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1984-08-16 adjAu~st 16 1 84 Ad'ourned Meetin ~ = , An adjourned meeting of the Board of Supervisors of Albemarle County, Virginia, was held on August 16, 1984, at 4:00 P.M., jointly with the Board of Directors of the Albemarle County Industrial Development Authority, in Meeting Rooms 5 & 6, Second Floor, Albemarle County Office Building, 401 McIntire Road, Charlottesville, Virginia; said meeting adjourned from August 15, 1984. Present: Mr. F. R. Bowie, Mrs. Patricia H. Cooke, Messrs. Gerald E. Fisher, C Timothy Lindstrom and Peter T. Way. · Absent: Mr. J. T. Henley, Jr. Officers present: Deputy County Executive, Robert W. Tucker, Jr.; Deputy County Executive Ray B. Jones; County Attorney, George R. St. John; and Deputy County Attorney James M Bowling, IV. ' - Industrial Development Authority members present: John Stewart Darrell, .William J. Kehoe, Frank W. McCulloch, Thomas A. McQueeney, James B. Murray, Jr., Bruce D. Rasmussen and Homer N Sandridge. · Agenda Item No. 1. Call to Order. The meeting was called to order at 4:06 p.m. by Board of SUpervisors Chairman, Mr. Fisher, and by Industrial Development Authority Chairman, Mr. Murray. re: Agenda Item No. 2. Joint Meeting with Albemarle County Industrial Development Authority Changes in Federal Law Governing Industrial Revenue Bonds. Mr. Murray said the Authority had originally scheduled this meeting in order to hear a presentation from a member of the law firm of McGuire, Woods & Battle, concerning the changes that occurred in the Industrial Bond sections of the Internal Revenue Service Code as a result of the Tax Reform Act of 1984 passed by the United States Congress on July 27, 1984. Mr. Murray said Mr. Fisher, agreed that a joint meeting with the Board of Supervisors would be a good idea because the changes in the law may require a policy decision on how the Authority and the Board are going to handle applications for inducement resolutions for the remainder of the calendar year. Mr. Murray then introduced Mr. William Strickland of McGuire, Woods & Battle, who stated that his firm has prepared two memoranda, one concerning the changes in the Federal law, dated July 3, 1984, and the other concerning the "Virginia Plan" to implement changes outlined in Executive Order No. 50 of Governor Charles S. Robb. Mr. Strickland gave each Board and Author- ity member a copy of the memoranda (dated August l, 1984). Mr. Strickland first discussed the limitation-on private activity bond issues, since, he said, that is the main topic his firm has heard about since the new law passed. The limitation on the amount of funds available will be the most diffiCult issue to deal with on a local level. The new federal law places a statewide ceiling on the amount of private activity bonds that can be issued in any state, based on the population. In Virginia the limitation will be, for 1984 about $820 million, (.$150 per capita). The state ceiling applies to virtually all industrial development bonds, including bonds issued under the $1 million and $10 million small issue exemption, and it will include most bonds that are' issued for exempt facilities, such as pollution control facilities, and certain other types of public facilities. It also applies to the student loan bonds issued by the Virginia Educational Loan Authority. The state limitation does not apply to bonds issued to the benefit of 501(c) organizations (charitable and non-profit organizations such as the YMCA), or a tax-exempt hospital. It does not apply to certain types of multi-family-housing bonds, or to refunding issues (those bonds that the Authority may already have issued). It also does not apply to certain types of indus- trial development bonds issued for facilities that are owned publicly, like a regional airport. Under the federal law, the $820 million that Virginia has been allocated for private activity bonds is divided between localities and the state issuing authority. Each locality will basically get fifty percent of the state's allocation on a per capita basis. The law allows the Governor, in the interim, and the General Assembly, finally, to supercede the federal allocation system and devise its system, which Virginia has done through the Governor's Executive Order No. 50, issued August 1. The executive prder, however, only applies to bonds issued during 1984. It is expected that the General Assembly will devise another system for allocating the State's share of funds next year. 