearly defined so that funds can be easily consumed when needed and done in conjunction with a Cash Reserve Policy so that the county doesn’t revert back to where it was several decades ago – nearly bankrupt.

Brent Wilson is the Greene County Field Officer for the Free Enterprise Forum a privately funded public policy organization.  The Free Enterprise Forum Field Officer program is funded by a generous grant from the Charlottesville Area Association of REALTORS® (CAAR) and by readers like you.  To support this important work please donate online at www.freeenterpriseforum.org

Photo Credit: Greene county, Dave Ramsey

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Is Fluvanna Ready To Turn On The ZXR Spigot?

By Bryan Rothamel, Field Officer

After debating the issue for decades, Fluvanna County is onewater bib step closer to providing water in the Zion Crossroads area.

The Board of Supervisors previously put aside $575,000 in a Capital Improvement Plan to develop a water system for Zion Crossroads (ZXR) planning area. The county spent about $45,000 for the water infrastructure report from RK&K.

On March 4 the Board of Supervisors voted 3-2 to pursue two ZXR water related items, Don Weaver (Cunningham District) and Bob Ullenbruch (Palmyra District) dissented.

From the RK&K report, the supervisors voted to implement short-term recommendations. The recommendations are designing a water and sewer system starting from the Department of Corrections facility on Route 250, going east to the Route 15 intersection, then back towards Palmyra for a mile. The design should include phasing to show possible cost-benefits.

Supervisors also directed staff to develop how the public works system would operate.

“We need to move forward,” said chairwoman Mozell Booker (Fork Union District).

The vote was in doubt for much of the debate. Ullenbruch, who vocally supported the system during the last two work sessions where RK&K presented. During the debate he advocated waiting until the budget and tax rate was more predictable than what was advertised.

His issue resided over how the system will be paid for. Supervisors later will have to formally decide how to pay for a water system.

It is estimated the system will cost $8 million. With it being financed, it will increase debt service by $655,000 a year, on a 10-year average.

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Supervisor Bob Ullenbruch

“I want to see where we are at in FY16 budget before I can move [over two cents for FY17’s budget],” said Ullenbruch. “The probability of me being here (next year) is 50/50, in my mind. I don’t want to do that [to someone else].”

Weaver also raised issue with the county’s debt load and corresponding tax rate.

“We are at 93.5 cents (advertised real estate tax rate) now? We are going to add to that [for next year]? Is that what that this board wants to do?” said Weaver.

“If we want to get out of increasing tax rates, then we need to invest,” said Tony O’Brien (Rivanna District).

When the debate prolonged into potentially delaying a vote on it, O’Brien questioned if shaving the advertised tax rate this year or not really matters.

“If three of us believe this is a losing proposition, let’s just stop right now,” said O’Brien.

Weaver again invoked the debt the county currently burdens, all of which has happened with him on the board but most, especially the high school debt, did not involve his voting support.

O’Brien questioned when supervisors, including Weaver, ever put aside money to plan for the construction that occurred. He asked how the board planned to replace an aging high school without financing it. He concluded the only plan was to finance.

“When did you vote to put aside money for the new high school?” said O’Brien.

Booker, fearing the board would again not vote on ZXR water, said, “You all are backing up again.”

O’Brien made the motion and Mike Sheridan (Columbia District) seconded it. The design should be completed within the next three to four months.

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bryan-rothamel.jpgThe 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.

Bryan Rothamel covers Fluvanna County for the Free Enterprise Forum

 

Photo Credit(s): Fluvanna County

Fluvanna Supervisors to Sue Over School Bonds

By William J. Des Rochers, Fluvanna Field Representative

On August 3rd, Fluvanna’s Board of Supervisors unanimously agreed to retain outside counsel to assist with: “any and all causes of action arising out of the issuance of debt instruments relating to the construction of the new high school.” First reported by FlucoBlog late last night, the decision came at the end of a closed session held after a marathon seven-hour meeting.

The action had been anticipated for quite some time. Supervisors have been frustrated almost since the beginning by the high interest rates charged for the school bonds, and the associated placement fees. Moreover, the county attorney’s fees have risen significantly in recent months, reflecting the ongoing preparations for the lawsuit.

According to FlucoBlog, Douglas M. Palais , of Eckert Seamens Cherin & Mellot will serve with county attorney Fred Payne in representing Fluvanna.

At the time of the original borrowing in 2008, former supervisor Gene Ott complained that he could have refinanced his home for a cheaper interest rate and wondered why tax-free municipal bonds had to pay nearly seven percent.

Filings are expected in the next few weeks.

Supervisors also took action on a number of other measures. They:

· Approved two water tower lease agreements in the Fork Union district for two cellular providers – US Cellular and Verizon;

· Agreed to switch to the self-insured health insurance program that was adopted earlier this year by the school board for its employees;

· Deferred action on a new services contract with the county’s SPCA in an effort to restart negotiations. Currently, there is a wide gap over proposed funding – the county had proposed no increase and the SPCA is looking for $25,000 for infrastructure improvements; and,

· Approved several budget carryover requests, most notably for an expansion of the Department of Social Services office space.

While the next regularly scheduled public meeting will be on September 7th, supervisors will hold a special work session on the budget on August 17th.

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William Des Rochers serves as Free Enterprise Forum’s Fluvanna County Field Officer.  The Free Enterprise Forum is a privately funded public policy organization covering Albemarle, Greene, Fluvanna, Louisa and Nelson county as well as the City of Charlottesville.  If you find this update helpful, please consider financially supporting these efforts.