IW supervisors OK $7.9M school loan

Published 9:50 am Monday, April 24, 2017

Isle of Wight County’s Board of Supervisors voted unanimously with one absent to take on $7.9 million in debt service to fund Isle of Wight County Schools’ proposed in-house career and technical education programs. This followed a public hearing on the matter held during their regular meeting on Thursday evening.

The debt service will come to the county via a bank loan from the investment firm Raymond James, which offered the county a repayment rate of $715,000 per year with 2.4 percent interest extending through fiscal year 2030. According to Jimmy Sanderson, a representative of Davenport and Company, who handled soliciting requests for proposals from banks on behalf of the county, Raymond James offered the lowest overall cost of funds out of the seven institutions that responded to the county’s request. He added that the rate Raymond James quoted the county was a non-bank qualified rate and that the county could close on this transaction by early May.

To repay the loan, the county will deduct approximately $750,000 annually from the funds it would ordinarily allocate to the school division.

A majority of people who spoke during the public hearing advocated that the board approve the debt service request, including Isle of Wight County parents Julie Branch and Christie Chatham, school board members Kirstin Cook and Vicky Hulick, school board clerk Tracy Reutt, Edmund Easter, Superintendent Dr. Jim Thornton, Executive Director of Secondary Schools Mark Mabey and former school board member Herb DeGroft.

During her comments, Reutt said that she overheard a child talking to his mother during breakfast at the Cockeyed Rooster restaurant in Smithfield about how excited he was to go back to school and learn how to build sheet rock and houses, and realized that he was talking about the CTE plan. Cook cited the rising costs of the division’s partnership with the Pruden Center in Suffolk as one of her reasons for supporting the plan.

However, several people also spoke out against approving the debt request, including Joe Puglisi, Albert Burckard Jr. and Thomas Griffin.

Puglisi recommended denying the request on the grounds that the division did not solicit the input of the county’s elected officials before rolling out the proposal, and said he felt that taxpayer financing of this magnitude should have been subjected to much more project management rigor. Burckard said that he was opposed to the plan on the grounds that school attitudes toward CTE tend to change with each decade and that he was against borrowing millions of dollars to construct infrastructure that in eight to 10 years may be obsolete.

“I am not in any way against CTE; I think it’s the correct direction to go for our public schools,” Burckhard said. “What I’m against is a 14-year loan obligation to taxpayers to repay a loan to build structures for a temporary and probably transitory program.”

Griffin said he was concerned that the county already had the second highest total debt in Virginia. Another speaker, Lynn Faulkner, asked the board to be very specific in the terms of the loan if they approve it so that the repayment comes from the school division and not the taxpayers.

Following the public hearing, Newport District Supervisor William McCarty, who had initially raised concerns regarding the plan’s impact on the county’s total debt when it was first presented, said that after meeting with school representatives and further investigating the matter, he found that, while the county’s total debt is high, the county’s debt to equity ratio would only increase from 3.3 percent to 3.4 percent should the supervisors approve the CTE plan. This would still keep the county below its policy of keeping debt to equity beneath 4 percent and well below the state’s debt to equity ratio of 10 percent.

Smithfield District Supervisor Dick Grice said that he liked that Raymond James had offered the county the ability to pay back the loan early at any time, though they would have to request permission from the bank to do so before the year 2027. He also said he was in favor of the bank loan option rather than the county having to issue a bond and have the market evaluate it because this way the funds would be available immediately. He was also in favor of the school division signing a memorandum of understanding regarding repayment of the loan.

The supervisors approved the request in the form of three separate motions, all of which passed unanimously. The first, made by Grice, authorized the county to issue the debt. The second, made by Hardy District Supervisor Rudolph Jefferson, authorized the county to draw up the paperwork to repay the debt. The third, made by McCarty, authorized the county to use unspent bonds from prior fiscal years to finance other projects, including transportation projects. According to Assistant County Administrator Don Robertson the approval of the debt service was done this way to make it very specific for the benefit of the lending institution.

In other business:

• The supervisors voted unanimously to approve the conditional use permit of Preston and Valerie Artis to continue to operate their home-based non-emergency medical transport business following a public hearing on the matter, during which DeGroft was the only speaker and spoke in favor of approval.

• They also voted unanimously to table their vote on the conditional use permit request of Billy Edwards of Southern Casting LLC to construct a concrete and asphalt plant and office on a vacant parcel of land zoned general industrial located off Lees Mill Road in the Carrsville District near International Paper.

• They also voted unanimously to re-enact Isle of Wight County Code Appendix B, Zoning: Article V, Supplementary Use Regulations; Section 5000.G, concerning walls and fences at a site designated a national historic landmark following a public hearing at which no one spoke for or against the ordinance.

• They held a public hearing on the county’s fiscal year 2017-2018 operating and capital budgets, at which no one spoke for or against the proposed budgets, but said they could not vote on the matter until May 11.

• They voted unanimously to lease county office space to the video production company Sirens Media LLC at $500 per month to produce a documentary with the Isle of Wight County Sheriff’s Office following a public hearing at which no one spoke.

• They voted unanimously to re-enact Isle of Wight County Code Chapter 15, Taxation, Section 15-4.2 concerning motor vehicles equipped for transportation of physically handicapped and certain motor vehicles owned by volunteer rescue squad members and volunteer firemen from taxation.

• They discussed the county’s memorandum of understanding with the Town of Smithfield regarding the Luter Sports Complex, but did not vote on it.

• They selected a new audit firm, P.B. Mare, following the expiration of the county’s previous audit contract.

• They discussed scheduling an intergovernmental meeting of the supervisors and representatives of the town councils of Windsor and Smithfield in June or July to hear the recommendations of the Water-Sewer Task Force and discuss other issues.