'The Virginia Plan basically follows the Federal law and allocates $75 per capita to the governing bodies of the cities and counties in Virginia. Those localities, in turn, are being required to file a report with the state by October 1, which indicates all of the limitation that has been allocated to these localities that will be used by the end of 1984. If a localit does no~ expect to use all of its allocation, that money will ravert to the state for a reserve fund. If a locality does expect to use all of its allocation, it must write by October 1, at the same time that this request is filed with the State, for a supplemental allocation from the State reserve. The other fifty percent of the allocation for Virginia, which is set up for state agencies the Executive Order, will be used by state authorities for such things as the Virginia student loan bonds or other projects such as. for the Small Business Assistance Authority. The state authorities that issue bonds are also required to file a report with the state by OCtober l, to indicate how much of-the state allocation those authorities need for 1984. Any excess from the state's issuing authority will go into the state reserve as~well. The state reserve is comprised of unused portions or'both allocationS. If a locality needs an extra allocation from the state reserve, the locality must apply for same by October i and under the Executive Order, the actual allocation will be made by October 15. If the requests are less than the amount of the reserve, there will be no problems. If the requests exceed the amount that the state has available, then the Governor will enter a subsequent Executive Order dealing with how to allocate the funds among the requests that are received. Many governing bodies have been asking how to deal with the allocation process. Most have ~hosen to handle the process themselves, with the board ~of supervisors or the city council being the agency that actually makes the allocation for a particular bond issue. In other instances, the governing bodies have delegated that responsibility to their industrial develop~ ment authorities. The other question facing the local governments is which type of project will receive an allocation for bonds. Methods of making allocations vary greatly. Some local- so they ities have decided to allocate their bond funds on a first-come, first-served basis, ~make-~no distinction between projects needing funds. 'Other localities are trying to devise some criteria to establish what they believe is important for the local community, with the idea of making the allocation based on projects satisfying these criteria. Because the development of ~riteria may take some time, several localities will allocate their 1984 bonds on a first-come, ?irst-served basis simply to give themselves time to work out the details of their own processe~ There are two points to consider: The placement of a "cap" on allocations from the ~ederal level should not affect the process the board of supervisors or the industrial develop- ment authority has used in the past~o~app~ove~.mndusD~l.a!~-~development bonds. The process involving the IDA adoption of an inducement resolution and the board of supervisors' doing likewise should continue because that process has important tax and bond ramifications whollY apart from the question of whether the project gets an allocation from the "cap" or not. One reason is that under Virginia law, once a public hearing is held, the local governing body must take some action within 60 days or the public hearing must be held again. Another is that if the locality wants to apply for funds from the state reserve, the approval process must have been complete for that project before an application can be submitted. A second'point for consideration is that the board of supervisors and the industrial development authority should include a statement in any resolutions that the bonds cannot be issued until an alloCation has been received from the state limit. This will give the locality control over the funding of approved projects. A statement attached to such a resolution would tell applicants for the bonds that the local governing body cannot guarantee allocations in the future just because the project has gone ~through the approval process. Bonds will only be issued when there is sufficient leeway under the "cap" to do' so. ' · '~ The Authority and the Board, Mr. Strickland said, may want to consider not making any allocations at all until there is some assurance that the project is going to proceed and some financing is available. By doing this, the governing body would be able to assure that it would not have all of its allocation tied up in projects that are moving slowly or are com- pletely stalled. Mr. Strickland said there are some grandfather clauses in the Federal tax law, such as providing that this private activity bond limit does not apply to any project on which-the inducement resolution was adopted before June 19, 1984, or if the bond issue can be closed before December 31, 198~. The effect of this in 1984 will be that there will be more room for~ limitation than in the fuDure. The real crunch on allocations will come in 1985. Federal law requires that localities give priority to certain projects meeting three tests: l) those induced before October 19, 1983; 2) construction had to have begun before that dat~ or a construction contract or binding obligation had to have been signed before that ~ate; 3) the developer has to have given-the issuing authority notice that he intends to claim pri- ority on the approved bonds (by August 17). Since~all of the projects that would fall under this clause also would qualify under the first grandfathering condition above, there will not Ibe a priority problem this'Year. Next year, however, some Priority problems may arise. For ~ Ithat reason, McGuire, Woods'& Battle is urging developers to close out Priority projects ~hi~~ lyear. Mr. Strickland then offered to answer questions for the Board and Authority members on the new tax act. Mr. Murray said that Albemarle County's cap under the new law is set at $4,312,500. It ~ppears that Albemarle County cannot induce any project(s) that would exceed that allocation without help from the state. Mr. Strickland Said this is what the law means. .~ ~ Mr. Murray then asked if, assuming the County induced a hypothetical $3 million issue after October l, if the County could then ask the state for another $3 million contingent on the funds being available in the state reserve. Mr. Strickland said that is possible, but in order to be able to qualify to receive those funds, the County would have to go through the process of using all available funds at the local level and then applying to the State reserve Mr. Fisher asked if such an application has to be filed by October i in order to have a chance for any of the state's reserve money. Mr. Strickland said the state has not required that such an application be submitted before October l, but has merely said that the first allocations from the state reserve will be made on October 15. If all of the money is not used up in that first allocation process, then an Executive Order will be issued making provisions to allocate any money left in the reserve. Mr. Strickland said that if local governments do not allocate all of their assigned cap and have some of their bonding power revert to the state, those localities will have the first option to get that money back should another project come along that they want to fund. At. the end of 1984, the rules change again. No ~allocat'ion can be carried over for small-issue bonds,~ but can be carried over for exempt facility types of projects. Any funds to be carried over must be earmarked for a specific project; the allocation cannot be carried over and be held as a reserve fund. Mr. Murray told the Board he would like to discuss a specific project. There is an application pending by the Albemarle County Industrial Development Authority, and in order for that applicant to be qualified, the Albemarle County Industrial Development Authority would have to act t'oday so the Board of Supervisors could act at its regular August meeting, or.~the IDA would have to act at its regular September~meeting, followed by the Board of Supervisors acting in September. This whole process, as complicated, as it sounds, only involves one more application. 365 A t 1 4 .... Mr. Strickland said that in order to be in a position to submit a request for reserve £und~hE~-~t~e~-whole process would have to be completed by October 1. Then, Mr. Murray~ stated that it seems the most practical thing for the Industrial Development Authority to dO is to defer until September all requests which may come before it, and then to make a decision on which possible projects to request funding for from the state reserve by the October 1 dead- line. Mr. Strickland said the whole allocation process for the bonds under the "cap" can and probably should be separated from the application and approval process itself. He said the Authority may want to set stricter requirements for projects applying for funds now than it has in the past, proof that a project.will proceed, firm financial commitments, etc. Mr. Lindstrom 'asked if the Industrial Development Authority may, without the 'approval of the Board of Supervisors, allocate the County's "cap" under the provisions of the Executive Order. Mr. Strickland said no. The Board of Supervisors has the allocating authority and must take action on projects on a case-by-case basis or it can place the whole amount of the County'~ allocation in the hands of its Industrial Development Authority. Mr. Lindstrom confirmed that the Industrial Development Authority could go ahead using normal procedures on applications, and the Board of Supervisors could Withhold action untiI near the October 1 deadline. Mr. Strickland said that was true.. Also, if the Board did-not want to allocate any of i. ts !'~ap" to the project, the project could be approved subject to the project getting an allocation from the state reserve. Mr. Strickland said t~at approval of a project may not mean that the Board of SU~Pervisors wants to allocate part of the County's share to it. Mr.- Murray asked if the County could approve a project subject to available state funding and save its own $4,312.500 allocation for other projects. Mr. Strickland said no; the county has ~to use its own allocation first. Mr; Murray mentioned the specific case of Riverbend Partnership, Ltd., (represented at this meeting by Mr. George Gilliam), induced in 1983 for a two-phase project. The first Phase has been funded. Phase Two is $4.1 million and Riverbend Partnership has already sent the Industrial Development Authority a ~formal notice of claim against the "cap". The orYginal resolution was made prior to October 19, 1983, and M~. Murray said his understanding is that the $4.~million request has no effect on the County's "cap" since the project falls under the grandfather clause, as long as th~ loan is closed Dy December 31, 1984 Mr Strickland sa~d' this is correct. ' · ~'Mr. ~McCulloch asked if the County woUld'lose most of its money if, on January 1, the project'had not closed. Mr. Strickland said the Riverbend Partnership project is not one of the types of projects the CoUnty can elect to carry over. The law, he said, specifically states-that small-issue Industrial Development Bonds (those under $!0 million) cannot be carried over from-one year 'into the next Year's allotment. Mr. McCulloch then asked if it is ~i~ essential that the Board of SuPervisors adopt some basis for the allocation of fundS, whet~er it be on a first-come, first-served bas~s or on some other list of criteria which projects must Mr. Strickland said there is no requirement that a county adopt criteria, but, obviously some c~iteria must be devised for allocating the bond funds Mr. Strickland went. On to mention two other provisions in the new tax law that will changes in the way industrial development bonds are allocated. The first, he said, is that under the new law no more than 25 percent of the bond proceeds can b~ used to acquire land~. ~The second provision-sta~es tha~t bond proceeds canno~ be used to acquire existing facil- ities~U~less 15 percent of the bond amount is used for rehabi~itiation purposes. Mr. Fisher asked the value of outstanding claims on the county's bonds for the year 1984, Mr. Murray told him the only outstanding claim is for Riverbend Partnership. He then asked Gilliam if the Partnership plans to have its bonds issued before the December 31 deadline. Gi~ttiam said the company is making every legitimate effort it can to get the fi~'~'cing by the end of this year, but unfortunately the closing is not solely under Riverbend's control. One lender, he said, has not yet decided if it will disburse the funds. He said he felt there was a pretty good likelihood that Riverbend would use $2.5 to $3 million of the $4.1 and the balance could be carried over as far as 198'6. Mr. Fisher asked Mr. Strickland w~uld happen on January 1 to the remainder that might possibly not be used, whether it ~automatically be obligated under the Industrial Development Authority,s actions or if it essentially on equal footing with all other applications. Mr. Strickland said he could not b on this specific case because he is the bond counsel for Riverbend Partnership, but the county would have to give priority to projects that pass the three tests under the randfather clause in the law or risk losing the funds that have been allocated to it. Mr. said he thought that the state Would issue some kind of guidelines whereby the 'could ask the applicants for definite-target dates for financing and then allocate on bas&s of the most immediate need, placing limitations on how long a priority lasts. Mrs. Murray told Mr. Fisher-that the way he reads the law, if Riverbend draws down $2.6 of the $4.1 million, as of January 1, 1985, the Industrial Development Authori~yhas to $1.5 million aside because Riverbend has a prior claim on the money. Mr. Gilliam then ~old both men that Riverbend did not intend to use the money in 1985 and would prefer to have ~he priority in 1986, if that would be permissible. · Lindstrom said as a practical matter it is difficult to establish a policy for the ce of bonds when bonds that have already been approved might be washed out under the new c~. He said that as he read the Executive Order, the "cap" would stop the practice begun ly of authorities approving facilities in other counties. Mr. Strickland said that was correct, but' said it still Would not prevent having an ty finance a project in another jurisdiction as long as it met state requirements, which s~y~.that the Authority has to attain permission from the local governing body, and the allocation must come from the local government where the project is located. The ire Order was designed this way to keep the local governments from trading around their ~'cap", to create a secondary market in "cap". Mr. Lindstrom asked if the Executive Order would ,rohibit two jurisdictions with similar interests from pooling their "cap" for projects located 366 (Adjourned Meeting) ~ithin their common boundaries. Mr. Strickland said the way this could be done under the law rould be to relinquish part of the County's "cap" to the state reserve and then have itvreallp-~ ~ated to a county whose project Albemarle supported. Mr. Murray asked if one could not Just lave two bond issuances whereby one county would induce 50 percent of the project and the ~artner county induce the other 50 percent. Mr. Strickland replied that the Executive Order .. ~rohibits counties from using their allocation in other jurisdictions. Mr. Murray offered another specific case, saying the Albemarle County Industrial De¥~0p~ t~t.!~h~yh~as~an'~h~r~pr0~e~t~at has been induced but on which the bonds have not be~ %ssued -- a high-rise apartment complex for the elderly on Pantops named Westbury Hall. As of ~idnight tonight, if that project has made no priority claim, Mr. Murray asked if the pro~ect ~ill be back in the pool of applicants with an equal claim. Mr. Strickland said they would, bu~ %t is possible that this project does not fall under the ceiling since the complex could come ~nder the multi-family housing category. Also, to qualify for priority, not only must t~e inducement be in place by October 15, 1984, but construction must have started. Mr. Murray ~hen asked if the Westbury project came back before the'Authority next February, would the~. ~uthority be able to review it on a totally equal footing with other projects. Mr. Strickland ~aid it is possible that the Authority could look at the project as new, since there would be ~o priority claim. Westbury would have to come back with another application and go through ~he process again, since governing body approval is only good for a year and they would,~ave to nave some way of getting under the "cap". Mr, James Bowling said the project was approved in 1983 for $6 million. Mr. Murray remarked that if it closes this year it does not even come out ~f the "cap". But, he added, they have to have construction contracts let, which there is no ~ign of at this time. Mr. Strickland said 'the cont'racts do not come under the June 19 grand- ?at,er clause and that it does not matter when the contracts are let as long as the bonds aFe _ssued by December 31. Mr. Carroll Mason, representing the Westbury developers, said he felt hat since the Westbury project had some FHA financing, it might quality under the exempt ategories. Mr. Murray then thanked Mr. Strickland for his presentation on the new Federal tax laws. Mr. Murray said it might be appropriate at this point, for the Board's clarificatio~ as~ ~ell.~as th~ Authority's, to address the question of who might be affected. He said the ~as on h'and an application from Heritage Hall for inducement to build a nursing-home ty~e Facility. Mr. Murray said Mr. Mason is here today representing the applicant..He Said Mr. ~ason had been informed a month ago that there might be a problem with the Authority and the ~oard trying to decide on such short notice how to handle the changes in the law, and that ~here was a good likelihood that action on the application would be deferred. Mr. Murray ~a~f~~ ~r.. Mason indicated that he would-like to come and hear the presentation today and would'liMe'~ ;o pursue the application. Mr. Murray said the Authority had also received an inquiry ih ~ ..... .asr week from the president of a small manufacturing firm in Illinois who wants to come to ~his locale and build a small manufacturing plant that would employ 28-30 people in minimum- ~age type jobs. That person has not procured a piece of real estate and is not sure whether h~ .s going to come to the City of Charlottesville, the County or to Wayne~boro. Mr. Murray..sa~d ;he Authority and the Board should take note of the fact that someone may show up this ~ext year wanting a part of the "cap", for what sounds s~perficially like an excellent project. Mr. Fisher said from what he understands, procedurally, the Board does not have to set in ~dvance any criteria for how the allocation will be granted to the applications. Furtherm0r~,- ~ meeting could be set late in September in order to give the Authority more time to con~ider ~pplications it has received. Then a recommendation could be made during the third or.~0urt~ leek of September. Mr. Murray agreed, reminding everyone that it is crucial that the report on llbemarle County's projects be to the state office by October 1. Mr. Lindstrom said he would prefer to wait hntil aZl applications are in hand and th~. ~ave everyone made aware of the things that must be dealt with. Mr. Murray said the Auth0~ty... ~nd the Board do not have a problem this year, but that a potential exists for problems next year unless the Board decides on the procedures tO.be Used~ He suggested a joint subcommittee ~f the Board and the Authority to discuss ways and means of preventing the problems in the ~oming year. Mr. Fisher said he is worried aboUt the sudden shift in focus from the merits ~n individual application to the "cap", an~ the best way to Use all of the all°cation.. _ge/ ~ears'that the Authority and the Board may lose track of the practice of looking at a pr~oject_ ~n its merits first and he urged caution. Mr. Way suggested following Mr. Murray's suggestion~to set some criteria before this issue~ ~omes of age in January. Mr. Fisher then asked if there were other comments. Mr. McCulloch said he appreciated the interest'in maintaining standards and taking pains ~o check the q~ality of the applicaDions. Mr. Murray said that what the federal government has ~one i~ come around to a position that has been widely held in this county for many years. Mr. ~isher said he personally was willing to set aside time on S~ptember 19 to review the applica- ions the Industrial Development Sutho~ity has on hand, Mr. Fisher thanked the Authority embers for allowing the Board to Share this presentation. = Agenda Item No. 3. Appointment: Jordan Davelopment Corporation. On motion by Mr. Lindstrom,. seconded by Mr., Way, the Board reappointed Mr. Harry D. Kennedy ~o the ~ordan Development Corporation for'a one-year term expiring on August 16, 1985. Roll was ~atled and the motion passed by the following recorded'vote: ~YES: Mr. Bowie, Mrs'..Cooke, Messrs.'Fisher, Lin trom and Way. ~AYS: None. ~BSENT: Mr Henley. ' August ~23, 1984 (Afternoon Meeting--Adjourned from August 16, 1984) AugUSt 1 1 84 A 'ourn d Mee i ~ Agenda Item No. 4. Other Matters Not on the Agenda. Mr. Bowie told the Board that a meeting scheduled for August 21, 1984, with a speaker from Texas to discuss methods of resource recovery will not be held because the gentleman could not come. Mr. Fisher told the Board members that the ground-breaking ceremonies for Broadus Wood School renovations was held at 3 p.m. this afternoon and were very good; people in the area are quite happy with the project. Agenda Item No. 5. Adjournment. There being no further business to come before the Board, Mr. Lindstrom made motion to adjourn at 5:08 p.m. to August 23, 1984, Meeting Room 12, at 3:00 p.m. Mr. Bowie seconded the motion, which carried by the following recorded vote: ~ESl ~Mr. Bowie, Mrs. Cooke, Messrs. Fisher, Lindstrom and Way. NAYS: None. ABSENT: Mr. Henley. August 23, 19S4 (Afternoon Meeting--Adjourned from August 16, 1984) An adjourned meeting of the Board of Supervisors of Albemarle County, Virginia, was held on.-August 23, 1984, at 3:00 P.M., in Meeting Room 12, Phase II, Second Floor, County Office Building, 401 McIntire Road, Charlottesville, Virginia; said meeting adjourned from August 16, 1984. Present: Mr. Frederick R. Bowie, Mrs. Patricia H. Cooke (Arrived at 3:07 P.M.), Messrs. Gerald E. Fisher, J. T. Henley, Jr., C. Timothy Lindstrom and Peter-T. Way. Absent: None. ~Officers Present: Agenda Item No. 1. Fisher. Deputy County Executives, Ray B. Jones and. Robert W. Tucker, Jr. The meeting was called to order at 3:05 P.M. by the Chairman, Mr. Mr. Frank Buck, Mayor called the City Council to order with the following persons present: Mr. Lindsay Barnes, Mrs. Elizabeth Gleason, Mrs. Mary Alice Gunter and Mr. E. G. Hall. Agenda Item No. 2. Joint Meeting with City Council. Mr. Fisher said this joint meeting was requested by Mr. Buck and both have worked together on the items for discussion. Mr. Buck said he felt there is a lot of common i~terest'between the two governing bodies. Although. some misunderstandings have occurred in the past, he felt there is a need to jointl~y meet .to discuss items of mutual interest. al) Parks and Recreation: Presentation by County Staff. Mr. Patrick Mullaney, Director of Parks and Recreation, w.as present and gape a summary of the parks and recreational facilities available in the County. He also noted that the State Division of Game and Inland Fisheries is looking for a'~boat launch site on the South Fork Rivanna Reservoir with same to be maintained by the County Parks Department. It is hoped that this site can be developed,within t-he next two years. Further, Mr. Mullaney noted that County parks staff has developed a good relationship with the Albemarle C?unty School Board in using school sites for recreational activit'i'es... Over the last four years, approximately $100,000 of parks and. recreational funds have been ,used to deVelop- school sites which range from lighting tennis cou~rts to 'installing backstops on .softball fields. Another $50,000 is planned to be spent in the coming year on improvement of various school sites. Mr. Mullaney said school' sites provide: fifteen soccer fields., seventeen softball fields, eight full-size gyms, six small gyms, ten outdoor tennis courts, and there is playground equipment at all school sites. Mr. Mullaney said development of exis6ing County lands especially usage of school sites has been a high priority and continues to be. Another priority is development of a southern regiOnal swimming facility to serve the Scottsville, Esmont, Covgs'ville and N~rth Garden areas. .Two other Country priorities are development of a section of school property on Whitewood 'Road for a Jogging and exercise trail and development of a site off of Route 712 (commonly known as Pancake Falls) for recreational purposes. Mr. Mullaney concluded by noting that the.projects mentioned are already priorities in the County's Capital Improvements Program, but additional work is always involved in maintaining the number of County facilities..